April 15, 2019 Insurance Advocate by C Acunto

Vol. 130 No. 7 | April 15, 2019

Insurers Lead Na onal Effort for Social Well-Being

Your New York DBL/PFL Partner

Learn more, please visit:

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Vol. 130 No. 7 | April 15, 2019

Contents

12 GIVING FORTH: Insurers Lead National Effort for Social Well-Being

info@insurance-advocate.com www.insurance-advocate.com

Foreword: White and Griffin Honored Steve Acunto, Publisher

HR Update: Court Rules that Insurance Agents Can Be Independent Contractors Instead of Employees Alfred T. DeMaria

On the Level: The Advantages of Storytelling Jamie Deapo

Guest Article: Getting the Hybrids on the Roads Tony Laudato

MSO: Annuity Basics Marilyn M. Singleton, M.D., J.D.

In the News: Starr Insurance Companies’ Construction Team Wins Insurance Underwriting Team of the Year Award Court Grants PIANY and Big I NY Request in NYDFS Regulation 187 Challenge

Guest Opinion: The New Normal in Claims Management

Legal Update: Liability Insurance and Gun Control Sari Gabay, Esq.

On My Radar: Ignoring an Administrative Order is Expensive Barry Zalma

Looking Back: March 19, 1994

Courtside: Plaintiff ’s 2001 Judgment Gets Paid with Compound Interest Despite 14 Year Delay in Enforcement Lawrence N. Rogak

Guest Opinion: Doctor Robot for You, Real Doctor for Me Marilyn M. Singleton, M.D., J.D. INSURANCE ADVOCATE / April 15, 2019 3

[ FOREWORD ]

STEVE ACUNTO, EDITOR & PUBLISHER

White and Griffin Honored

RICHARD A. WHITE

4 April 15, 2019 / INSURANCE ADVOCATE

harity is the topic of this issue and comes to our cover just as we receive notice that scholarships and financial aid awards, providing students the best academic opportunities available regardless of financial means, will be the subject of a dinner honoring two outstanding friends. The College of Mount Saint Vincent, long an organization that has recognized insurance leaders for doing great work (Rivera, Casillas, De Carlo, Walsh, Flynn, Decaminada, Fishlinger, Menzies, Newman, among many others), will honor two remarkable individuals at its 2019 Tribute Dinner—individuals whose lives reflect a profound dedication to the values set out in the College’s mission and the charism of the Sisters of Charity. This year, the College will recognize Richard A. White and Mary A. Griffin. Richard White is the Chief Executive Officer and a member of the Board of Directors of ShelterPoint Life Insurance Company, New York’s largest insurer of both Disability Benefits Law and Paid Family Leave, with over 168,000 employer groups and covering 1.7 million insured employees. Mr. White has over 30 years of experience in creating and implementing effective strategies for business growth, diversification, product development, sales expansion, and operational excellence for several leading insurance companies. Prior to joining ShelterPoint in 2009, Mr. White was Executive Vice President of Domestic Markets with Pan American Life Insurance Company in New Orleans. He also spent nearly 20 years with The Guardian Life Insurance Company—the same organization where he began his career in 1984 as a group sales representative—culminating as Senior Vice President, Group Insurance. He is an officer of the Board of Directors of The Insurance Federation of New York and serves on the Board of Directors for the Life Insurance Council of New York (LICONY). He earned a B.S. in Business Administration from the University of Nebraska and holds certificates in Marketing Management from Columbia University, as well as in Organizational and Executive Coaching from New York University.

Mary Griffin, President and Chief Executive Officer of LICONY, oversees New York’s leading life insurance organization, representing over 75 life insurer member companies and more than 20 allied professional firm members. Prior to joining LICONY in 2016, Ms. Griffin served as Senior Vice President with Citigroup’s Government Affairs Department. Her career also includes leadership positions at the American Insurance Association, the New York Department of Insurance under the administration of Governor Mario Cuomo, and on the staff of the New York State Assembly. A notable leader, Ms. Griffin has had a remarkable impact throughout the insurance and government industries— she has been named MARY GRIFFIN Outstanding Woman in Government for her significant contributions to New York State and is a past two-time recipient of the Outstanding Government Affairs Representative award from the Northeast Financial Services Association. She attended Newton College of the Sacred Heart and earned a B.A. in American History from Boston College. Proceeds from the event directly support scholarships for talented and deserving students, an objective like those outlined in our feature on the IICF that makes good sense for the industry and for the society we serve.

S I N C E

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VOLUME 130 NUMBER 7 APRIL 15, 2019

www.insurance-advocate.com EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Jamie Deapo Alfred T. DeMaria Sari Gabay Lawrence N. Rogak Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Gina Marie Balog-Sartario 914-966-3180, x113 g@cinn.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x113 circulation@cinn.com PUBLISHED BY CINN Global Initiatives P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | info@cinn.com www.cinn.com President and CEO Steve Acunto

CINN GROUP

INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in January, July, August, and December by CINN ESR, Inc., P.O. Box 9001, Mt. Vernon, NY 10552. Periodical postage pending at Greenwich, CT and additional mailing offices. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $135.00. TO ORDER Call 914-966-3180, email: circulation@cinn.com or write: Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2019. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Office.

INSURANCE ADVOCATE / March 25, 2019 5

[ HR UPDATE ]

ALFRED T. DEMARIA

Court Rules that Insurance Agents Can Be Independent Contractors Instead of Employees uA United States federal court recently found that insurance agents working under independent contractor agreements for a major insurance company were employees for purposes of pursuing pension and other benefits under the Employee Retirement Income Security Act (“ERISA”). The court found that the insurance agents were properly classified as independent contractors. It recognized that the decision was a close one but disagreed with the lower court on two major factors of the employee versus independent contractor test: (1) the skill required of an insurance agent; and (2) the hiring and paying of assistants. The first factor – the amount of skill required—weighs in favor of independent contractor status because selling insurance requires considerable education and training and occurs in a highly specialized field, according to the Court. The second factor in the Court’s dis-

...the amount of skill required— weighs in favor of independent contractor status because selling insurance requires considerable education and training and occurs in a highly specialized field, according to the Court.

cussion –the individual’s role in hiring and paying assistants – also weighs in favor of independent contractor status for these insurance agents because the agents were solely responsible for paying their own staff, determining their compensation and benefits, and deciding whether to classify these assistants as independent contractors or employees. Even though the insurance company

4441 Sepulveda Blvd., Culver City, CA 90230-4847 www.zalma.com | zalma@zalma.com 310-390-4455 | fax: 310-391-5614 | http://zalma.com/blog

Mr. Zalma recently published on Amazon.com with links at the Zalma Books site, with the following: Non Fiction books: • “Insurance Fraud & Weapons to Defeat Insurance Fraud” In Two Volumes • “The Compact Book on Adjusting Liability Claims: A Handbook for the Liability Claims Adjuster” • “The Compact Book on Adjusting Property Claims” • “Ethics for the Insurance Professional” • “Rescission of Insurance” • “The Insurance Examination Under Oath” 6 April 15, 2019 / INSURANCE ADVOCATE

• “Random Thoughts on Insurance Volumes IV and V: Digests from Barry Zalma’s Blog: ‘Zalma on Insurance’” Fiction: • “HEADS I WIN, TAILS YOU LOSE” • “Candy and Abel: Murder for Insurance Money” • “Murder And Insurance Fraud Don’t Mix” • “Murder & Old Lace”

Alfred T. DeMaria is a Senior Partner at Clifton Budd & DeMaria, LLP and is recognized as one of the preeminent management labor attorneys in the field. He has extensive experience in all areas of employment law, including advice on avoiding liability under disability, race, gender, age and related anti bias laws. Mr. DeMaria advises on compliance with all federal, state and local laws governing the employment relationship, including the defense of lawsuits brought by employees against the companies that employ them. Prior to his work at Clifton Budd & DeMaria, LLP, he served as a trial attorney with the National Labor Relations Board.

had some right to override hiring and firing decisions, on balance, the insurance agents had the primary authority over hiring and paying their assistants. Going forward, insurance industry executives should be aware that courts will weigh certain factors in the ERISA test for employee versus independent contractor more heavily than others. Because employee benefit disputes under ERISA focus on the financial benefits companies provide to their employees, the factors most relevant to the financial structure of the arrangement guide the inquiry. These factors include the source of instrumentalities and tools, the location of the work, the method of payment, the provision of employee benefits, and tax treatment. Because each case is factintensive, consultation with legal counsel is advised before embarking on an independent contractor relationship with any employee.[IA]

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2003 Bakeries 7998 Hardware Store 8001 Florist Store 8006 Food/Fruit/Deli/Grocery 8008 Clothing/Shoe/Dry Goods 8013 Jewelry Store 8016 Quick Printing 8017 Retail (Not Classified) 8031 Meat/Fish/Poultry Store 8033 Supermarkets 8039 Department Store 8043 Retail (including Food) 8044 Furniture Store 8046 Auto Accessories 8072 Book/Music Store 8105 Leather Store 8382 Self serve gas w/conv. store Residential Care Facilities

8864 Developmental Organizations 8865 Residential Care Facility Hotel/Motel 9052 Hotels NOC 9058 Restaurants in Hotels

Wholesale

4310 Greeting Card Dealer 7390 Beer/Ale Dealer 7999 Hardware Store 8018 Wholesale Store/NOC 8021 Meat, Fish Dealer-Wholesale 8032 Dry Goods, Clothing, Shoe 8047 Drug Store 8048 Fruit & Vegetables 8111 Plumbers Supplies Dealer-Wholesale Restaurant 9061 Clubs 9071 Full Service Restaurants 9072 Fast Food Restaurants– Including Drivers 9074 Bars & Taverns Social and Health Services 8854 Home Health Care – Prof. Employees 9051 Home Health Care – Non Prof. Employees 8857 Counseling – Social Work – Traveling Oil and Gas Dealer 5193 Oil Burner Installation 8350 Fuel Oil & Gas Dealer 8353 Gas Dealers, LPG & Drivers

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[ ON THE LEVEL ]

JAMIE DEAPO

The Advantages of Storytelling uRecently I have been taking a writing course and in the course they make the point that storytelling has been the most effective method of communication, forever. I believe the art of storytelling is extremely important in getting people to see and understand the need for insurance protection. Most people want to protect themselves, their families and their business from significant injury or damage. Unfortunately, many people do not have a clue when it comes to the different perils that could befall them. That’s where stories can help to draw their attention to the many different types of loss that can occur and how solid protection can save the day. The stories can be real-life experiences that have occurred or a situation created in the mind of the client meant to focus their attention on the very real suffering and heartache that can exist if someone hasn’t been responsible and bought proper protection. It’s important that the story draw the listener or reader in and get them to relate to what is occurring—creating a mental picture of the loss and pain that can occur and what life would be like if little or no protection exists. Insurance can’t make pain and suffering go away but it can make sure it isn’t compounded

by not having the resources to heal, repair and, in some cases, replace what has been injured or destroyed. For example, a family member who is seriously injured in an auto accident and is looking at months or years of medical attention and rehabilitation and, in extreme cases, never being able to return to the life they previously had. Another example is when a family home, devastated by weather or fire, becomes uninhabitable. They now have to find a temporary living situation, buy lost possessions and pray there is enough protection to put themselves back in the home they had before. Imagine 15-20 years of work creating and developing a business to see it possibly jeopardized or worse yet put out of business because the necessary protection wasn’t there to keep going after a significant loss. In addition to all that law suits for damage or injuries could significantly change the life of an individual, family or business unless the proper planning and protection has been achieved. I understand that to some individuals the idea of storytelling may sound manufactured and fake but that couldn’t be farther from the truth. Too many people today are being led astray by advertising intended to mislead consumers.

...proper insurance coverage allows consumers to live a full and active life knowing they have done their best to protect themselves from the unknown.

8 April 15, 2019 / INSURANCE ADVOCATE

Jamie Deapo is AVP of Membership & Member Programs for Big I and is an approved CE instructor in New York. Prior to being with Big I, he was an independent agent in the Syracuse area for 15 years. Jamie started his career in 1972 working for insurance carriers, and he has held various underwriting and marketing positions with several national as well as regional companies. He is a past president of the Independent Insurance Agents of Central New York and served on the board of directors of Big I.

Focusing them on price instead of the real value of insurance—having proper coverage to adequately protect themselves, their families and their businesses. Storytelling draws attention to the serious nature of insurance and the need to think through what coverages and at what amount a consumer needs and wants protection. Today’s world is complex and filled with many opportunities for physical and financial loss. It allows the insurance agent in the role as advisor to help consumers to visualize and understand the potential for serious loss and properly protect themselves. You may think storytelling is old school and doesn’t belong in our highly computerized and fast paced world. Actually it’s just as important as ever and social media, blogs and websites are great venues for storytelling. Deep down most responsible people want to properly protect themselves and storytelling allows them to picture themselves in the story and then take action to make sure they don’t end up with an unhappy and possibly disastrous ending. The moral of the story is: proper insurance coverage allows consumers to live a full and active life knowing they have done their best to protect themselves from the unknown. Some people might call that “peace of mind.”[IA]

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[ GUEST ARTICLE ]

TONY LAUDATO

Getting the Hybrids on the Road The continued decline of standalone long-term care policies seems inevitable, and the life insurance gap among Americans continues to widen. Hybrid policies offer an obvious solution, and are becoming increasingly popular - but the right approach will be needed for insurers to fully cast off their skepticism uRecent months have seen a steady drip of bad news from life insurers, as firms have had to boost their reserves to the tune of billions in an expectation of soaring payouts for long-term care policies. October’s update from Unum followed to tune of Prudential’s in August, and by the time this is published more will likely have followed. While troubling, the news simply confirms something that sums have made fairly obvious for some time: the old long-term care market – once so popular as a means of funding assisting living, nursing home and home care services – is now more of a headache than an opportunity for insurers. The market is now having to significantly review assumptions made long ago when the first such policies were written, during a period when interest rates and projected lapse rates were higher and health care expenses lower. The to say the equation has shifted would be an understatement - healthcare costs for assisting living have almost doubled over the last fifteen years, while one in two Americans now suffers from chronic illness. The accompanying increased premiums have decimated the industry. Many providers have withdrawn from the line altogether, and those that remain are having to be increasingly restrictive with their policies. Axing an entire revenue stream, however - especially one that was once so lucrative - is a risky choice to make in a situation where demand is clearly not the problem. The need for long term care is going nowhere. 10 April 15, 2019 / INSURANCE ADVOCATE

The current gap in the longterm care market is more circumstantial than reflecting anything fundamental— the financial crash and its aftermath engendered a lack of product innovation, with the long-term health care insurance market suffering from this as providers scrambled to de-risk their portfolios.

As such, the market is increasingly starting to turn to hybrid policies. Hybrid policies work by combining the two types of coverage – life insurance and long-term care – and allow for payouts based on accelerated or early payments of a death benefit. Importantly, the combination also allows insurers to stabilise the risk profile of the product, and provide a sustainable means of growing both the top and bottom line. These policies are designed to make long-term health care insurance profitable again, and in doing they may also present a way to partially tackle another problem—the decline in the life insurance market. The number of Americans holding life insurance has been falling steadily for decades and is now at a record low, with about half of US households now going without. While this problem is concentrated among younger Americans – not the traditional market for late life health care – research shows that one of the main reasons younger Americans don’t buy life insurance is a lack of flexibility and innovation in the product itself. Long term care is much cheaper the younger you are, and so the hybrid policies could well have more appeal here. The younger market aside, there is every sign that these policies could grow very popular among middle aged and

Tony Laudato, FSA, MAAA, is Vice President of Partnership Solutions with the Hannover Re Group. He joined the Hannover Re Group in July 2012 and is currently leading the Partnership Solutions Group that supports insurance carriers’ products, web, mobile and digital strategies that are focused on the demands of today’s consumers and reaching new markets. In addition to working with carriers, the specialized team works with emerging, high tech distribution companies and InsurTech players, vetting their technology and helping them gain access to insurers that want to modernize the life insurance sales process, products, risk assessment, client engagement and back-end analytics.

older Americans. As opposed to more traditional stand-alone policies, hybrid policies provide an option that isn’t ‘use it or lose it’ with regard to benefits—with hybrids there is still a death benefit even if the LTC benefit isn’t used. For wealthier clients that have accumulated financial assets throughout their life, hybrid policies additionally provide a way for them to protect those assets from the high cost of late-life care should it be needed. The current gap in the long term care market is more circumstantial than reflecting anything fundamental—the financial crash and its aftermath engendered a lack of product innovation, with the long-term health care insurance market suffering from this as providers scrambled to de-risk their portfolios. Hybrid solutions, however, offer a solution to this impasse that comes with a far more favourable risk profile, will genuinely benefit all parties involved, and could help breathe life back into the ailing sector. CONTINUED ON PAGE 29

ADVERTORIAL

Annuity Basics By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE - Assistant Vice President/Media Editor uAS THE BABY BOOMER GENERATION RETIRES, and life expectancies increase, many have questions about whether they will have enough money to last throughout their golden years. Health care and nursing home costs can be substantial. In many cases, gone are the days of guaranteed pensions offered by employers. Most workers are now left on their own to navigate the jungle of options, including IRA’s, stocks and bonds, and annuities. The prospect of developing a retirement income strategy can be daunting. Helping clients navigate the road to retirement is another value-added service of the true insurance professional. What is an annuity? Annuities are a means of deferring taxes as well as guaranteeing a set income at retirement. Three parties are involved – the owner, the annuitant and the beneficiary. The initial deposit is made by the owner, who also decides when the payout will begin. The term of the annuity is set by the life of the annuitant- often the same individual as the owner. Depending on how the annuity is structured, the beneficiary will receive any death benefit. Annuities can be immediate or deferred. With deferred annuities, a sum is deposited into an investment account for a period of time before withdrawals start, typically at retirement. Payouts under an immediate annuity start shortly after the initial deposit. Annuities can be fixed, with predetermined fixed payouts, or variable, with payouts tied to investment performance (https://money. cnn.com). S e ve r a l f a c t or s go i nt o t h e determination of the annuity payout amount. They include the amount deposited, the age of the annuitant, and options, such as built in cost of living increases, and whether or not payouts continue upon the death of the annuitant. Deferring the payout for a number of years after the initial deposit is made increases the amount that is available. Payouts can be set up to go to the annuitant for life, with no payment

Drawbacks include tying up a significant amount of money – sometimes for several years before payouts begin, and annuities may have high fees.

to a beneficiary or spouse upon the annuitant’s death. This also increases the amount the annuitant receives. Annuities may be an option for people who have maxed out their contributions to other retirement options, such as 401ks and pension plans. Unlike retirement plans such as 401ks, there are no annual contribution limits for annuities. People who cannot qualify for life insurance can purchase an annuity to provide some of the same benefits. Annuities can also be used to pay for long term care (www. goodfinancialcents.com).

Draw b acks include tying up a significant amount of money – sometimes for several years before payouts begin, and annuities may have high fees. There may be significant penalties or restrictions for early withdrawals. Annuities may not have the same growth potential offered by other investments, such as stocks. As with any investment, careful research should be done to find a reputable and fiscally sound annuity provider. Carefully research the fees and regulations before committing to the purchase. As is often the case in life, balance is important. Adding an annuity to the retirement portfolio may be one way to guarantee a set income. Helping clients understand the various retirement options may be another value-added service of the professional insurance agent.

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Insurers Lead National Effort for Social Well-Being 12 April 15, 2019 / INSURANCE ADVOCATE

Insurance Industry Charitable Foundation Releases Millennial Ideas Summit White Paper

e prefer “Giving Forth” to “Giving back,” although they mean the same thing, charitable contribution by insurers to our society’s well-being in this case.

The Insurance Industry Charitable Foundation (IICF), a nonprofit organization working with the insurance industry “to help communities and enrich lives,” held its Key Partner Company Philanthropic Forum in New York, an annual gathering of representatives of IICF’s Key Partner Companies and national media. Insurance Advocate® was pleased to participate. Established in 1994, IICF has served as the philanthropic foundation of the insurance industry for more than twenty-five years, contributing over $31 million in community grants along with 300,000 volunteer hours by more than 110,000 industry professionals. IICF reinvests locally where funds are raised, serving hundreds of charities IICF REINVESTS LOCALLY WHERE and nonprofit organizations, for maximum community im- FUNDS ARE RAISED, SERVING pact. IICF is a registered non profit organization under section HUNDREDS OF CHARITIES AND 501(c)(3) of the IRS code. NONPROFIT ORGANIZATIONS, FOR MAXIMUM COMMUNITY

According to the press statement issued by the Group, senior IMPACT. industry executives, insurance industry partners such as the Insurance Information Institute, and the charitable foundation leaders and corporate social responsibility specialists of the IICF Key Partners meet to present to colleagues and media on the significant and varied ways the insurance industry is giving back to the communities where we live and work. This includes hundreds of thousands of hours of global employee volunteerism, pro bono, and skills-sharing support to nonprofit organizations, disaster response, relief and recovery, employee-driven outreach in local communities and many other creative corporate social responsibility initiatives”. IICF Key Partner Companies are those with Board of Directors representation across three or more of IICF’s five divisions, along with serving on the IICF International Board of Governors. The following Key Partners were repCONTINUED ON PAGE 14

INSURANCE ADVOCATE / April 15, 2019 13

REPRESENTATIVES OF MANY IICF KEY PARTNER COMPANIES, INCLUDING AIG, AON, ASSURANT, AXA XL, CHUBB, CNA, EY, FARMERS, HUB INTERNATIONAL, MUNICH RE, THE HARTFORD AND ZURICH, GATHERED IN NYC TO DISCUSS INSURANCE INDUSTRY PHILANTHROPY CONTINUED FROM PAGE 13

resented at this year’s IICF event: AIG, AON, AXA XL, Assurant, CHUBB, CNA, EY, Farmers Insurance, HUB International, Munich Re, The Hartford, Swiss Re and Zurich. The 2019 IICF Key Partner Company Media Day was hosted by CHUBB in their Manhattan office. “It was a privilege to observe each of these companies presenting on their significant philanthropic initiatives,” said Barbara Bufkin, Chair, IICF International Board of Governors and Assurant, Executive Head of Business Development. “And while individually impressive, what is truly unique is their collaboration in leveraging their own corporate social responsibility campaigns for scale and scope within the IICF, our industry’s philanthropic foundation.” IICF’s Media Day also featured the release of a new white paper that documents the findings of IICF’s Millennial Ideas Summit. Convened in late 2018 with more than 50 young leaders and emerging talent from across the insurance industry, the Millennial Ideas Summit provided a platform to discuss several key topics and challenges facing the industry. These included talent and recruitment of millennials in the insurance industry; technology, innovation and change; and social responsibility, particularly the industry’s philanthropic response following natural disasters. CONTINUED ON PAGE 16 14 April 15, 2019 / INSURANCE ADVOCATE

Peter Tucker, Regional Executive Officer, CHUBB and Member, IICF Northeast Division Board of Directors, welcomes guests to Chubb’s Manhattan offices for 2019 Media Day

Brandon Davis, Director, Public Relations and Corporate Social Responsibility for CNA, discussing partnership with Girls Who Code and other nonprofits

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MarshBerry documented the insight gleaned at the IICF Millennial Ideas Summit in a new white paper: What Millennials Want, How are we engaging the millennial workforce and showing what it means to work in the insurance business. This distinctive white paper explores many timely themes and ideas expressed by representatives of the millennial workforce, one of the most diverse workforces ever, including: • As the insurance workforce ages, the industry needs to actively engage more young people in what it means to develop and enjoy an insurance career – and how does the industry connect with millennials to show the pathway to insurance positions that offer the qualities they’re looking for: flexibility, empowerment, career advancement, social responsibility and independence; • How businesses gear up and develop a culture that welcomes and drives change, helping the industry work smarter through innovation – an area where younger people can contribute greatly; • How should the industry be perceived to attract millennials - diverse, genuine, versatile, modern, caring, tech-savvy, recession-proof, empathetic and purpose-drive were just some of the ideas; • Communicating to the younger workforce that insurance is a business of service and one that helps people in their times of need - corporate social responsibility is critically important to millennials, who want opportunities to give back and make a difference through experiences and grassroots ways to get involved in helping. “MarshBerry concludes the white paper by reminding us that the insurance industry is on the cusp of a grand evolution. The industry can change and embrace the fresh, inspired next generation and become better organizations for it. Learn more in What Millennials Want, How are we engaging the millennial workforce and showing what it means to work in the insurance business for further insight and analysis,” the IICF noted.[IA] 16 April 15, 2019 / INSURANCE ADVOCATE

Insurance Industry Charitable Foundation CEO, Bill Ross, discusses IICF initiatives for 2019 and how the insurance industry is giving back to local communities

Shawn Kahle, VP, Corporate Responsibility & Community Engagement and Executive Director, Assurant Foundation, presents to the group on Assurant’s philanthropic programs

Jeff Rubin, SVP, HUB International Northeast and Member, IICF Northeast Division Board of Directors, introduces video highlighting HUB International Limited being named IICF’s “Double I” award winner for influence in the industry and impact in the community at December 2018 IICF Northeast Benefit Dinner

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On the agenda • Keynote Address from Financial Services Acting Superintendent Linda Lacewell • CEOs Provide their View from the Helm: Staying the Course in New York • Flying with the Legal Eagles: Being Forewarned is Being Forearmed • Regulatory Reflections: A Conversation with Jim Wrynn • Is There a Demand for Insurance On-Demand? • Town Hall Meeting with Legislators • Small Company Roundtable • Exhibit Show • Golf Tournament, Lake George Boat Cruise, Banquet and More

[ IN THE NEWS ]

Starr Insurance Companies’ Construction Team Wins Insurance Underwriting Team of the Year Award uNew York, N.Y.—Starr Insurance Companies today announced that Starr’s construction experts received the Insurance Underwriting Team of the Year Award at Business Insurance’s U.S. Insurance Awards on March 21. Starr received the award for its September 2018 launch of Starr CIP Enterprise, a mono-line general liability construction wrap-up insurance policy sold through a small and exclusive group of wholesale producers who specialize in construction. “Starr prides itself on having strong industry specialist teams in place that uniquely understand how best to mitigate their clients’ risks so they can focus instead on achieving their business goals,” said Maurice R. Greenberg, chairman & chief executive officer, C.V. Starr & Co., Inc. “This award recognizes the good work done by our construction team, but it’s also an example of the smart thinking we bring to all of our clients.” “Since its introduction, reviews from clients and brokers have been very favorable,” said Steve Blakey, president & chief executive officer, Starr Insurance Holdings, Inc. “Our primary and excess construction underwriters, corporate underwriting, claims and legal teams worked together to shape this coverage. It seamlessly aligns primary and excess coverage to fill risk gaps that construction clients typically face. This is a great recognition of how Starr teams collaborate to serve unmet needs in the market.” About Starr Insurance Companies Starr Insurance Companies (or Starr) is a marketing name for the operating insurance and travel assistance companies and subsidiaries of Starr International Company, Inc. and for the investment business of C. V. Starr & Co., Inc. and its subsidiaries. Starr is a leading insurance and investment organiza18 April 15, 2019 / INSURANCE ADVOCATE

tion with a presence on six continents; through its operating insurance companies, Starr provides property, casualty, and accident and health insurance products as well as a range of specialty coverages including aviation, marine, energy and excess casualty insurance. Starr’s insurance company subsidiaries domiciled in the U.S., Bermuda, China, Hong Kong, Singapore and U.K. each have an A.M. Best rating of “A” (Excellent). Starr’s Lloyd’s syndicate has a Standard & Poor’s rating of “A+” (Strong).[IA]

On Nov. 16, 2018, New York’s biggest and most influential insurance agent and broker associations filed a lawsuit against the DFS over amendments to Regulation 187, which would fundamentally alter the agent/broker-customer relationship in the sale of life insurance and annuities, and ultimately harm consumers. PIANY and Big I New York, who collectively represent thousands of insurance agents and brokers across New York State, are challenging the DFS on the basis that it acted beyond its authority when it adopted an amendment to Regulation 187, imposing a vague and subjective standard of care for insurance agents and brokers that is contrary to existing law. “The Regulation 187 amendment we are contesting has the potential to restrict open, honest discussion with clients, drive out business, weaken the market—and ultimately would harm New York State’s insurance-buying public,” said PIANY President Jamie Ferris,

Court Grants PIANY and Big I NY Request in NYDFS Regulation 187 challenge u ALBANY, N.Y.—The New York State Supreme Court in Albany ruled in favor of a consolidation motion filed by the Professional Insurance Agents of New York State and Big I New York in the ongoing lawsuit over amendments to New York State Department of Financial Services (DFS) Insurance Regulation 187. The court granted a motion to consolidate the action with a similar lawsuit that was filed by the National Association of Insurance and Financial Advisors in New York County. Additionally, the venue for both actions will now be in Albany County. “We are pleased the court ruled in favor of our request.” said Big I NY Board Chairman Louis Atti, CPCU. Atti further remarked “Hopefully, this decision will lead to a swift resolution of our legal challenge.”

“We are pleased the court ruled in favor of our request.” said Big I NY Board Chairman Louis Atti, CPCU. Atti further remarked “Hopefully, this decision will lead to a swift resolution of our legal challenge.” CIC, AAI, CPIA. “This ruling is one small success in a challenge that we hope will bring a huge victory for agents and their clients.”[IA]

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[ GUEST OPINION ]

The New Normal in Claims Management Random No Longer Rules: Premonition Analytics and the New Normal in Claims Management uIn just a few short years, big data and analytics have fundamentally shifted the way claims departments litigate claims. How are these technologies changing how experts assess risk in the courtroom? In the movies, plucky heroes are forever setting off to solicit the aid of mysterious wizards. Muttering arcane language and appealing to strange powers no mere mortal could hope to understand, the magician makes the situation either better or worse, taking the end result out of the hands of the poor sods who asked for their assistance. Until recently, a claims professional probably experienced a similar mixture of hope and helplessness. Lawyers are often seen as the keepers of “secret knowledge.” Yet numerous studies have shown them to be little better than random at predicting the outcome of a given case. The outcome of cases worth millions, too, often come down to a coin toss. Today, it’s common practice for claims managers to consult data scientists as part of their risk assessment process. Litigation analytics firms help insurers determine when it’s most practical to settle a claim or to proceed to court by identifying red flags based on historical trends. It’s telling that few managers will even hire a lawyer without knowing their courtroom win/loss record; a metric that would’ve been virtually impossible to verify even five years ago. So, how did we get here? And why? Moneyball for Law The science of predictive analytics comes down to isolating reliable bellwether metrics within a given data set. If you can find a factor that is regularly correlated with a given outcome, whether or not you understand why that correlation exists, you’re on your way to cracking the code. 20 April 15, 2019 / INSURANCE ADVOCATE

Insurance claims represent a huge share of the litigation occupying America’s courthouses, and the outcome of a given case can have existential consequences for brokerages.

For many years, the $437 billion USD legal services sector was one of the few holdouts in a marketplace that has otherwise been thoroughly disrupted by data-driven efficiencies, price-matching tools and online reviews. Litigation was thought to have too many variables for effective predictive modeling, but a few firms, like Bloomberg, LexisNexis and Thompson Reuters, questioned the conventional wisdom and began to develop products. Legal analytics researchers eventually isolated the following key predictors for case outcomes: • Jurisdiction/Court Location • Case Type • Attorney Win/Loss Record • Attorney-Judge Relationship What they found was that, while the

particulars of each case indeed varied widely, the respective track records of the lawyers assigned to the case were the strongest predictor of future results. They looked at not only their overall win/loss records but also how well they fared in the case type at hand in the jurisdiction where the case is to be decided and in front of the judge overseeing the case. In general, the more historical data an AI has to analyze, the more accurate its predictions will be. Collecting this data proved to be no small challenge, as there is no central repository for court records in the United States (let alone globally). A Miami-based InsurTech firm, Premonition, was the first to come up with a winning and scalable solution for the insurance industry. By scraping millions upon millions of cases from online databases at the federal and state court levels, they were able to generate the largest litigation data repository ever assembled, fueling further breakthroughs in the field. A Seismic Shift The insurance industry has been the major beneficiary of these innovations. Insurance claims represent a huge share of the litigation occupying America’s courthouses, and the outcome of a given case can have existential consequences for brokerages. Insurers have, by and large, long been early adopters of new technologies, as they seek to maximize their margins by all means available. Adding technologies that allow managers to exert more control over the claims process once it moves into the legal system adds a degree of security that the industry has never known before. While some advocates have noted that the costs of these analytics platforms are prohibitive for claimants, thereby granting an even greater advantage to insurers in court proceedings, there’s no way to put the genie back in the bottle. It remains to be seen how profoundly litigation analytics will change the balance of power in the industry, but it’s already clear there is a new normal in insurance.[IA]

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[ LEGAL UPDATE ]

SARI GABAY, ESQ.

Liability Insurance and Gun Control u Imagine if gun owners in New York are legally required to carry liability insurance? Well, the New York State Senate seeks to impose this requirement by way of Senate Bill S2857A. In fact, if implemented into law, gun owners would be required to purchase one million dollars of liability insurance, and to continuously maintain such insurance, to cover any damage resulting from the use of such firearm. This would amend the insurance law by adding a new “Section 2353.” The Justification set forth in the Bill is that “Injury and death by gun has increasingly become a problem in U.S. and in New York State. In the wake of recent mass shooting incidents in Aurora, Colorado and Newtown, Connecticut; there has been a nationwide attention on gun control and public safety.” The Justification cites to certain FBI Crime Report data. Proponents of the Bill posit that the required insurance policies would protect innocent victims of gun-related accidents and violence who would be compensated for the medical care for their injuries. It is also believed that the gun ownership liability insurance policy will serve as an incentive for owners to implement certain safety measures and to take extra precaution with respect to use of gunds. Some critics of the Bill deem the insurance requirement to be an unfair “tax” on honest gun owners, that will affect those in low income households, and an interference on the Second Amendment Right, under the U.S. Constitution, “to keep and bear arms.” While on its face, this Bill may be designed to protect innocent victims of gun accidents, it fails to address the fact that not all owners of firearms that result in harm to victims, possess them lawfully. Thus, while negligent acts may be covered by a law-abiding citizen who who has a gun permit and purchases the required insurance, willful acts, such as mass shootings, would not be covered 22 April 15, 2019 / INSURANCE ADVOCATE

In fact, if implemented into law, gun owners would be required to purchase one million dollars of liability insurance, and to continuously maintain such insurance, to cover any damage resulting from the use of such firearm.

where the possessor of the firearm does not lawfully own it and/or comply with the insurance requirement, which, at $1 million, may be insufficient to address all injuries. Notably, there are few express exemptions in the Bill though it specifically exempts police officers and active members of the military from its application. The Bill attempts to address the scenario of who is deemed the “owner” and therefore responsible if a fire arm is lost or stolen, and provides that it is the registered owner’s responsibility until reported to the police. The Bill’s penalties include the immediate revocation of an owner’s gun license for failure to maintain such insurance. Will this punishment increase public safety? Only time will tell but the Bill is a step towards gun control and the protection of those who are harmed by the use or misuse of guns. As of March 28, 2019, the Bill is in the Senate Committee, Insurance Committee, thus, there is certainly more to come. This is against the backdrop of the New York State Department of Financial Services’ (“DFS”) recent $7 million Consent Order entered into with a broker who sold the NRA’s “Carry Guard” insurance program in New York. The Carry Guard program provides liability insurance to NRA members for firearm-related accidents and for legal costs in self-defense cases. DFS contended that the Carry Guard Program

Sari Gabay is a go-to insurance regulatory lawyer representing insurance agents, brokers and public adjusters in Department of Financial Services’ investigations, complaints, and hearings and in relicensing applications. She represents sellers and purchasers of insurance agencies and other businesses. Sari also reviews and interprets insurance policies and advises homeowners, venues, and other policyholders in insurance coverage disputes, in addition to her general law practice. Sari is a frequent speaker and author on issues in the insurance industry, and most recently spoke on October 3, 2018 on DFS’ Regulation 208 and the ensuing Article 78 proceeding. Sari is also among PIA’s Circle of Consultants.

is illegal because it gives liability protection to gun owners for acts where there was “intentional wrongdoing” and was violative of New York Insurance Law. Significantly, Senate Bill S2857A, specifically contemplates liability insurance protection for “willful” acts.[IA]

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BARRY Z ALMA

Ignoring an Administrative Order is Expensive 1011 Fake Claims Results in more than $500,000 Penalty When a chiropractor is caught billing insurers for services not performed he should never fail to appear to defend himself at an administrative hearing. Of course, if he or she has no defense delay is possible but dangerous. In The Matter Of Proceedings By The Commissioner Of Banking And Insurance, State Of New Jersey To Fine Charles Boas Pursuant To The New Jersey Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30, Docket No. A-2223-17T2, Superior Court of New Jersey Appellate Division (February 22, 2019) Charles Boas appealed from New Jersey Department of Banking and Insurance (Department) orders directing that he pay $500,000 in civil and administrative penalties for his submission of 1011 fraudulent insurance claims, a $1000 statutory insurance fraud surcharge, $53,384.52 in restitution and $3459 in attorneys’ fees, and denying his motion for reconsideration. Boas is a licensed chiropractor in the State of New Jersey. In April 2014, Boas pleaded guilty to third-degree health care claims fraud and was sentenced in July 2014 to a two-year term of probation. The Order To Show Cause The order to show cause alleged that from 2003 to 2007 Boas submitted claims for insurance payments to Horizon for chiropractic services he did not provide. The Department served, and Boas received, the order to show cause in September 2014. The Department again served Boas with the order to show cause in December 2014, and at that time informed Boas that if he did not respond within seven days, his right to a hearing would be deemed waived and the Commissioner would dispose of the matter. Boas failed to respond to the order to show cause. 24 April 15, 2019 / INSURANCE ADVOCATE

Boas’s Motion to Vacate the Final Order Four months later, in March 2016, Boas filed a motion to vacate the final order. In support of the motion, Boas submitted a certification asserting that upon his receipt of the order to show cause on September 26, 2014, he called the attorney who represented him in the criminal proceeding, forwarded the order to show cause to the attorney by telefax, and was assured by the attorney that he “would handle the matter.” Boas also certified that he received the December 2014 “second notice” concerning the order to show cause and forwarded it by telefax to the attorney. Boas’s certification offered the conclusory assertion that he “had a clear defense to this case.” He did not identify the putative defense or provide any facts supporting a defense to the allegations contained in the order to show cause. In a detailed and comprehensive November 7, 2016 written order, the Commissioner denied Boas’s motion to vacate the final order. The Commissioner determined that a default judgment will not be disturbed unless the failure to answer or otherwise appear and defend was excusable under the circumstances and unless the defendant has a meritorious defense, either to the cause of action itself, or to the quantum of damages. The Commissioner noted that in his motion to vacate the final order, Boas did not challenge the penalties imposed and failed to present any evidence establishing a meritorious defense to the charges in the order to show cause. The Commissioner further determined Boas did not establish excusable neglect for his failure to timely respond to the order to show cause because he did not indicate when his purported conversations with the attorney occurred or what “assurances” the attor-

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 51 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. Mr. Zalma’s books are available as Kindle books or paperbacks at Amazon. com and can be reached at http:// zalma.com/zalma-books/ Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/ bzalma on Facebook at https://www. facebook.com/barry.zalma and you can follow him on Twitter at https:// twitter.com/bzalma. His blog, Zalma on Insurance is available at http://zalma.com/blog and his videoblog, Zalma’s Insurance 101 is available at http://www.zalma.com/ videoblog/

ney provided, the $2000 check to the attorney is dated eight months after Boas received the December 2014 second notice concerning the order to show cause. Analysis An appellate court may not upset an agency’s final quasi-judicial decision absent a clear showing that it is arbitrary, capricious, or unreasonable, or that it lacks fair support in the record.

[ ON MY RADAR ] The appellate court will only review discipline to determine whether the punishment is so disproportionate to the offense, in the light of all of the circumstances, as to be shocking to one’s sense of fairness. Courts are required to take care not to substitute their own views of whether a particular penalty is correct for those of the body charged with making that decision. Boas did not provide any facts supporting a meritorious defense to the allegations in the order to show cause other than a conclusory assertion that he had a “clear defense.” Boas argued the Commissioner’s denial of his motion to vacate the final judgment was arbitrary, capricious and unreasonable and lacks support in the record. Generally, a defendant seeking to reopen a default judgment must show that the neglect to answer was excusable under the circumstances and that he has a meritorious defense. There is an abuse of discretion when a decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis. To prevail on a motion to vacate a judgment a party is compelled to prove the existence of a meritorious defense because it would create a rather anomalous situation if a judgment were to be vacated on the ground of excusable neglect, only to discover later that the defendant had no meritorious defense. A court is required to examine defendant’s proposed defense to determine its merit. The record presented to the Commissioner on Boas’s motion to vacate the final order was bereft of any evidence supporting a meritorious defense to the allegations in the order to show cause. Indeed, Boas’s certification demonstrates his putative attorney’s alleged assurances could not be reasonably relied upon to ensure that a response to the order to show cause was, or would be, filed. Boas certified that he sent the September 2014 order to show cause to the attorney and received assurances the attorney would “handle” the matter, but in December 2014 Boas was served with the order to show cause again with a notice that if he did not respond in seven days, CONTINUED ON PAGE 29

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[ COURTSIDE ]

LAWRENCE N. RO GAK

Plaintiff’s 2001 Judgment Gets Paid with Compound Interest Despite 14 Year Delay in Enforcement B.Z. Chiropractic, P.C. v Allstate Ins. Co. Edited by Lawrence N. Rogak In this declaratory judgment action arising out of a No-Fault suit, the Court rules that plaintiff ’s delay of 14 years in enforcing a judgment it obtained in 2001 does not toll the accumulation of interest at 2% per month, compounded, as per the Insurance Department regulations in effect at that time. Nor does the interest rate change as a result of reducing the order to a judgment.Thus, a judgment in the amount of $8,847.49 entered in 2001 is now worth $227,060.57.—LNR

The portion of Petitioner’s Petition seeking to turn over monies from its bank account maintained outside of New York State with Bank of America, N.A. in such sum as is sufficient to satisfy the judgment is denied in its entirety as Bank of America, N.A. is not a party to this action as required by CPLR §5225(b).

u The instant action arises out of an action filed in the Civil Court of the City of New York, Queens County, entitled B.Z. Chiropractic, P.C. a/a/o Tony Dance v. Allstate Insurance Company, Index No. 70935/00, which sought to recover first party No-Fault benefits for services rendered to defendant’s insured by plaintiff. Plaintiff was granted summary judgment in that action and on November 15, 2001, the Clerk of the Court entered judgment in favor of the plaintiff in the amount of $8,847.49. Plaintiff did not attempt to enforce said judgment until 2015, at which time defendant moved for a protective order and modification of the judgment pursuant to CPLR 5240. At that time, the amount of the judgment had grown to $227,060.57 ($8,847.49 plus 2% per month interest, compounded from November 15, 2001 through August 11, 2015). In an Order, dated November 16, 2015, the Civil Court found that plaintiff unreasonably allowed the compound interest to accrue and stayed said interest for the period of November 1, 2005 through June 19, 2015, the date that

defendant received the plaintiff ’s collections letter. Respondent issued checks in the amount of $22,999.70 in accordance with that decision and sought a satisfaction of judgment, moving by Order to Show Cause to compel same. Said motion was granted on July 7, 2016. Plaintiff appealed and on August 18, 2017, the Appellate Term, consolidated both appeals and reversed the lower court’s decision, finding that contrary to defendant’s assertions, plaintiff did not prevent defendant from timely paying the judgment. The Appellate Term added in an advisory capacity that the postjudgment rate of interest should be calculated pursuant to CPLR 5004 and not at the 2% per month rate provided for in 11 NYCRR 65-3.9(a). Thereafter, B.Z. Chiropractic moved before the Appellate Term seeking clarification of said decision or, in the alternative, for leave to appeal to the Appellate Division. The Appellate Term clarified that it was the Court’s intention to note that interest be awarded at the rate of 9% per year as in CPLR 5004, but that

28 April 15, 2019 / INSURANCE ADVOCATE

Lawrence N. (“Larry”) Rogak has been practicing insurance law since 1981. He has defended over 23,000 lawsuits and arbitrations and has represented over 75 different insurance companies and self-insured corporations. Lawrence N. Rogak LLC is listed in Best’s Recommended Insurance Attorneys, a distinction that requires written recommendations from at least 12 insurance carriers. A 1981 graduate of Brooklyn Law School, Mr. Rogak has published more books and articles on insurance law than any other New York attorney in the field.

same is advisory and not appealable as of right or by permission. The portion of Petitioner’s Petition seeking to turn over monies from its bank account maintained outside of New York State with Bank of America, N.A. in such sum as is sufficient to satisfy the judgment is denied in its entirety as Bank of America, N.A. is not a party to this action as required by CPLR §5225(b). The portion of Petitioner’s Petition seeking a declaratory judgment on the proper interest rate which accrues on first party no-fault benefits after the entry of judgment is decided as follows: Pursuant to CPLR §5004, interest shall be at the rate of nine per centum per annum, except where otherwise provided by statute. Pursuant to 11 NYCRR 65-3.9(a), All overdue mandatory and additional personal injury protection benefits due an applicant or assignee shall bear interest at a rate of two percent per month, calculated on a pro-rata basis using a 30-day month. At the time that the underlying claims were filed, said interest accrued at a compound rate. It is well settled that “with respect to interest on first party benefits due un-

[ COURTSIDE ] der the no-fault statute,...the Insurance Law supersedes the provisions for interest contained in CPLR 5002, 5003 and 5004 (Gov’t Emp. Ins. Co. v. Lombino, 57 AD2d 957, 394 N.Y.S.2d 898 [1977]) The policies of encouraging prompt payment of claims and reducing litigation outweigh limits on interest found elsewhere. The interest rate on No-Fault actions is intentionally punitive, with severe penalties in order to encourage prompt adjustment of claims. As such, the rate of interest is not reduced simply because the claim has been reduced to a judgment. While such claims remain overdue, they accrue interest at two percent per month. As such, plaintiff is entitled to a declaratory judgment recognizing same. Comment: As an interesting side note, this case had gone up to the Appellate Term, which had ruled that post-judgment interest should accrue at the statutory rate of 9%, not the “no fault” rate of 24%, but stated that this was an “advisory” opinion only. Supreme Court declined to follow it.[IA] 2019 NY Slip Op 50241(U) Decided on February 25, 2019 Supreme Court, Queens County Love, J.

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the Commissioner would dispose of the matter. Thus, Boas knew in December 2014 that his putative attorney’s alleged assurances were not true, but his certification offered no explanation why he thereafter assumed the same attorney would actually file a response to the order to show cause or why he took no steps to ensure the attorney did so. The Commissioner’s findings support his determination that Boas failed to demonstrate excusable neglect for his failure to respond to the order to show cause. Mere carelessness or lack of proper diligence on the part on an attorney is ordinarily not sufficient to entitle his clients to relief from an adverse judgment in a civil action. Here, Boas’s supporting certification did not demonstrate any meritorious defenses to the order to show cause and, as the Commissioner found, Boas failed to provide sufficient details concerning his actions, and those of his putative attorney, to demonstrate a mistake compatible with due diligence. Boas failed to demonstrate the Commissioner’s findings and decision denying the motion to vacate were made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis. Given the substantial deference the court must afford an agency’s choice of remedy or sanction and all of the circumstances found by the Commissioner in the final order. The penalty imposed for Boas’s 1011 violations of the Act occurring over a four-year period, was not so disproportionate to the offense as to be shocking to one’s sense of fairness. The order was affirmed.

As well as potentially re-opening the long-term care market, the policies could simultaneously help the market reverse the downward trend in life insurance. Evidence suggests that one of the main barriers for uptake of life insurance among today’s customers is the lack of flexibility and control associated with traditional products. By addressing this, hybrid policies promise to turn two problems into a new and untapped market for the sector.

ZALMA OPINION Boas, a convicted felon, who pleaded guilty to having billed insurers for 1011 services never performed only to be given probation failed to deal with the administrative proceeding. As a result of his sloth, perhaps encouraged by a charitable sentence after his conviction, finds himself obligated to pay the state more than $500,000, an almost adequate punishment for such a major fraud, who should have spent time in prison.[IA]

As the history of the aviation industry teaches us, hyper-engineering is the best form of reassurance.

As a result of all these favourable factors, hybrid policies are on the up, with over 260,000 such policies sold last year. However there is still a long way to - uptake has been delayed and stymied by an understandable scepticism on the part of the industry, still reeling from the impact of the earlier miscalculations and erroneous assumptions that continue to cause losses today. While firms are beginning to warm to the opportunities afforded by the new approach, skepticism still lingers. If the long-term care market is to enjoy a hybrid revival and avoid the mistakes of history, carriers will need to ensure that the design of such products is right, and certainly more robust and well-founded than those of the previous era of stand-alone life insurance products. As the history of the aviation industry teaches us, hyper-engineering is the best form of reassurance. Given the nascent stage the new product is at, getting it right requires a specific set of underwriting skills, a granular understanding of the pricing and risk modelling involved, a deep expertise in area of mortality rates, and new reinsurance structures to support risk transfer. For those that can get it right, the rewards will be significant.[IA] INSURANCE ADVOCATE / April 15, 2019 29

[ GUEST OPINION ]

MARILYN M. SINGLETON, M.D., J.D.

Doctor Robot for You, Real Doctor for Me uA couple of years ago, computer programs, algorithms, and glorified Google searches were touted as the replacements for a physician’s analysis of a patient’s medical condition. Compressed medical research is quite useful for clinicians who are presented with novel situations and have no readily available colleagues with whom to discuss the case. However, the purpose of flow charts should not be to replace the brains of busy clinicians or, worse yet, be a cookbook for the practitioners at drugstore clinics. Medical technological aids have now jumped the shark. An unbelievable, but—thanks to cell phone video—verifiably true news report detailed how a robot rolled into a patient’s Intensive Care Unit cubicle and a physician’s talking head appeared on the robot’s “face” and told the patient the sad news that he had a terminal illness. While remote medicine is reasonable in rural areas where access to medical care is limited, telling a patient he is going to die from a TV screen is a crime against all medical ethical principles. We can certainly expect more medicine by proxy as larger corporations and the government take more control of our medical care. The patient becomes secondary to the goal of “value-based care” or some other medically meaningless metric developed by government bureaucrats to give the appearance of managing costs. It is highly unlikely that the ruling class (aka legislators) or elitist wannabes (aka limousine liberals) would tolerate a robot doctor. And neither should we. Thankfully, people are waking up to the incremental erosion of their freedoms. and they are using the free market to find ways around being treated like mindless cattle. In California, where there is a 3-month wait for an appointment at the Department of Motor Vehicles (DMV), for a modest fee a pri30 April 15, 2019 / INSURANCE ADVOCATE

Thankfully, people are waking up to the incremental erosion of their freedoms. and they are using the free market to find ways around being treated like mindless cattle.

vate company will get you an appointment in two weeks. For a little more moola, they’ll have a surrogate stand in line in your stead. Almost on cue, our fearless leaders put forth a bill to outlaw the service because it is “unfair.” What is unfair is a monopolistic government service that holds working people hostage to its incompetence. DMV style medicine is gradually supplanting individualized care. Clinicians are sharing reports of chronic pain patients being harmed by government one-size-fits-all guidelines pulled together in an effort to stem the tide of opioid abuse. Health Professionals for Patients in Pain, a large group of prominent academic and private physicians, have urged action on this issue. In a letter to the Centers for Disease Control and Prevention (CDC) and relevant House and Senate Committees the group advised that “patients not only have endured unnecessary suffering, but some have turned to suicide or illicit substance use” or had their conditions deteriorate. It would be disastrous to even more patients if this paint-by-the-numbers approach to our medical care were expanded. If—as the Medicare for All bills propose—all private insurance is outlawed and the government is the sole arbiter of our medical care, what are average people to do? Stay behind the electrified fence and chew their cud? At a time when depression and suicide are increasing at an alarming rate,

Dr. Singleton is a board-certified anesthesiologist. She is also a Boardof-Directors member and Presidentelect of the Association of American Physicians and Surgeons (AAPS). She graduated from Stanford and earned her MD at UCSF Medical School. Dr. Singleton completed 2 years of Surgery residency at UCSF, then her Anesthesia residency at Harvard’s Beth Israel Hospital. While still working in the operating room, she attended UC Berkeley Law School, focusing on constitutional law and administrative law. She interned at the National Health Law Project and practiced insurance and health law. She teaches classes in the recognition of elder abuse and constitutional law for non-lawyers.

the personal touch is more crucial than ever. If you want to ensure that your doctor treats you like an individual, run – don’t walk to a direct-pay or a direct primary care (DPC) practice. For a monthly fee from $10 to $140 based on age, you can receive all basic medical services, lab tests and medications at amazingly low prices. Best of all, you will have an empathetic and humane doctor who has the time to be thorough and whose face is not buried in a computer screen full of metrics and centralized standards. The patient-physician relationship is the most effective part of doctoring. National Doctors’ Day was on March 30th. Make it mean something: just say no to cattle prods and robots.[IA]

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