Insurance Advocate July 23, 2018 by C Acunto

Volume 129 Number 12 | July 23, 2018

Independent Agentsâ&#x20AC;&#x2122; Digital Tech Use Growing, Yet Big Gaps Remain

Volume 129 Number 12 | July 23, 2018

12 I ndependent Agents’ Digital Tech Use Growing...

Contents

4 Foreword: Coming Soon... Steve Acunto, Publisher 6

On the Level: Retaining Your Agency’s Most Important Asset N. Stephen Ruchman

Guest Article: Five Benefits of Private Placement Life Insurance Jon Corrigan

11 MSO: Blast Communication Can Backfire Sue C. Quimby 14

Insurance Digital Transformation Survey

24 HR Update: When Employees Have to be Paid for Off-the-Clock Cell Phone Use Alfred T. DeMaria 26 Guest Article: PIA: What if the NFIP is Not Renewed? Bradford J. Lachut, Esq. 28 On My Radar: Spousal Abuse Can Never Be an Accident Barry Zalma 22

Looking Back: August 10, 1968

32 Courtside: Insurer Must Prove not Only that Insured Lied About her Address, but Also that it Would not Have Written the Policy Lawrence Rogak info@insurance-advocate.com www.insurance-advocate.com

34 Guest Article: Create Your Own Healthcare “System” Marilyn M. Singleton, M.D., J.D. M.D., J.D. INSURANCE ADVOCATE / July 23, 2018 3

[ FOREWORD ]

STEVE ACUNTO

Coming Soon... u“Coming soon to a theater near you....” California Governor Jerry Brown signed into law the strongest online privacy law in the country, the California Consumer Privacy Act of 2018. It may alter the way Silicon Valley does business. The law ensures the following rights: • The right to know the categories and specific pieces of personal information collected from consumers, the categories of sources from which the personal information is collected and the business purpose for collecting or sharing the personal information. • The right to know whether personal information is sold or disclosed and the categories of third parties with whom personal information is shared. • The right to object to the sale of personal information. • The right to access personal information, including the right to request the deletion of personal information, subject to certain exceptions. • The right to equal service and price, even when exercising privacy rights. Companies are allowed, however, to charge consumers different prices or provide different levels of services, if those differences are directly related to the value provided to the consumer by the consumer’s data. Additionally, companies can offer financial incentives for the collection/sale/deletion of personal information. The California Consumer Privacy Act does not go into effect until January 1, 2020, and changes are anticipated as major tech companies and business-interest groups will likely lobby to further dilute the bill. The California legislature is also expected to pass “cleanup bills” to make any necessary corrections to the law over the next 18 months, and, there is a possibility that federal privacy legislation will be enacted that would preempt this California law. Therefore, the law that comes into force in 2020 may be different from the bill that was just passed, but the point has been made right in the back yard of Silicon Valley. It is marquee type legislation from that – positively and negatively – innovative state. Copycats sure to follow.… Patrick Kerney, an 11-season NFL star who played defensive end for the Falcons and the Seahawks, has traded in his shoulder pads for a calculator and has opened an insurance agency on Greenwich, CT. When he saw his career coming to a close, he began looking at options for business and alit upon the MBA program at Columbia and then the two-time Pro Bowl player discovered the world of risk transfer, writing his agency’s first policy in January. Full service agency in one of the USA’d wealthiest enclaves, it’s bound to be a success. Good luck, Patrick.… The New York State Department of Motor Vehicles has launched a REAL ID public awareness campaign and urged New Yorkers to get a REAL ID now. According to the federal REAL ID Act, those wishing to fly within the U.S. using their New York Stateissued license or ID card will need a REAL ID or Enhanced Driver License (EDL) starting October 1, 2020. DMV encourages everyone who is renewing or obtaining a license or non-driver ID for the first time to get a REAL ID. For more information about REAL ID and Enhanced Driver Licenses, visit dmv.ny.gov/REALID. A full list of identification accepted for travel by the Transportation Security Administration can be found here: https://www.tsa.gov/travel/security-screening/identification.SA 4 July 23, 2018 / INSURANCE ADVOCATE

S I N C E

1 8 8 9

VOLUME 129 NUMBER 12 JULY 23, 2018

EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Jamie Deapo Alfred T. DeMaria Kelly Donahue-Piro Christopher Paradiso Lawrence N. Rogak N. Stephen Ruchman 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, x111 circulation@cinn.com PUBLISHED BY CINN Global Initiatives P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 613-1595 www.cinn.com | info@cinn.com President and CEO Steve Acunto

CINN MEDIA, INC.

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, fax 914-613-1595, 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 2018. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Office.

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[ ON THE LEVEL ]

N. STEPHEN RUCHMAN, CPIA

Retaining Your Agency’s Most Important Asset uThe U.S. Labor Department issued a press release this month that’s getting a lot of attention: It said the Bureau of Labor statistics recorded a leveling off of hires and separations for the month of June, 2018. While employment openings seemed to have slowed down, unemployment is up slightly. The reason for this, experts say, is that people are quitting their jobs at a higher rate—in fact, the highest rate since April, 2001. These figures reflect a strong job market, as well as optimism by workers who are seeing more employers willing to grow their workforce. Agencies should be concerned. Hiring and maintaining good staff is not a new challenge in our industry, and it won’t be getting easier any time soon. We have lamented for years how difficult it is to entice people to join the insurance industry; now, we are facing an uphill battle to keep them once they are here. There is good news: Once a job seeker tries insurance, they realize what I have written about many times: Insurance is a great career. There are opportunities for any type of personality, from the introverted analytical person to the mushy extrovert. I have enjoyed the entrepreneurial aspect of owning my own business and knowing that what I do helps people; allows them to sleep at night; and it provides them solace during the toughest times in their lives. The compensation has been good, and I had the opportunity to build a staff of great people who I loved working with every day. I truly enjoyed working at my office, and my employees were like family to me. We need to keep promoting the message that insurance is a great career. But, we agency principals also need to remember that the most important asset to our business is its people. Our clients work with us because they trust us; because they talk to a real person when they call our office; because they can hear in the true concern and com6 July 23, 2018 / INSURANCE ADVOCATE

Our clients work with us because they trust us; because they talk to a real person when they call our office; because they can hear in the true concern and compassion for their well-being in our

Ruchman is a retired independent agent and founder of Ruchman Associates Inc., the agency he started in 1961. A past president of PIANY, he is an active supporter of the association, and he has sat on or chaired nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. Reached him at nsruchman@gmail.com.

receptionists’ and CSRs’ voices. passion for their well-being in our receptionists’ and CSRs’ voices. We are successful beyond the funny commercials and cute mascots that direct writers use because our agencies reflect the friends, families and communities we serve. Our employees are the only thing that can do that. Not an agency management system; not a computer; not a 15-minute quote … So, what can we do to retain our best employees? First, we can be explicit about how much we value them. Make a point of talking to your staff; Use compassion when you speak with them and tell them they are valuable to you and your clients. They need to talk, and they need to know their employer cares and respects them. When I look back at the time I was an agency principal, the memories I value the most are when I shared truly personal moments with my staff. I’ve written previously about my assistant Roberta—she, and others in my office, made going to work every day a joy. The tears we shared over each other’s trials were real, mutually beneficial and what we both valued most about the agency. Time off is a benefit cited over and over again, particularly with regard to Millennials, but for anyone who has a family. People appreciate when you recognize that they have lives. I know of agencies that close early prior to a holiday or early on Fridays during the

summer. How much business gets done at this time? Perhaps it’s worth closing your doors to maintain a culture of appreciation. I know an agency that is a class outfit. Last month, the agency principal called a staff meeting about the Fourth of July, which happened to fall on a Wednesday this year. The principal explained that, while the agency had to be opened for the week, he wanted to ensure that staff had time to spend with their families. He gave them the option of choosing to take Monday and Tuesday or Thursday and Friday off. Employees were responsible for making sure there was coverage for each other when their colleagues took off. This did two things: It demonstrated that the agency cared about its employee’s personal lives, and it demonstrated confidence in their dedication to their jobs and their ability to work out their responsibilities. Another way to demonstrate appreciation to your staff is by recognizing birthdays, work anniversaries and other landmark events for the individuals you employ. One agency I know sends new employees flowers when they hire them: Talk about a great way to start a positive relationship. Sending your staff a token of congratulations or appreciation is a small investment in making sure the relationship lasts. I know many agencies demonstrate to their staff that they consider them CONTINUED ON PAGE 10

[ GUEST ARTICLE ]

JON CORRIGAN

Five Benefits of Private Placement Life Insurance & Why it’s a Hot Commodity for the Ultra-Rich uPrivate Placement Life Insurance & Annuity programs, commonly referred to as PPLI, have quickly become a favorite strategy among ultra-wealthy investors seeking greater tax efficiency within investment vehicles. It allows policy holders to combine the strength of premium investment products, like hedge funds or other alternatives, with the tax-free benefits of life insurance. “This is a sexy product that people get excited about owning and tell their friends about,” Aaron Hodari, Managing Director at Schechter, recently told Bloomberg. “It’s an alternative investment that allows you to invest in hedge funds and defer or eliminate taxes.” It’s estimated that clients put $3 billion into Private Placement products last year alone, with Lombard International, a Luxembourg and

“It’s an alternative investment

Jon Corrigan is a content marketing specialist for Schechter in Birmingham, MI. He assists in the development of communications to the media, the public, Schechter’s advisors, clients and strategic partners.

that allows you to invest in hedge funds and defer or eliminate taxes.” Philadelphia-based wealth manager bought by Blackstone LP in 2014, attracting most of that business; but they aren’t the only players. Wealth managers like Lombard rely on firms with complex insurance expertise to handle the structure of the life insurance strategy. Hodari estimates investors have put upwards of $18 billion into similar funds along with other insurance products for the wealthy like Private Placement annuity contracts.

WHAT SPECIFIC BENEFITS DOES PRIVATE PLACEMENT LIFE INSURANCE OFFER?

So, what specifically is drawing people to Private Placement Life Insurance & Annuity programs? They offer an array of benefits to investors, including: 1. O wn tax-inefficient assets in a tax-efficient structure Private Placement Life Insurance & Annuity programs provide ownership of tax-inefficient hedge funds and other alternative investments in a tax-efficient structure. The owner trades incurring short and long-term capital gain taxation for annual insurance and annuity charges – amounting to significant tax savings. 2. Death benefit proceeds can pass to beneficiaries tax free Section 7702 of the United States Internal Revenue Code defines how life insurance contracts are taxed. Death benefit proceeds are received income tax-free to the policy beneficiaries. The cash value in life insurance contracts grows on a tax-deferred basis – and if structured properly, both the investment cost basis and gains can be accessed income tax-free. 3. No surrender charges Unlike retail life insurance and annuity structures, there are no contractual surrender charges. The contract’s cash value can be accessed when needed, CONTINUED ON PAGE 10

8 July 23, 2018 / INSURANCE ADVOCATE

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GUEST ARTICLE CONTINUED FROM PAGE 8

subject to the liquidity constraints of the underlying investments. 4. Exposure to a variety of alternative money managers, strategies, and asset classes Private Placement Life Insurance & Annuity contracts have emerged as an attractive medium for exposure to traditionally high-tax, income-producing alternative asset classes. Both life insurance and annuity structures offer tax advantages – accomplishing temporary or permanent tax-deferral. 5. Transparent pricing structure Transparent pricing structure is the concept of telling the client the total fee including the manager and do diligence fee, trading fee, and the custodian fee added to Schechter’s fee, compared to other firms that only tell the client their fee and nothing else.

ON THE LEVEL CONTINUED FROM PAGE 6

professionals by providing them with continuing education. And, while licensing is a benefit to both the agency and the individual, what about encouraging them to join associations in their fields? Ask any PIA volunteer director: The benefit of participation in PIA to their agency is a hundred times their investment. But, perhaps your staff would benefit from joining PIA’s Young Insurance Professionals organization or a local marketing group or toastmasters club. There are endless organizations at which employees can build their skills, which helps cement loyalty and benefits your agency. How important is the attire your staff wears? Many organizations have “dress for the day” policies, in which staff is allowed to dress down or casually. Allowing their comfort and discretion in choosing their attire says, “I trust you and I want you to be happy here.” Speaking of being happy, many agency employees hold certain causes close to their hearts. Allowing them time to volunteer at local charities can instill deep satisfaction, and it has the added benefit of strengthening commu10 July 23, 2018 / INSURANCE ADVOCATE

WHO IS AN IDEAL CANDIDATE FOR PRIVATE PLACEMENT LIFE INSURANCE?

There’s no way to sugarcoat it, you have to be exceptionally wealthy to play in the Private Placement world. Accredited investors or qualified purchasers are required to contribute a minimum of $2 million into a Private Placement Life Insurance policy to set it up. However, you get what you pay for. With a properly structured private placement policy, clients are able to capture returns without the high tax implications typically associated with hedge fund investments. This equals healthy wealth accumulation for a client’s lifetime, to preserve for their heirs, and for charitable contributions, if they so choose. These returns can be accessed taxfree in two ways:

nity relations and raising awareness for your agency. Another idea to demonstrate you value your staff is closing your office and throwing them an employee appreciation event. Some agencies invite their staff ’s families for picnics or bring in a caterer on slow summer Fridays. The cost of these gestures is small when you consider how important your staff is to your agency. Consider in contrast, the cost of losing institutional knowledge, finding and training new staff. Of course compensation is going to be a factor. But, report after report affirms that it’s not all about the Benjamins. Inc. magazine is just one publication that repeatedly has said pay raises and bonuses can’t keep salespeople and other staff happy.1 “It’s well-known that monetary incentives do little to motivate people,” Inc. magazine printed on July 10, 2018. “Research shows that pay raises won›t turn your employees into productivity machines. In fact, giving creative people bonuses demotivates them and leads to poorer performance.” Inc. magazine pointed to a recent survey conducted by Businessolver, 2 which found that 60 percent of employees would take a pay cut to work for an

1. W ithdrawing up to the investment in the contract 2. Borrowing funds from the policy Funds that are left within the policy for life will never be subject to income taxes and heirs will receive the funds as an income-tax-free death benefit.[IA] About Schechter: Schechter is a boutique, third-generation wealth advisory and financial services firm, and has worked in the Private Placement environment since 2003. For 79 years, Schechter has quietly advised wealthy families on financial matters including: institutional-quality investment advisory services, private capital and alternative investments, advanced life insurance planning, income and estate taxes, business succession and charitable planning.

“empathic organization.” That’s one that provides supportive emotional connections, positive relationships, meaning and purpose. The survey found that employees value certain displays of empathy by their employers more than pay. These include: Offering flexible hours and work schedules to promote work-life balance; understanding the need to take time off for family matters and caregiving; creating a climate to talk about challenges; and recognizing achievements and milestones. I believe, if you look at Millennials entering the workforce, you will find that they value these things even more than older cohorts. Point made. Your employees are your agency’s most important asset. You make a living by reminding people to protect their assets. Don’t forget to do the same for your business. Nowdays, it’s more important than ever. [IA] Footnotes: 1. Inc. magazine, July 10, 2018 https://www.inc. com/melody-wilding/what-your-employeeswant-more-than-money.html 2. https://www.businessolver.com/who-we-are/ news/businessolver-quantifies-empathy-inthe-workplace-#gref

ADVERTORIAL

Blast Communication Can Backfire By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE - Assistant Vice President/Media Editor

ADVANCEMENTS in technology have changed the way companies communicate with their clients and potential clients. Blast communication—via fax, phone call or text message—enables a company to get their message to many people or companies at the same time. However, sending communication that is unsolicited or unwanted may be a violation of federal regulations, and can result in significant penalties and fines. Such violations may not be covered in standard insurance policies. Helping clients understand the possible negative consequences of blast communication is another value-added service of the professional insurance agent. According to the Federal Communications Commission (FCC), there are two criteria that must be met in order to legally send a fax. First, there must be an established business relationship between the parties. Second, the fax number must have been obtained either directly from the intended recipient, or from publically available advertisements, websites, etc., and the intended recipient must not have indicated they do not accept unsolicited faxes. In addition, there must be a no cost means for the recipient to opt out of future communication, such as an 800 number, local phone number or website, included in the fax (www.fcc.gov). Similar rules apply to robocalls, or those made by autodialer, where no human intervention is involved. Companies must have prior written consent, and not just an established business relationship, in order to robocall a home or cell phone. An opt out option is required. The caller must provide their name, the company they are representing, as well as the company’s address. The Telephone Consumer Protection Act (TCPA) was enacted in 1991 to protect consumers from unwanted solicitations via phone call, fax or text. The FCC is charged with creating the rules and regulations for its implementation. Violations of the TCPA can incur se-

Businesses that use these marketing tools should carefully review their procedures to ensure compliance with TCPA and other regulations. vere penalties and fines, including up to $1,500 per phone call. The insurance industry response has been to specifically exclude TCPA violations from coverage under standard general liability insurance policies. While courts have generally upheld these exclusions, the same cannot always be said for other types of policies, such as Directors’ and Officers’. Some courts have denied coverage based on invasion of privacy exclusions in such policies (Los Angeles Lakers vs Federal Insurance Company, April 2015) (www. financierworldwide.com). A number of class action suits have been filed against companies alleging violations of the TCPA. It is interesting to note that determinations of coverage or

no coverage are fairly evenly split. Some companies have settled cases rather than incur the expenses and publicity of a trial. In 2017, in the case of Boise vs ACE American Insurance Company, the company agreed to a $9.8 million settlement, but did not admit to any wrongdoing. There were 107,000 claims filed that ACE American had improperly called people on the Do-Not-Call-Registry (https:// gryphoncompliance.com). Coverage for sending unsolicited faxes may or may not be covered under a company’s Directors’ and Officers’ (D&O) or Errors and Omissions (E&O) policies. Courts have been mixed in their coverage determinations. Exclusions that come into play include invasion of privacy. The LA Clippers sent unwanted faxes that courts determined to be an invasion of privacy, and therefore excluded under the D&O policy. (LAC Basketball Club vs Federal Insurance Company, 2014) (www.finan cierworldwide.com). When used correctly, blast communication can be an effective and efficient marketing tool. Incorrect use can be costly. Businesses that use these marketing tools should carefully review their procedures to ensure compliance with TCPA and other regulations. Employee training is another key tool to avoid TCPA violations and suits. A thorough review of the business’s insurance coverage is always recommended. Helping clients understand the potential benefits and pitfalls of blast communication is another sign of the true insurance professional.

139 Harristown Road, Suite 100 Glen Rock, NJ 07452 (800) 935-6900 www.msonet.com INSURANCE ADVOCATE / July 23, 2018 11

Independent Agentsâ&#x20AC;&#x2122; Digital Tech Use Growing, Yet Big Gaps Remain 12 Juky 23, 2018 / INSURANCE ADVOCATE

uIndependent insurance agents have made important advances in awareness and use of digital technologies to improve the customer acquisition and service experience in the last two years, according to the Insurance Digital Revolution’s second Insurance Digital Transformation Survey. Today, the majority of agents, 95 percent, say that digital technologies are important or very important to their success, a substantial increase from the 58 percent who responded similarly in 2016. The Insurance Digital Revolution, an industry initiative organized by IIABA’s Agents Council for Technology (ACT), Associations & User Groups Information Exchange (AUGIE) and the PIA to drive adoption of digital technology, published the second installment of this survey to measure the industry’s use of digital tools and compare changes in digital adoption over time. Agents are embracing the use of digital technologies to improve the customer experience. Historically, they have spent more time focusing on tools that improve internal workflow and less on customer-facing technologies. That is changing: 67 percent of agents offer e-signature today, which is up from 54 percent in 2016. Also agents have improved their quoting capabilities, with 41 percent of agents offering this function, double the percentage of respondents from 2016 (20%). Moreover, agents are increasing their use of web-based portals to allow customers to request policy changes, check policy information and payments, report claims, obtain insurance ID cards, and get insurance certificates. Thirty-nine percent of agents provide portals today, up from 23 percent in 2016. “Insurance is a complex product and the majority of customers want a relationship with their insurance professional, helping them through the process and handling their unique needs. This is where independent agents still hold the advantage over other options, like insurtechs and direct writers. But agents can’t stand still. They need to embrace digital tools that will enhance that relationship,” said Mike Becker, CEO of PIA. “The results of the survey are encouraging. But there is still work to be done. Only a small percentage of agents are using on-demand service tools such as mobile apps, live chat and even 24x7 service. Tools like these can further enhance the agencies’ customer acquisition and service capabilities to stay ahead of the competition.” The survey also showed that agents believe carriers can help increase adoption of digital tools. Overall, 55 percent of agents say there are more ways carriers can support their digital initiatives, including more download, especially commercial lines and commission statements, assist in training staff, and support for e-signature. There is also significant room for improvement in the tools carriers have developed for customers and agencies to use. Only four percent of agents said carriers’ customer facing technology is excellent, while 49 percent rated the carrier technology average. For agencies, the productivity benefits of some tools are only realized if most or all carriers offer them, such as claims download, and eDocs and Messages. Currently fewer than half of agencies use claims download (47%) and eDocs and Messages (35%). If more carriers offered these capabilities, the number of agencies would grow. Cal Durland, CPCU, Director of AUGIE states, “Communication between carriers and agents is crucial. A number of carriers do not currently provide claims and eDocs and Messages download. This in addition to quality policy

download provides the independent agency with more data and additional workflow efficiency. AUGIE continues to encourage agents to contact their carrier partners, ask them to offer this connectivity, and explain how this not only improves their agency’s workflow and their collective client’s experience, but also saves the carrier time and money.” The increase use of digital tools leads to an increased risk of cyber security threats including hacking of information, or loss of data due to malware. But many agencies do not understand their risks and are not taking appropriate action to protect themselves.

“While it is important that independent agents continue to adopt digital technologies, they need to be aware of and protect their businesses from the risks....”

More than half of agencies (62%) said they are concerned about cyber threats, but they do not have a good understanding about specifically what those cyber risks are, and what to do about them. Only 37 percent have a written security plan in place. In addition, only 37 percent hold cybersecurity training for employees at least once a year. Less than a quarter (24%) perform annual penetration and vulnerability scans, and only seven percent test their staff ’s resistance to phishing campaigns and virus-laden emails. Despite this lack of protection more than half of respondents (55%) rate their cybersecurity protection as either good or excellent. Ron Berg, Executive Director of ACT stated, “While it is important that independent agents continue to adopt digital technologies, they need to be aware of and protect their businesses from the risks. In this day and age, becoming a victim of a cyber attack is a question of when, not if. When a situation occurs, having a cyber plan in place can minimize the impact. For many agencies the first line of defense should be your employees. With adequate training they can detect suspicious emails or risky downloads and stop them – closing one of the most common doors hackers use to infiltrate systems.” The Insurance Digital Revolution (IDR) is an industry advocacy and communications initiative to accelerate adoption of digital technologies that enable independent insurance agents to improve customer satisfaction, grow business, and increase profitability. Organized by IIABA’s Agents Council for Technology (ACT), ACORD User Groups Information Exchange (AUGIE) and the PIA, IDR is focused on acting as an information hub with resources to accelerate technology adoption, generating awareness of new tools, providing a roadmap for implementation, and growing usage of existing solutions. The Insurance Digital Transformation Survey was conducted electronically among agents in the United States between January and February of 2018. Overall, 1,970 independent agents responded to the survey. A similar survey was conducted in March and April of 2016. An edited version of the report follows.[IA] INSURANCE ADVOCATE / July 23, 2018 13

14 July 23, 2018 / INSURANCE ADVOCATE

INSURANCE ADVOCATE / July 23, 2018 15

HOW AGENTS VIEW DIGITAL TECHNOLOGY More agents are realizing the importance of digital to their futures. But to this point many agencies have been more focused on leveraging technology for internal workflowsâ&#x20AC;&#x201D;most likely driven by the capabilities of their management systemsâ&#x20AC;&#x201D;than concentrating on customer-focused applications. But that is changing, as agents recognize the need to embrace digital more quickly to stay competitive.

Agents that say digital technologies are important or very important

2018 2016

www.insurancedigitalrevolution.org 16 July 23, 2018 / INSURANCE ADVOCATE

95%

29%

have advanced or highly advanced digital capabilities for their clients.

51%

have advanced or highly advanced digital capabilities for internal workflow.

65%

expect to make incremental improvements in their digital capabilities in 2018.

22%

expect to make significant improvements in their digital capabilities in 2018.

58%

The Insurance Digital Transformation Survey

Page 4

WHAT STOPS AGENTS FROM MOVING FASTER? The insurance industry has been typically slow-to-move in adopting new technologies. There are a variety of challenges, including the complexity of the products, regulations, and dynamics of the agent-carrier relationships. But beyond those umbrella issues, agents cite a variety of obstacles when it comes to adopting new solutions—issues that are applicable to many small businesses today. Agencies don’t stand alone. Carriers and agents can partner to bring better experiences to customers, a fact that agencies were clear to acknowledge in the survey.

Biggest Barriers to Using Digital Technology

59%

cost

55% educating team 48% time 43% new workflow WHAT

Agent View of Carrier Technology

of agents say carriers’ customer facing technology is excellent.

49%

say carrier technology is average.

55%

of agents say there are more ways carriers can support their digital initiatives, including more download, especially commercial lines and commission statements, assistance in training staff, and support for e-signature.

AGENTS SAY:

“Carriers need to embrace efficient rating and binding tools. It’s ridiculous in the current age that it takes so long to quote current risks.”

“We need a better understanding of how to implement prospecting tools within our agency management systems.”

“The technology capabilities are actually advanced—we need new workflows and monitoring to ensure we’re making the most of the technology”

“We would love to be able to integrate carrier billing into our customer portal, so clients don’t have to go to both our site and the carriers’ sites.”

www.insurancedigitalrevolution.org

The Insurance Digital Transformation Survey

Page 5

INSURANCE ADVOCATE / July 23, 2018 17

FOCUSING ON MARKETING AND POINT-OF-SALE There are encouraging signs that agencies today are making it easier for customers to do business with them, demonstrated by significant increases in the use of digital tools, like e-signature and web quoting. But there are also significant gaps. Agencies still donâ&#x20AC;&#x2122;t consider their web sites up to par, a view that has not changed since the 2016 survey. And more than three-quarters of agents surveyed do not have any mobile applications.

Agents Offering E-Signature

Agent Web Sites & Social Media

rate their web sites as excellent.

2018

67%

2016

54% 36% rate their web sites as average.

Agents Offering Web Quoting

20% 2016

2018

41%

www.insurancedigitalrevolution.org 18 July 23, 2018 / INSURANCE ADVOCATE

33% say their web sites are good. *******************

57% get leads from their web sites. 74%

use social media, specifically Facebook and LinkedIn.

getting leads from social 39% are media.

76%

******************* of agencies do not provide any mobile applications for prospects or customers.

The Insurance Digital Transformation Survey

Page 6

CREATING AN EXCELLENT CUSTOMER SERVICE EXPERIENCE Despite an increase in the use of customer portals, agents have a longer way to go to using digital technologies to improve the customer service experience. Few agencies are providing mobile applications or offering 24X7 service, and fewer still report using even basic service solutions, such as live chat.

Agencies Offering Customer Portals

39%

2018

23%

2016

19%

provide at lease one mobile application.

18%

provide 24X7 service for their customers.

Customers can request policy changes, check policy information and payments, report claims and get insurance certificates. ******************

Agencies Offering Claims on Portal

12% 2016

2018

19%

www.insurancedigitalrevolution.org

have live chat capabilities.

The Insurance Digital Transformation Survey

Page 7

INSURANCE ADVOCATE / July 23, 2018 19

SOLVING THE INTERNAL EFFICIENCY CHALLENGE

Agents have been very focused on leveraging technology and processes to become more efficient. These include everything from agency management systems to CRM and lead management. They have made solid progress to date, but many say theyâ&#x20AC;&#x2122;d get even more benefits if more carriers would participate in available industry solutions. And there are real opportunities for agents to expand their use of cloud and CRM.

23% are satisfied or highly satisfied with their current methods of managing the pipeline.

43% rate their ability to manage leads as good or excellent.

53% are using the cloud-based version of their agency management systems.

33% of agencies have upgraded their management systems in the last year for greater capabilities, cost efficiencies and greater security.

www.insurancedigitalrevolution.org 20 July 23, 2018 / INSURANCE ADVOCATE

35% 79%

of agencies are using eDocs and Messages for DEC pages, underwriting memos, and billing information.

say that eDocs and Messages have improved internal efficiencies. ********************

Agencies that Use Claims Download

2018 2016

47% 40%

Theyâ&#x20AC;&#x2122;re using claims download to stay aware of customer claims and provide support.

The Insurance Digital Transformation Survey

Page 8

A DISCONNECT WHEN IT COMES TO CYBERSECUIRTY Agents are concerned about security, but there is a disconnect between the level of concern and taking action to make their information safer. More than half of agencies say they are concerned about cyber threats, yet they don’t have a good understanding about what those cyber risks are, and what to do about them. Only 37% of agencies have a written security plan in place and hold training for employees on security and cyber issues at least once a year. Even fewer perform penetration and vulnerability scans annually. Therefore, it’s surprising that nearly half of agencies rate their protection against cyber threats as good.

45%

of agencies rate cybersecurity protection as good.

62%

of agencies are concerned or very concerned about cybersecurity.

52%

say they don’t have a good understanding of cyber threats and what to do about them.

37%

have a written security plan in place. These plans are a requirement by the GrammLeach-Bliley Act and the NAIC Model Laws.

cybersecurity training for 37% hold employees at least once a year.

10%

say their cybersecurity protection is excellent.

www.insurancedigitalrevolution.org

annual penetration and 24% perform vulnerability scans.

The Insurance Digital Transformation Survey

Page 10

INSURANCE ADVOCATE / July 23, 2018 21

THE GOOD NEWS

THE OPPORTUNTIES

Almost 100% of agents recognize that digital technology is critical to their businesses.

There is significant room to improve web sitesâ&#x20AC;&#x201D;only 7% of agents say their sites are excellent.

Use of e-signature has increased 13 percentage points since 2016.

Only 19% of agencies provide mobile applications for customers and prospects.

The number of agencies enabling quoting from their web sites has increase 21 percentage points since 2016. Agents providing customer portals has increased 16 percentage points since 2016. Agents enabling customers to enter claims via portal has increase 7 percentage points in two years.

www.insurancedigitalrevolution.org 22 July 23, 2018 / INSURANCE ADVOCATE

Only 18% offer 24X7 customer service. Just 7% provide live chat. 19% allow customers to enter their claims on a portal. Just 10% say their cybersecurity programs are excellent, and 37% have written plans and conduct training.

The Insurance Digital Transformation Survey

Page 11

WHAT IS THE

INSURANCE DIGITAL REVOLUTION? The Insurance Digital Revolution is an industry advocacy and communications initiative to accelerate adoption of digital technologies that enable independent insurance agents to improve customer satisfaction, grow business and increase profitability. In this role, IDR is focused on: acting as an information hub, sharing new ideas and data, bringing a variety of industry organizations and their resources together. providing one place where participants can find the right information and resources to accelerate their own technology adoption.

OUR SPONSORS GOLD Applied Systems Smart Harbor

SILVER Applied Client Network The Cincinnati Insurance Companies ITC Liberty Mutual Insurance

generating awareness and excitement for the power of implementing new technologies.

NetVU

providing independent agents with clear information and roadmaps to implement digital technologies and become automated agencies.

BRONZE

Safeco Insurance

Xanatek

growing usage of existing solutions, including real time and download, e-docs, messages, e-signature, single sign-on and other technologies. insurancedigitalrevolution.org

www.insurancedigitalrevolution.org

The Insurance Digital Transformation Survey

Page 13

INSURANCE ADVOCATE / July 23, 2018 23

[ HR UPDATE ]

When Employees Have to be Paid for Off-TheClock Cell Phone Use uIt is almost universal that mobile device habits bleed into work. More and more, answering a quick email, text or phone call outside of the workplace by nonexempt employees has blurred the lines of what is and what is not considered “compensable hours worked.” Many employers are reluctant to face this thorny issue of work performed on electronic devices outside of employees’ regularly scheduled shift hoping not to create a problem where one (seemingly) does not exist. However, a cottage industry has recently grown which focuses on suing employers on behalf of nonexempt employees in a class action for failure to compensate for more than isolated, infrequent, minor, offtheclock smart phone work.

WHEN CAN AN EMPLOYER BE FOUND LIABLE?

When an employer has actual or constructive knowledge (that is, may not have known but SHOULD have) that the work is performed, overtime compensation must be paid (assuming the employee has already worked forty hours in that payroll week). Basically, employers must pay for all, but trivial work that they know about, even if they did not ask for the work, even if they did not want the work done and even if they had a rule against doing the work! Knowledge is pinned on the employer where, through reasonable diligence, is “should have known” that work was being performed. In the case of emails and texts received by the employer, it would be extremely difficult to deny knowledge of offtheclock work. The issue of liability for work being done away from the office is not only not going to go away, but will certainly proliferate as an increasing number of nonexempt employees conduct work remotely on cell phones. As all employers can expect to see an increase in the number of these type of claims, here are some helpful tips. 24 July 23, 2018 / INSURANCE ADVOCATE

Knowledge is pinned on the employer where, through reasonable diligence, is “should have known” that work was being performed. HELPFUL TIPS TO AVOID LIABILITY

• If practical for your company, allow smart phone use only for exempt employees (who are not entitled to overtime) and restrict the availability of mobile devices for nonexempt employees). • Establish time reporting policies by clearly promulgating a comprehensive, written policy regarding the use of smart phones including processes for employees to report any unpaid time. • H ave employees regularly review their daily and weekly hours worked to confirm that they’re reporting and, thus, compensated for all hours worked. • B e sure that managers did not develop an “unwritten policy” discouraging employees from reporting their offtheclock time. The presence of a process for reporting unpaid time will not shield the employer from liability if employees are discouraged from supervisors and managers from doing so.

CONCLUSION

Technology has changed American workplaces and lawsuits revolving around smart phone use and other offtheclock computer work will no doubt continue to proliferate. The best way to avoid or minimize these claims is to be proactive and address this thorny issue before you find yourself defending a wage and hour lawsuit.[IA]

Alfred T. DeMaria is a Senior Partner at Clifton Budd & DeMaria, LLP. He is recognized as one of the preeminent management labor attorneys in the field of combating union organizational campaigns. In addition, he has extensive experience in all areas of employment law including the negotiation of collective bargaining agreements in public education and the maritime, aerospace, airline, hospital and health care industries. Mr. DeMaria has conducted the annual Commerce and Industry Association seminar on White Collar Organizing, and has designed and conducted two of the country’s leading unionfree courses, “Maintaining UnionFree Status” and “How to Decertify a Union.” His handbooks, Maintaining Non-Union Status and Silence Is Not Golden, have been widely used in management in critical in union organizing campaigns for over twenty years. In addition, Mr. DeMaria has written a primer on labor relations entitled “Labor Law”; a manual for recapturing non-union status, The Process of Decertification; a leading management resource for defeating union organizing, How Management Wins Union Organizing Campaigns; and Combating the Resurgence of Organized Labor, a modern guide to union prevention and coordinates with the in-house video training program, Super Worker can keep union free, an award winning industrial training program. Prior to his work at Clifton Budd & DeMaria, LLP, he served as an attorney with the National Labor Relations Board.

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[ GUEST ARTICLE ]

PIA: What if the NFIP is Not Renewed?

BY B RADFORD J. LACHUT, ESQ., PIA MANAGEMENT SERVICES’ DIRECTOR OF GOVERNMENT & INDUSTRY AFFAIRS

uThe U.S. Senate successfully passed an extension of the National Flood Insurance Program on June 29. The extension, which was passed as an amendment attached to larger farming bill, would extend the program for six months. While this may seem like good news, there are several issues that could prevent this extension from being signed into law. Differences between the farm bill that passed the Senate and the version that passed the House, including the extension of the NFIP, will require the conference committee to convene between the House and the Senate. The conference committee will debate the differences of the two bills, and produce one uniform bill. It is unknown whether this will occur prior to July 31, the expiration date of the NFIP. If the NFIP is not reauthorized before July 31, many flood insurance policies may not be written or renewed. What happens then? NEW COVERAGE For requests to increase or begin coverage that are on or before the last day of effective authorization; or if the carrier receives the application and payment within the lapse period and within 10 days of the date of request, the policy or coverage change may be issued and effective on the requested date in accordance with standard rules. If the effective date is before the beginning of the lapse in authorization, and all is received within 10 days of that date, the policy may be issued as long as all other eligibility requirements have been met. However, if the application or request and payment are not received within 10 days of the application request date, the policy or change will not be issued. When a loan closing is involved, if applications or change requests are dated after the lapse, then the policy or change request can’t be issued. If the loan is closing before the lapse in authority and the premium payment is 26 July 23, 2018 / INSURANCE ADVOCATE

For requests to increase or begin coverage that are on or before the last day of effective authorization; or if the carrier receives the application and payment within the lapse period and within 10 days of the date of request, the policy or coverage change may be issued and effective on the requested date in accordance with standard rules. not part of the closing, as long as the application or request and premium are received within 10 days of the closing date, the policy or change may be effective as of the date of the closing. When the premium for the payment is from the escrow account, title company or settlement attorney, then payment must be received within 30 days of the closing date. If the loan closes after the lapse in authority, but the date of coverage was before the lapse period, then payment from the insured is acceptable within 10 days. If payment is from the escrow account or others, payment is acceptable within 30 days of the effective date of the closing. RENEWING COVERAGE Renewals are handled similarly to new coverage. Offers to renew a policy can’t be made during the lapse in authority. If a renewal is offered before the lapse in authority and premium payment is received before 30 days have passed, then the policy may be renewed. The same applies if underpayment was made as long as the difference is made up within 30 days. If payment is received beyond the 30 days, the policy may not be renewed. If the renewal requests increased limits that are within the inflation factors on the bill, the next higher Preferred Risk Property or a newly mapped limit, it is

processed the same way as policies with premiums received within or after the 30-day grace period, whichever applies. If the renewal requests a higher limit than the inflation factor, PRP or newly mapped limit, the amount above the existing coverage amount must be handled as if it were a new policy or a request to increase coverage, as stated earlier. Endorsements that increase coverage are also handled the same as new policies or requests to increase coverage. Endorsements not increasing coverage are handled using existing NFIP rules, and policies may be assigned during the lapse. Cancellations may be handled normally. EXPIRATION DATES Policies that are in force before midnight of the last effective day of authorization will remain in effect until their expiration date. Any claims filed will be handled as usual. If a policy is in force after the last day of authorization, claims on those policies are also handled as usual. If a claim occurs under a policy that was not issued due to a lapse, it can still be investigated under a reservation-of-rights letter or a non-waiver agreement, up to the point of payment. However, payment will not be made if the NFIP is not reauthorized. If the NFIP is reauthorized retroactively, then the policy will be issued and the claim paid as appropriate. If the reauthorization is not retroactive and the NFIP is authorized with a lapse, policies without a waiting period (which are the loan closings) would become effective the date of the reauthorization. Policies with a 30-day waiting period would become effective 30 days after the date of reauthorization. When reauthorization is not retroactive to the first day of the lapse, policies with a one-day waiting period become effective one day after the effective date of the reauthorization. The NFIP makes a number of recommendations to carriers while the program is lapsed. All premiums for changes or policies effective on or after the first day of the lapse should be held in abeyance, as should applications. Because the acceptance of applications and premiums gives the impression that a contract is in force, carriers should advise applicants in writing that insurance is unavailable by law and pending reauthorization.[IA]

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[ ON MY RADAR ]

BARRY Z ALMA

Spousal Abuse Can Never Be an Accident There is no Right to Beat Your Girlfriend and Get Defense from your Insurer u People are known to do stupid things. Insurance is designed to protect the insured against his or her negligence or stupid conduct. People who drink alcohol to excess and intentionally get drunk almost certainly do stupid things because of the intentional act of getting drunk. Insurance is, by definition, not available for intentional conduct that causes bodily injury to another. In D.G. v. B.E.A. v. Harleysville Insurance Company of New Jersey and Hanover Insurance Company, Docket No. A-3527-15T3, Superior Court Of New Jersey Appellate Division (March 29, 2018) Defendant/third-party plaintiff B.E.A. sought coverage and a defense under a homeowner’s policy issued by third-party defendant Harleysville Insurance Company (Harleysville) for a claim for bodily injuries inflicted on his girlfriend, plaintiff D.G., during a domestic violence incident. The trial court granted summary judgment to Harleysville.

FACTS

Plaintiff and defendant began dating in 2009. They had no history of domestic violence or physical abuse until the morning of July 11, 2013. The day before, they went to a casino/hotel in Atlantic City for the weekend to gamble. Defendant consumed alcohol during the day and into the next morning. He was extremely intoxicated when he returned to the parties’ hotel room at approximately 3:30 a.m. and viciously assaulted plaintiff. He threw her against a wall and choked and strangled her to the point she almost lost consciousness and thought she was going to die. He also threw her through a doorway, slammed her head into an air conditioning grate leaving a dent, blocked the door as she crawled away in an attempt to escape, and kneed and kicked her in the head and shoulders. 28 July 23, 2018 / INSURANCE ADVOCATE

Harleysville disclaimed coverage and a defense, stating the assault was not accidental in nature and thus did not meet the definition of “occurrence” covered under the policy. Harleysville also disclaimed coverage based on the policy exclusion.

The police arrested defendant for “domestic assault” and issued a supplemental domestic violence offense report. Defendant was charged with simple assault, Plaintiff obtained an indefinite temporary restraining order against defendant after his repeated attempts to communicate with her after the assault. Plaintiff sustained injuries to her head, neck, throat, left knee, legs, and arms. She has permanent injuries to her vocal cords and ankle, including an approximately two-inch scar on her ankle, and suffers from post-traumatic stress disorder. She filed a complaint against defendant in the Law Division, which defendant eventually settled for $250,000.

THE POLICY

Defendant sought coverage and a defense under his homeowner’s policy. The policy provided as follows: The policy defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period in: . . . ‘bodily injury[,]’” and defined “bodily injury” as “bodily harm, sickness or

Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness 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 founded Zalma Insurance Consultants in 2001 and serves as its only consultant. Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www. nationalunderwriter.com/ZalmaLi brary. The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide. The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http://shop.americanbar.org/eBus/ Store/ProductDetails.aspx?produc tId=214624, or 800-285-2221 which is presently available. Legal Disclaimer: The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

[ ON MY RADAR ] disease, including required care, loss of services and death that results.” The policy did not define the term “accident.” The policy excluded coverage for bodily injury “which is expected or intended by one or more ‘insureds’ even if the ‘bodily injury’ . . . (1) [i]s of a different kind, quality or degree than expected or intended; or (2) [i]s sustained by a different person or entity than expected or intended.”

CLAIM REJECTED

ANALYSIS

Defendant did not dispute he physically assaulted plaintiff or that this was an act of domestic violence. Rather, he claimed he was extremely intoxicated, had no recollection of what happened in the hotel room, and did not intentionally or knowingly cause plaintiff bodily harm. Harleysville countered that defendant’s violent assault of plaintiff was not an accident under the policy, but rather, a particularly reprehensible act of domestic violence where intent to injure is presumed and insurance coverage is denied. The motion judge agreed. It held that when actions are particularly reprehensible, the intent to injure can be presumed from the act without an inquiry into the actor’s subjective intent to injure. Grabbing a female by the neck and strangling that person and then smashing her head against an air conditioning unit would result, obviously, in nothing other than bodily injury. Defendant claims he did not intentionally or knowingly injure plaintiff, and given his mental state – his intoxication – his actions were not expected or intended to cause plaintiff injury so as to apply the policy exclusion. He admits he assaulted plaintiff and this was an act of domestic violence. The issue before the appellate court is whether defendant’s act of domestic violence

The result in this case was obvious. What surprised me was the unmitigated gall on the part of the batterer to sue the insurer and take such an obvious case up on appeal. I was also surprised that the court took the case seriously enough to render a lengthy and detailed analysis of the issues. was a particularly reprehensible act supporting a finding of presumed intent to injure plaintiff. The New Jersey Supreme Court has applied an objective approach in the assault and battery context to determine the insured’s intent to injure. As a general rule, then, policy exclusions of the type at issue here represent enforceable limitations to an insurance contract when free of ambiguity. Courts ordinarily refrain from summary judgment unless the record undisputedly demonstrates that such injury was an inherently probable consequence of the insured’s conduct. There are occasions where the objective conduct of the actor also determines the actor’s subjective intent to injure. Such is the case where the actor engages in assault and battery. The very nature of the conduct imputes the actor’s subjective intent to cause some injury to the victim. Where, as here, the plaintiff claims no more than the type of injuries that are inherently probable from such conduct there is no need to inquire into defendant’s subjective intent. Allowing spouse abusers insurance coverage for their intentional abuse, whether it be physical or emotional, would contravene the public policy clearly enunciated by the New Jersey Supreme Court, and the intent of the Legislature in its enactment of the Prevention of Domestic Abuse Act. Clearly, coverage for spousal abuse, in any form, would encourage those who are disposed to commit such reprehensible acts to inflict injury upon their spouses with impunity, knowing that their insurance companies will indem-

nify them for the money damages recovered by their spouses if only they can convince some jury that they did not intend or expect bodily harm to flow from their conduct. Spousal abuse in any form is so inherently injurious. That it can never be an accident, and therefore, as a matter of public policy and logic to the end that the intent to injure is presumed from the performance of the act. In a civilized society, the New Jersey court concluded “wife-beating is, self-evidently, neither a marital privilege nor an act of simple domestic negligence.” Neither is any other intentional tort by which one spouse victimizes the other. Insurance coverage for such torts are not available as a matter of public policy. Although there was only one incident of domestic violence here, it was sufficiently egregious to warrant the denial of coverage. Defendant brutally assaulted plaintiff, causing her significant and permanent injuries. Defendant’s conduct was so egregious as to be “particularly reprehensible,” warranting a presumption of intent to injure plaintiff and denial of coverage under the policy exclusion. Defendant’s voluntary intoxication is no defense. Where domestic violence is involved, there is no exception. He intended to get drunk. He admitted his drunkenness was the reason for the violence. the claim of no intent to do harm failed. Regardless of how a claim is framed, if the operative facts constitute an assault and battery, the exclusion applies, and the insurer has no duty to defend.

ZALMA OPINION

www.insurance-advocate.com INSURANCE ADVOCATE / July 23, 2018 29

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INSURANCE ADVOCATE / July 23, 2018 31

[ COURTSIDE ]

LAWRENCE RO GAK

Insurer Must Prove not Only that Insured Lied About her Address, but Also that it Would not Have Written the Policy Maxford, Inc. v Erie Ins. Co. of N.Y. Edited by Lawrence N. Rogak In this No-Fault suit, the insurer moved for summary judgment on the grounds that plaintiff misrepresented her true home address on the insurance application. Civil Court denied the motion. The Appellate Term held that the insurer’s burden is not only to prove that the insured gave a false address, but also that the insurer would not have written the same policy if it knew the true address.—LNR Appeal from an order of the Civil Court of the City of New York, Kings County (Katherine A. Levine, J.), entered March 9, 2016. The order denied defendant’s cross motion for summary judgment dismissing the complaint and, upon, in effect, denying plaintiff ’s motion for summary judgment, made, in effect, CPLR 3212 (g) findings in plaintiff ’s favor. ORDERED that the order, insofar as appealed from, is affirmed, with $25 costs. In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court denied plaintiff ’s motion for summary judgment and defendant’s cross motion for summary judgment dismissing the complaint, and found, pursuant to CPLR 3212 (g), that plaintiff had established that it had mailed the bill to defendant, that the bill was unpaid, and that defendant had timely denied the claim. The court limited the issues for trial to defendant’s basis for denying the claim, to wit, that plaintiff ’s assignor had fraudulently procured the insurance policy by materially misrepresenting her address to obtain a lower insurance premium. Defendant appeals from so much of the order entered March 9, 2016 as denied 32 July 23, 2018 / INSURANCE ADVOCATE

IN THIS ACTION BY A PROVIDER TO RECOVER

ASSIGNED

FIRST-PARTY

NO-FAULT

BENEFITS,

THE

CIVIL

COURT DENIED PLAINTIFF’S MOTION FOR

SUMMARY

JUDGMENT

AND

DEFENDANT’S CROSS MOTION FOR

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.

SUMMARY JUDGMENT DISMISSING THE

COMPLAINT,

AND

FOUND,

PURSUANT TO CPLR 3212 (G), THAT PLAINTIFF HAD ESTABLISHED THAT IT HAD MAILED THE BILL TO DEFENDANT, THAT THE BILL WAS UNPAID, AND THAT DEFENDANT HAD TIMELY DENIED THE CLAIM.

defendant’s cross motion for summary judgment dismissing the complaint and made, in effect, CPLR 3212 (g) findings in plaintiff ’s favor. On appeal, defendant fails to articulate a sufficient basis to strike the Civil Court findings, pursuant to CPLR 3212 (g), in plaintiff ’s favor. Defendant cross-moved on the ground that plaintiff ’s assignor had fraudulently procured the insurance policy in question by making a material misrepresentation on her policy application as to her place of residence and the principal location for the garaging of the vehicle which was to be insured. Upon a review of the record, we find that defendant failed to establish as a matter of law “ ‘that it would not have issued the same policy if the correct information had been disclosed in the application’ ” (Interboro Ins. Co. v Fatmir, 89 AD3d 993, 994 [2011], quoting Schirmer v Penkert, 41 AD3d 688, 691 [2007]; see

Renelique v National Liab. & Fire Ins. Co., 53 Misc 3d 147[A], 2016 NY Slip Op 51615[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016]). Defendant further asserts that plaintiff is collaterally estopped from maintaining the present action by virtue of an order, rendered on default, by the Civil Court, Queens County (Richard G. Latin, J.), in an action against plaintiff ’s assignor, finding that the assignor had made “material and/or fraudulent misrepresentations” on her application for the insurance policy. However, the doctrine of collateral estoppel is not applicable here, as plaintiff was not named in the Civil Court, Queens County, action, and, thus, plaintiff was not in privity with the assignor (see Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481, 486-487 [1979]; Magic Recovery Med. & Surgical Supply Inc. v State Farm Mut. Auto. Ins. Co., 27 Misc 3d 67, 69 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]). In view of the foregoing, we reach no other issue. Accordingly, the order, insofar as appealed from, is affirmed.[IA] 2018 NY Slip Op 51057(U) Decided on June 29, 2018 Appellate Term, Second Department

NEW YORK

PAID FAMILY LEAVE

It’s here!

Bonding

Caring

Military Find out what you need to know:

[ GUEST ARTICLE ]

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

Create Your Own Healthcare “System” uKudos to the folks in D.C. who are advancing alternatives to the Affordable Care Act’s over-regulated and expensive health insurance policies. Small business association health plans and expanding health savings accounts (HSAs) are among several tools to increase health care choices. However, one element in the medical care cost analysis that is rarely addressed is personal responsibility for one’s health. Politicians are reluctant to “blame the victim” (patients) so they criticize the health care “system.” That misses the point: It is not the government’s job to keep us healthy. Estimates of 2016 U.S. health care spending averages $10,345-per-person. Purchasing insurance makes up the bulk of the spending: $3,852 annual insurance premium, $4,358 to meet the deductible, for a total of $8,210. But most of the actual spending on medical care is for 5 percent of the population, mainly for chronic conditions. Eighty-six percent of the nation’s $2.7 trillion annual health care expenditures (2010) were for people with chronic and mental health conditions. It takes more than good luck to maintain good health. Up to 40 percent of lost years of life from each of five leading U.S. causes (heart disease, cancer, chronic lower respiratory diseases, stroke, and unintentional injuries) are preventable according to the Centers for Disease Control and Prevention (CDC). Sadly, opiate use disorder jumped from 52nd on the list in 1990 to 15th in 2016. Research suggests that behaviors, such as smoking, poor diet and over-eating, and lack of exercise are the most important determinants of premature death. Over the last 25 years the percentage of Americans with healthy lifestyles (exercise, good diet, “normal” body fat, non-smoking) has dropped from 6.8 percent to 3 percent. More than two-thirds of all adults and nearly onethird of all children and youth in the United States are either overweight or obese. The CDC reports that 9.3 percent 34 July 23, 2018 / INSURANCE ADVOCATE

Health insurance is necessary for big ticket items like hospitalizations. of Americans have diabetes. Will this problem be solved by expanding government “healthcare” programs? No. In 1965 when Medicare and Medicaid were established, 1.2 percent of Americans had diabetes. This number had doubled by 1975, even with more sources for medical care, and continued to rise at the same rate despite the implementation of the ACA. The American Diabetes Association estimates that in 2017, diabetes and its related complications accounted for $237 billion in direct medical costs — a 26 percent increase from 2012. The price of poor lifestyle choices is staggering. For the years 2009–2012, the costs for direct medical care due to smoking was at least $170 billion. Medical costs linked to obesity were estimated to be from $147 billion to nearly $210 billion per year. Let’s face it. Many Americans have been duped into ignoring responsibility for their own health. With the drug companies’ relentless ads, prescription drugs have become the equivalent of “As Seen on TV” products. These ads send the unstated message that the latest diabetes or lung disease medication will take care of you so you do not have to take care of yourself and possibly avoid these diseases in the first place. It’s no surprise that 70 percent of Americans take at least one prescription medication. And the same government geniuses that permit food stamps to be used at fast food outlets mandates over-priced insurance products that include “free” preventive care. But, of course the highpriced cholesterol medication will cancel that out, right? No sane person would wish a chronic condition on anyone, or deny treatment

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.

for such patients. But preventive health begins at home. Changing behaviors requires someone who connects with patients, will take time to listen and help identify personal motivators for change. This requires a physician who will spend time with you— not a storefront doc-in-the-box. Direct pay practices (DPC) offer quality time, service, and chronic disease management. These physicians are not constrained by insurance companies’ and the government’s paint-bythe-numbers treatments. Health insurance is necessary for big ticket items like hospitalizations. But there is no need to pay thousands for services that will never be used. PreObamaCare high-deductible plans and their out-of-pocket costs were generally offset by lower premiums and employer contributions to health savings accounts. Shifting all our personal responsibilities to the government has not improved our nation’s health. Imagine if the $1,000 spent on designer coffee or manicures were spent on foods and a non-sedentary activities that improved health.[IA]

EXCELLENCE An essentiall component to our continued d success at Hamond d is the experience and knowledge of our staff.

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Group Members are not just another policyholder.

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*Service fee on subsequent renewals and on returning members continues at our usual 20%. Underwritten by the New York State Insurance Fund

Expect big things in workers’ compensation. Most classes approved, nationwide. It pays to get a quote from Applied.® For information call (877) 234-4450 or visit auw.com/us. Follow us at bigdoghq.com. ©2018 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best. Insurance plans protected U.S. Patent No. 7,908,157.