Insurance Advocate June 10, 2019 by C Acunto

Vol. 130 No. 11 | June 10, 2019

Big I Confab Targets Five Key “Takeaways” for New York Agents Pictured above L-R: John Cofini, Big I NY Chair of the Board; Lisa Lounsbury, Big I NY President & CEO; Lou Atti, Outgoing Big I NY Chair of the Board

Pictured L-R: Ellen Melchionni, president, NYIA; Laura Evangelista, executive deputy superintendent of insurance, NYSDFS; NYIA Chair Elizabeth Heck, president and CEO, GNY Mutual Insurance Company

NYIA ANNUAL MEETING RECAP

PAGE 8

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Vol. 130 No. 11 | June 10, 2019

Contents

12 FIVE TAKEAWAYS FROM GO BIG 2019 4 Foreword: Mills Appointed; Lacewell Ties in New Staff Steve Acunto, Publisher 6

On the Level: Why Belong? Jamie Deapo

8 In the Associations: NYIA Annual Conference 22 In the Associations: Harris to Receive Professional Agent of the Year from PIANJ PIANJ Honors Capone as Company Person of the Year

PIANJ to Give Starr Community Service Award

24 On My Radar: Why is it not Obvious that a Motocross Raceway is Not a Home? Barry Zalma 26 Looking Back: April 30, 1994

28 Courtside: In de novo Proceeding, Attorney Fees are Fixed by Court, Not Regulation 68 Lawrence N. Rogak 29 Guest Opinion: Free Medical Care: A Deal With the Devil? Marilyn M. Singleton, M.D., J.D. info@insurance-advocate.com www.insurance-advocate.com

30 Legal Update: Commingling of Funds Sari Gabay, Esq. INSURANCE ADVOCATE / June 10, 2019 3

[ FOREWORD ]

STEVE ACUNTO, EDITOR & PUBLISHER

Mills Appointed; Lacewell Ties in New Staff

ongratulations to hard hitting Howard Mills as The Doctors Company, the nation’s largest physician-owned medical malpractice insurer, announces his appointment to its Board of Governors. Howard is the former global insurance regulatory leader of Deloitte, who served as superintendent of the New York State Insurance Department (now known as the Department of Financial Services) and was a leader at the National Association of Insurance Commissioners and the International Association of Insurance Supervisors, as a member of the presidential Financial and Banking Information Infrastructure Committee, and as co-chair of the International Commission on Holocaust Era Insurance Claims. He serves on the Board of Directors of the Insurance Federation of New York, as a trustee of the Griffith Insurance Education Foundation, and as a member of the International Insurance Society. He has testified before Congress on matters impacting the insurance industry and served three terms in the New York State Assembly, including a term as deputy minority leader. His expertise in state, federal, and international insurance regulation will boost the Company, for sure and put what he learned at Marist College (BA), American University (MA) and Mansfield College, Oxford to good use…. Acting Department of Financial Services (DFS) Superintendent Linda A. Lacewell has announced new appointments to DFS’s Executive staff. Wendy Erdly has been appointed Chief of Staff for the New York State Department of Financial Services. Ms. Erdly was most recently Special Counsel for Ethics, Risk, and Compliance for the New York State Liquor Howard Mills Authority, Department of Agriculture and Markets and the Roosevelt Island Operating Corporation. Prior to her Special Counsel appointment, Ms. Erdly was counsel to many companies through Axiom Legal, including United Technologies, Unilever, and Kraft. She served as a Litigation Associate at Bernstein, Litowitz Berger & Grossman LLP and at Dewey & LeBoeuf LLP. Ms. Erdly was named one of the “Best Under 40” lawyers by the National LGBT Law Association and holds a J.D. from Vanderbilt University Law School and a B.A. from Lafayette College. Sumit Sud has been appointed Special Counsel to the Superintendent of Financial Services. Sumit was most recently Deputy Chief Special Counsel for Ethics, Risk and Compliance across dozens of state agencies and directly covered the Department of Labor and the New York State Insurance Fund. Prior, Mr. Sud served as Linda A. Lacewell Senior Counsel at the New York City Law Department for almost ten years where he also served on the New York City Law Department Diversity Committee. He holds a J.D. from Case Western Reserve University in Ohio and a B.S. from the University of Washington, Seattle.

4 June 10, 2019 / INSURANCE ADVOCATE

Gareth Rhodes has been appointed Special Assistant to the Superintendent of Financial Services, where he will be working on crossagency initiatives that implicate policy, law, communications, and intergovernmental issues, and other special projects. Mr. Rhodes most recently earned a J.D. at Harvard Law School, during which he served as a law clerk on the U.S. Senate Judiciary Committee and interned for Judge F. Dennis Saylor IV on the U.S. District Court for Massachusetts. Prior, Mr. Rhodes served as Deputy Press Secretary to Governor Cuomo as part of his five-year tenure in the Executive Chamber. Mr. Rhodes holds a B.A. from The City College of New York (CUNY), where he was a recipient of a Harry S. Truman Scholarship and served as a White House intern. Shaunik R. Panse has been appointed Special Counsel for Ethics, Risk and Compliance for the New York State Department of Financial Services. Prior to this appointment, Mr. Panse was an Associate at Sullivan & Cromwell LLP, with a focus on internal investigations, criminal defense, complex civil litigation, and cross-border regulatory and enforcement matters. In that role, he completed a secondment to a global financial institution where he advised on anti-money laundering, sanctions, compliance, and data privacy issues arising from investigations conducted by an independent compliance monitor across multiple jurisdictions in the Americas, Europe, and the Middle East. Previously, Mr. Panse served as a law clerk to the Honorable James L. Cott of the United States District Court for the Southern District of New York, and a foreign law clerk to the Honorable Justice Johann van der Westhuizen of the Constitutional Court of South Africa in Johannesburg. Mr. Panse serves as a reserve attorney in the Judge Advocate General’s Corps of the United States Air Force at the rank of Captain. He holds a J.D. from the University of Virginia School of Law and a B.A. from Tufts University, and has completed coursework at The London School of Economics. Raquel Gonzalez has been appointed Deputy Chief of Staff and Chief Diversity and Inclusion Officer for the Department of Financial Services. Prior to this appointment, Ms. Gonzalez was Deputy Commissioner for Administration at the Department of Civil Service and Director of Policy at the Department of Agriculture and Markets. Previously, she served in various roles as a Presidential appointee during the Obama Administration in executive offices at four federal agencies and the White House. Ms. Gonzalez is on the Board of Directors of the New Yok State Academy for Public Administration. She is also a 40 Under 40 Rising Latino Star in NY and a New Leaders Council Capital District Fellow. Ms. Gonzalez holds a M.S. and a B.A. from George Mason University and an M.A. from the Mediterranean Academy of Diplomatic Studies. Cheyenne Aguayo has been appointed Director of Scheduling for the Superintendent of Financial Services. Cheyenne was formerly an assistant in the Governor’s Office and previously served as Deputy Director of Constituent Services and Director of Scheduling for the New York City Council. Insurance Advocate wishes them all the best.

S I N C E

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VOLUME 130 NUMBER 11 JUNE 10, 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 gmb@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 / June 10, 2019 5

[ ON THE LEVEL ]

JAMIE DEAPO

Why Belong? uAs I celebrate 20 years with Big I New York I have been reflecting on who we are and our mission. Although the name has changed several times over the years we were always known as the Big I and it is great to see that is now how we are officially known. Regardless of how our name has changed we have always believed Independent Insurance Agents serve customers best and we have always been committed to supporting our members in every way possible. Our focus and direction have always been provided by our Board that is made up of active members of our organization In a time when independent agents have so many demands on them we are proud of our commitment and service to agencies of all sizes. In addition to their primary focus of providing advice and coverage to their existing and prospective clients our members are dealing with: • Significant and time consuming regulations and laws. • Increasing technology demands and the cost associated with them.

• A changing competitive landscape including non-traditional competitors. • A shrinking employee pool and inability to attract new, young talent. • Governmental oversight based on perceptions of consumer manipulation for profit. • Developing more sophisticated, specialized, high performing employees. • Evolving consumer demands of speed and price not recognizing the importance of proper protection. • Changes in risk associated with weather related and societal change. We recognize that these issues affect independent agencies of all sizes and we are currently assisting our members with solutions. In the area of regulations, laws and governmental oversight many times we are able to get out in front of the issue either eliminating the problem or at the very minimum modifying it to reduce the impact it will have on members.

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 June 10, 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”

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.

On a regular basis I am asked by prospective members why they should join Big I New York. I routinely ask them about the issues listed above and how they intend to deal with them while effectively operating and growing their agency which is their primary function. Even if they can handle some of these issues themselves it draws away important agency resources. There lies the value of Big I New York membership. We are aware of these issues and have developed solutions saving individual agencies from having to invest the time, money and staff. We are also constantly monitoring future issues determining their impact and creating solutions if necessary. It’s not cost effective for individual agencies of any size to monitor, research and develop solutions especially when it gets in the way of helping clients. Our primary purpose and value comes from providing information, resources and solutions so our members can focus on providing trusted advice and the right coverage options to protect what matters most – their customer. That’s why we exist and we take our responsibility to our members very seriously.

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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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[ IN THE ASSOCIATIONS ]

NYIA Navigates New York Regulations, “Waters” Ahead at Lake George Annual Conference u T h e Ne w Yor k Ins u r an c e Association was joined by over 200 insurance industry professionals in Bolton Landing, New York, for the group’s 2019 NYIA Annual Conference: Navigating New York Waters. The conference featured educational sessions on a variety of timely topics and included networking opportunities with industry experts, representatives from the New York State Department of Financial Services and New York State legislators. The opening session on Thursday fe ature d a re a l-de a l Q&A s ession entitled Regulatory Reflections: A Conversation with Jim Wrynn. Insurance professional and former insurance department superintendent, Jim Wrynn, senior managing director of FTI Consulting and NYIA chair Elizabeth Heck, president and CEO of Greater New York Mutual Insurance Company, together chronicled Wrynn’s more than 30 years of industry experience. They took questions from the audience and discussed the future of the insurance industry. This opening discussion was followed by an insightful CEO panel discussion, View from the Helm: Staying the Course in New York, led by moderator NYIA first vice chair Mark Prechtl, executive vice president and CEO of Chautauqua Patrons Insurance Company. The session featured panelists Richard Creedon, chairman of the board and CEO of Utica National Insurance Group; Norman Orlowski, president and CEO of Erie and Niagara Insurance Association and Peter Vercillo, president and CEO of Dryden Mutual Insurance Company. The discussion explored the unique nature of the New York insurance marketplace and provided a CEOs’ perspective on how to best prepare for future industry challenges. 8 June 10, 2019 / INSURANCE ADVOCATE

and casualty insurance companies in New York and the importance of regulatory and industry collaboration. The morning sessions concluded with the panel discussion Flying with the Legal Eagles: Being Forewarned is Being Forearmed, featuring moderator Marc Craw, senior counsel at MLMIC Insurance Company and panelists Michael Brown, partner at Nicoletti Gonson Spinner Ryan Pinter LLP;

(L-R): NYIA Chair Elizabeth Heck, president and CEO, Greater New York Mutual Insurance Company; Bernie Turi, Senior Vice President, senior vice president, general counsel, general auditor & chief risk officer, Utica National Insurance Group; Richard Creedon, chairman of the board and CEO, Utica National Insurance Group; Ellen Melchionni, president, New York Insurance Association

The New York Insurance Association was joined by over 200 insurance industry professionals in Bolton Landing, New York, for the group’s 2019 NYIA Annual Conference: Navigating New York Waters. L ater that morning L aura Evangelista, executive deputy superintendent of insurance for the New York State Department of Financial Services (DFS), delivered the keynote address and talked about the critical role of property

Brian Heermance, partner at Morrison Mahoney LLP; Dan Kohane, senior member at Hurwitz & Fine, P.C. and William Matlin, partner at Hoffman Roth & Matlin, LLP. These legal aficionados gave conference attendees an educational and engaging update on what is happening in the courts and the impact on our industry. The morning sessions concluded with the panel discussion Flying with the Legal Eagles: Being Forewarned is Being Forearmed, featuring moderator Marc Craw, senior counsel at MLMIC Insurance Company and panelists Michael Brown, partner at Nicoletti Gonson Spinner Ryan Pinter LLP; Brian Heermance, partner at Morrison Mahoney LLP; Dan Kohane, senior CONTINUED ON PAGE 10

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[ IN THE ASSOCIATIONS ] CONTINUED FROM PAGE 8

member at Hurwitz & Fine, P.C. and William Matlin, partner at Hoffman Roth & Matlin, LLP. These legal aficionados gave conference attendees an educational and engaging update on what is happening in the courts and the impact on our industry. The day concluded with an evening reception, banquet and award presentation. NYIA was proud to honor Bernard Turi, senior vice president, general counsel, general auditor & chief risk officer of Utica National Insurance Group as the recipient of the Chair’s Distinguished Service Award. Turi is an accomplished insurance professional whose combined passion for the insurance industry, expansive knowledge of the law and ability to effectively communicate is unparalleled. The award was presented to Turi during the banquet in audience of his family, colleagues and peers.

(L-R): Jim Wrynn, senior managing director, FTI Consulting, Inc. and NYIA Chair Elizabeth Heck, president and CEO, Greater New York Mutual Insurance Company

Turi is an accomplished insurance professional whose combined passion for the insurance industry, expansive knowledge of the law and ability to effectively communicate is unparalleled. For those with energy to burn post banquet, it was off to The Sagamore’s recreation center for On Deck at “The Rec”–Fun, Games and Friendly Competition. Attendees enjoyed games of ping-pong, miniature golf, whiffle ball and basketball while live karaoke and the NBA finals didn’t miss a beat in the background. The Town Hall Meeting was first up on the agenda for the final day of the conference. The Town Hall Meeting featured moderator William Melchionni, vice president and co-head, U.S. state government affairs at American International Group, Inc. with panelists Assemblymembers Kevin Cahill, Will Barclay and Andrew R. Garbarino. The panel discussed the latest happening CONTINUED ON PAGE 25 10 June 10, 2019 / INSURANCE ADVOCATE

(L-R): Mark Prechtl, executive vice president and CEO of Chautauqua Patrons Insurance Company; Richard Creedon, chairman of the board and CEO, Utica National Insurance Group; Norman Orlowski, president and CEO, Erie and Niagara Insurance Association and Peter Vercillo, president and CEO, Dryden Mutual Insurance Company

(L-R): William Melchionni, vice president and co-head, U.S. state government affairs, American International Group, Inc.; Assemblyman Kevin Cahill; Assemblyman Will Barclay Assemblyman Andrew R. Garbarino

The New York Insurance Association congratulates this yearâ&#x20AC;&#x2122;s Chairâ&#x20AC;&#x2122;s Distinguished Service Award recipient Bernie Turi of Utica National Insurance Group. Bernie is an accomplished insurance professional who is admired by his peers. The combination of his passion for the insurance industry, expansive knowledge of the law and ability to effectively communicate is simply unparalleled.

Big I Confab Targets Five Key â&#x20AC;&#x153;Takeawaysâ&#x20AC;? for New York Agents Big I New York brought together the independent agency community at GO BIG 2019. This sold out event featured sessions on agency valuation and cybersecurity, a panel of carrier leaders, and an industry marketplace. Five key takeaways were pulled to share from this insightful day.

12 June 10, 2019 / INSURANCE ADVOCATE

1. The Agents Leading Big I NY Believe Independent Insurance Agents ARE Relevant and That They Serve Customers Best. As John Cofini, principal of BNC Insurance Agency, Inc., was sworn in as Big I NY’s Chair of the Board, he shared, “Independent insurance Outgoing Big I New York Chair of the Board Lou Atti addresses the crowd as Big I New York President & CEO Lisa Lounsbury looks on

agents and brokers are relevant. The change that’s surfacing is in the tools.” He emphasized the need to shift to a growth mindset where leaders understand the value of their businesses, embrace technology and automation, and engage with carriers to enhance what they deliver to customers. This belief ran deep throughout the event. Lou Atti kicked off the day by stating, “We believe independent agents serve customers best, with trusted advice and the right coverage options to protect what matters most.” He challenged the room, asking if there was anyone who disagreed. While surely rhetorical, we feel confident no one Swearing in of the new board. Left to Right: Victor Rutecki, Regional Director; David MacLachlan, Vice Chair & Secretary/Treasurer; Lisa Lounsbury, Big I New York President & CEO; David Bodenstein, Regional Director; Lou Atti, Immediate Past Chair of the Board; Nicholas C. Masterpole, Regional Director; Ronald Brunell, Regional Director; Steve Anderson, At-Large Director

in attendance disagrees that this channel and its agents DO serve customers best. Cofini said, “Big I NY has your back because we know what you are dealing with. There is an entire board of agents working on issues that you face in your agency today. You need help with technology, with talent development and recruitment, with advocacy. And that’s what we are doing.” Newly elected/re-elected individuals joining him on the Board of Directors: • David MacLachlan, CPCU of Dominick Falcone Agency and Falcone Associates in Syracuse, New York Denise Brown-Carter, IAAC Personal Lines Underwriter, and Brian Bixby, IAAC President, in the Go Big Industry Marketplace

• Ronald Brunell, CIC of Acrisure, LLC doing business as The Signature B&B Companies in Garden City, New York CONTINUED ON PAGE 14 INSURANCE ADVOCATE / June 10, 2019 13

CONTINUED FROM PAGE 13

• David Bodenstein of Mike Preis, Inc. in Callicoon, New York • Marianne B. McCormick, CPCU, AAI, AIS, AAI-M of Insurance Office of America in Binghamton, New York Bobby Reagan presents his Go Big & Grow Your Agency Value session

• Victor Rutecki of Rutecki Agency in West Seneca, New York • Nicholas C. Masterpole, Jr. of Masterpole Murphy Agency in Syracuse • See the full list of Big I NY board members at BigINY.org/board 2. Talent Recruitment and Development are Key to Agency Value and Growth Bobby Reagan uses a combination of experience and hard data to make informed recommendations on how to increase agency value when working

Bobby Reagan moderates the Carrier Panel, where carrier leaders discuss how they directly impact how successful agencies can be, and what they’re doing to help. From left to right: Bobby Reagan, Reagan Consulting; Jeffery A. Updyke, Chubb; John C. Roche, Hanover Insurance; Tyler Asher, Liberty Mutual & Safeco; Gregory E. Murphy, Selective Insurance Group, Inc.

with clients through Reagan Consulting. In the Go Big & Grow Your Agency Value session, he shared some eye-opening stats that lead back to two important facts: first, the industry is aging; and second, recruiting drives growth, sustainability, and value. Here are some key agency numbers: • Weighted average shareholder age up from 51.1 to 53.7 over 10 years • Weighted average producer age up from 46.6 to 49.7 over 10 years

John C. Roche, President and Chief Executive Officer of Hanover Insurance, speaks during the Carrier Panel

• 41% of producers are over age 55, and there are fewer leaders under 46. Why These Stats Matter Organic growth and profitability are the two CONTINUED ON PAGE 16 14 June 10, 2019 / INSURANCE ADVOCATE

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drivers of value. Organic growth of firms with an older average age hovers around 1% to 2%. In contrast, agencies with a more balanced age

Bill Stearns of the Allstate Independent Agency Channel, at his booth in the Industry Marketplace

distribution see organic growth of 8% to 9%. Firms that invest more in hiring new producers grow faster. Carriers on the Go Big panel emphasized the need to develop a culture that attracts younger people and adds more diversity to agencies. Each company representative shared that they have training tools available to help the onboarding process, but some acknowledged they have a hard time knowing the best way to support agencies in hiring. Companies also understand balancing the risk of hiring someone who may fail verses

L-R: Lisa Lounsbury, Big I NY President & CEO; Jeffery A. Updyke, Chubb; Tyler Asher, Liberty Mutual & Safeco; Gregory E. Murphy, Selective Insurance Group, Inc.; John C. Roche, Hanover Insurance; Lou Atti, Outgoing Big I NY Chair of the Board

not hiring at all. But the fact remains: hiring is critical. To be a successful agency in next five to ten years, Bobby says generational health â&#x20AC;&#x201C; becoming great at recruiting, hiring & developing producers â&#x20AC;&#x201C; is of utmost importance. Successful agencies will create an excellence-focused, client-centric culture where all employees can prosper. These qualities, along with collaboration, need to be modeled by agency principals. The bottom line is this: in order to increase agency value, you must create a great culture, attract diverse, quality employees, create organizational efficiencies, and lead with vision.

John Cofini (left), is sworn in as Big I NY Chair of the Board

3. Both Carriers and Agencies Must Improve Technology and Automation Technology and automation represent both an opportunity and pain point. No one in our chanCONTINUED ON PAGE 18 16 June 10, 2019 / INSURANCE ADVOCATE

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nel has it fully figured out. Barriers include integration capabilities, implementation time, cost, and for some, openness. Throughout Go Big there was a clear message – technology is a linchpin to future success. A video of a racing pit stop shared by Bobby Reagan served as a great example. In an Indy 500 in 1950, it took over a minute to complete the tire change. In a 2013 race, it was 2.4 seconds. Our industry does not currently operate at 2.4 seconds. Reagan emphasized that agencies must embrace technology to achieve greater value and growth. The many benefits include enhanced ease of business and improved customer service, increased efficiency and productivity, and better recruitment ability. The leaders on the carrier panel agreed. Greg Murphy of Selective said, “The customer wants a seamless experience; they want you to know them.” When asked how they see the state of agency-company relations today, the answers given by carrier leaders called for an improvement in using technology. The companies didn’t shirk accountability in the challenge. Noted weaknesses included agency management systems not capturing important customer interactions, fragmentation from automation, and sharing of data. The companies are striving for improvement both internally and in conjunction with systems like Vertafore and Applied. Carriers are making data available to agencies, but there is inconsistency in the amount and types of data shared. Standardization would benefit agencies, the companies, and ultimately customers. While technology raises the bar in terms of speed, carriers see the value in combining it with human interaction. For Tyler Asher of Liberty Mutual/Safeco, using artificial intelligence (AI) is not about replacing underwriters - it’s augmenting their capabilities. Chubb is using AI to measure propensity to buy - if they purchased X, they are likely to purchase Y. According to Jack Roche, consumers “still need human interaction.” That said, every day is a new frontier when it comes to technology. Refinement and use of predictive modeling is expected to grow. AI capabilities are expanding. Data is being collected anywhere and everywhere. A rising startup, DAIS Technologies, shared how it’s making the industry agency-centric through the Internet of Insurance, a risk syndication network that will connect agents and carriers on a shared platform. Carriers and agencies need to come together to harness it to improve workflows, deliverables, and give more time to agents to do what they do best – serve customers.

WHILE TECHNOLOGY RAISES THE BAR IN TERMS OF SPEED, CARRIERS SEE THE VALUE IN COMBINING IT WITH HUMAN INTERACTION.

CARRIERS ARE MAKING DATA AVAILABLE TO AGENCIES, BUT THERE IS INCONSISTENCY IN THE AMOUNT AND TYPES OF DATA SHARED. STANDARDIZATION WOULD BENEFIT AGENCIES, THE COMPANIES, AND ULTIMATELY CUSTOMERS.

4. The Cybersecurity Threat is Real, Especially for Small and Mid-Sized Businesses In NY, we’ve heard the word cybersecurity a great deal. Due to the NYS Cybersecurity Regulation, agencies doing business in this state have faced a slew of tasks to complete in order to comply. Because some of the requirements require an approach exponentially more burdensome on small businesses than the benefits gained, the idea of cybersecurity has become a sore spot for many. However, protecting your data should be a key priority in every business. Andrew Frisbee of LCG Discovery says cybersecurity should be part of your business strategy, regardless of regulation. In the Cybersecurity War Stories session, Andy raised the alert level, using a real-life example in hopes of changing the mindset from one of weakness to one of strength. Small and mid-sized businesses are the weak link for cyber attacks because they have fewer resources for defense and can often be used as a conduit for a larger attack (as seen with Target and Marist College). Andy warned, “Cyber-criminals are watching you. What do you want them to see - an easy opportunity or Fort Knox?” After a cyber attack, many businesses of this size never open their doors again. In a case study of a recent LCG forensic investigation, Andy shared that the lack of cybersecurity policies and procedures cost the business almost $200,000, a lifetime of ID protection for its employees, and significant reputation damage. In this case, a large amount of the damage done was to employees and their families. What can we learn from this example? CONTINUED ON PAGE 20

18 June 10, 2019 / INSURANCE ADVOCATE

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• Change passwords! One of the employee passwords hadn’t been changed in two years. Make sure they are unique, strong passwords and don’t share them. • Remove admin access immediately after an employee departs. • Have a secure firewall and properly log traffic. • Make sure the third-party service providers that have access to your data have and adhere to proper cybersecurity standards (Big I NY has tools to help you with this). • Have a cybersecurity policy/program in place and execute it. This includes making sure every employee is trained on your procedures. • Over in the Industry Marketplace, Big I NY’s research guru Tim Dodge answered cybersecurity compliance questions and provided flash drives preloaded with related tools. Many agencies have yet to implement all the policies and procedures required in order to fully comply with the Cybersecurity Regulation. All agencies must have a cybersecurity policy in place right now. Big I NY has an entire toolkit of compliance resources, including a customizable policy template. It’s free for members. If you weren’t able to grab a flash drive from Tim, you can download these tools at BigINY.org/cyber. • The day was capped off with DAIS Technology announcing an online tool to help agencies with their TPSP due-diligence. 5) There are Many Agents, Individuals, and Companies Making a BIG Difference in the IA channel and We Need to Inspire Others Our channel needs people willing to take the extra step, go the extra mile. We need to inspire future generations to continue raising the bar and strive for excellence. That’s why Big I New York chose Go Big as the platform to award many standouts this year. No matter your company, association, or agency, let the following inspire you to raise your hand and keep our industry strong. HONORING OUR AWARD RECIPIENTS 1882 Award: James D. Sutton, CPCU, AAI, CIC This highest honor recognizes the individual member who has most significantly contributed to Big I New York, the industry, and their community. This deserving individual is a man of the highest integrity, commitment and dedication to our industry and his community. Thom McDaniel Exemplar Award: Joseph Headd, CPCU This award is presented as a reflection of the individual’s dedication and unwavering support of the Independent Agency System by their words, deeds and actions. Joe’s been an exceptional friend to Big I New York and all of the member agents he’s worked with. The Vincent Alba Award: Ronald Brunell, CIC This recognition is awarded to the individual who makes an outstanding contribution to the political effectiveness of Big I New York. Ron has demonstrated passion and dedication to furthering the cause.

Distinguished Service Award: Big I New York Staff As Chair of the Board, Lou Atti chose to do something different this year. He honored an entire team. Proud of the incredible commitment to agencies and the industry this year surrounding cybersecurity, Lou honored the Big I New York staff. Joel S. Pollack Young Agent of the Year: Nicholas Campbell This award is presented to a young agent for their outstanding achievements to the Independent Agency System and their community. This recipient is very involved in his community, our industry, and on his local association board.

WE NEED TO INSPIRE FUTURE GENERATIONS TO CONTINUE RAISING THE BAR AND STRIVE FOR EXCELLENCE. THAT’S WHY BIG I NEW YORK CHOSE GO BIG AS THE PLATFORM TO AWARD MANY STANDOUTS THIS YEAR. NO MATTER YOUR COMPANY, ASSOCIATION, OR AGENCY, LET THE FOLLOWING INSPIRE YOU TO RAISE YOUR HAND AND KEEP OUR INDUSTRY STRONG.

ACSR of the Year: Lexie Dumont, ACSR This recipient consistently provides exceptional service to her customers while building strong relationships with carrier partners. The quality of her work and desire to go the extra mile for her clients have made her a valued member of her agency. Local Association of the Year: Big I Westchester This award recognizes outstanding effort and accomplishment in local association meetings, legislative advocacy and public relations to enhance independent agents. This group hit it out of the park in all four areas. Top Carrier Partner - Over $100 Million in NY Written Premium: Selective Selective invests in their agency partners with recruitment, training and mentoring programs as well as women’s leadership programs designed to help agents thrive in today’s marketplace and beyond. They are also expanding value-added technology solutions with a goal of further increasing customer satisfaction to help their agents gain and retain customers. Selective is well-positioned to support independent agency partners today and in the future. Top Carrier Partner - Under $100 million in NY Written Premium: Sterling Insurance Group Sterling is focused on ease of doing business and efficiency while their underwriting approach and niche markets support growth and profitability for independent agents. They focus on building relationships, consistent pricing and strong retention, along with outstanding claim service.[IA]

Didn’t make this year’s event? Save the date now for GO BIG 2020. May 19, 2020 | Syracuse, NY

20 June 10, 2019 / INSURANCE ADVOCATE

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[ IN THE ASSOCIATIONS ]

Harris to Receive Professional Agent of the Year from PIANJ New Jersey Young Insurance u T R E N T O N , N . J. — Professionals—an organization Andrew Harris Jr., CIC, dedicated to the professional AAI, of Jackson Township, and personal growth of newN.J., received the Professional comers to the insurance indusInsurance Agents of New try—and co-chair of the Special Jersey’s Professional Agent of Olympics Golf Committee. the Year during the associaIn 2018, Harris was named tion’s annual business meeting PIANJ’s Director of the Year. on June 9 at Harrah’s in Atlantic Andrew Harris, Jr. The award recognizes the hard City. Harris is president of work and dedication of a memLiberty Insurance Associates ber of the association’s board of direcInc., in Millstone Township, N.J. Active in PIANJ, Harris was elected tors who has contributed remarkable secretary of the association for 2019- time and talent to help support the asso20. Harris also is Legislative/Regulatory ciation and its many programs. In his community, Harris is an chairperson of PIANJ’s Government Affairs Committee and is a member avid supporter of both the Monmouth of the association’s Executive/Budget County American Society for the Prevention of Cruelty & Finance; PIANJ Political Action Governing Committees. Additionally, to Animals, and Make-a-Wish of New Harris is a member of NJ Agents Jersey. He also is a volunteer for IEP Justice Task and is a director of PIANJ’s Youth Services in Freehold, N.J.[IA]

PIANJ Honors Capone as Company Person of the Year With over 35 years experiuATLANTIC CITY.—Gary ence in the insurance indusJ. Capone, CPCU, ARM, vice try, Capone began his career president of field services for in insurance in 1983, working Franklin Mutual Insurance Co. at the Ronzel Agency managin Branchville, N.J., was awarded ing their personal lines divithe New Jersey Professional sion. He went on to join FMI Insurance Agents Company in 1990 where he was a field Person of the Year at its Annual Gary J. Capone representative until 2000, then Conference held at Harrah’s becoming manager of field serResort and Casino in Atlantic City, June 9-11. Nominated by PIA mem- vices. Active in the industry, Capone ber agents, this award is presented to an participates as a New Jersey delegate individual who fosters a strong working for the National Association of Mutual relationship with agents and brokers, Insurance Companies Congressional and who exemplifies a commitment to Contact Program. “Our members have grown to recogprofessionalism and service. 22 June 10, 2019 / INSURANCE ADVOCATE

nize Gary as a person who has a strong working relationship between his company and their agencies,” said Lloyd ‘Rip’ Bush, CPIA, PIANJ president. “His commitment to the independent agency system is evident in the relationships he’s developed across the state. PIANJ is pleased to present him with this award.”[IA]

PIANJ to Give Starr Community Service Award uTRENTON, N.J.—Beth Starr received the Community Service Award from the Professional Insurance Agents of New Jersey at the association’s annual conference held June 9-11, at the Harrah’s Resort and Casino in Atlantic City. She is the Director of Corporate Partnerships for Special Olympics New Jersey in Lawrenceville, N.J. This citation is given in appreciation for her on-going efforts on behalf of her commitment to Special Olympics New Jersey and New Jersey’s Professional Insurance Agents. “Beth has been the heart of Special Olympics New Jersey for nearly 10 years,” said PIANJ President Lloyd ‘Rip’ Bush, CPIA. “Her dedication and commitment is exemplified by how the PIANJ Golf Classic and the NJYIP Fun Run continue to grow and support Special Olympic athletes each year. She is an integral part of PIA’s partnership with Special Olympics New Jersey.” Special Olympics New Jersey is a non-profit that’s mission is to provide year-round sports training and athletic competition in a variety of Olympictype sports for children and adults with intellectual disabilities, giving them continuing opportunities to develop physical fitness, demonstrate courage, experience joy and participate in a sharing of gifts, skills and friendship with their families, other Special Olympics athletes and the community.[IA]

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[ ON MY RADAR ]

BARRY Z ALMA

Why is it not Obvious that a Motocross Raceway is Not a Home? Liability Policy Limited to Insured Residence Premises u Houses are often homes. Not all houses are homes. Not all properties with a house are residences or residence premises. Insurance policies never cover every conceivable potential exposure the insured faces. By their terms the policy limits its exposure based on the requirements and needs of the insured and the willingness of an insurer to take on that risk.

FACTS

In Shelley Lynn Yocom v. Ram Mutual Insurance Company, A18-1320, State of Minnesota in Court of Appeals (April 15, 2019) a person seeking indemnify from an insurer claimed that a motocross raceway was part of a residence premises entitling the owner of the property to liability protection although the injury occurred at Midway Recreation Park. Yocom was struck from behind by a golf cart driven by Jamey Swanson. The property on which the raceway is located is jointly owned by Jack and Cynthia Stamschror, who also serve as officers of the raceway corporation. In addition to the raceway, there is a home on the Stamschrors’ 40-acre property.

THE POLICY

At the time of the accident, Swanson had homeowner’s insurance with respondent RAM Mutual Insurance Company. The policy’s Incidental Liability Coverages include: “Motorized Vehicle Coverage. We pay for the bodily injury or property damage which: a. occurs on the insured premises and is a result of the ownership, operation, maintenance, use, loading or unloading of: (1) a motorized vehicle if it is not subject to motor vehicle registration because of its type or use; or (2) a recreational motor vehicle.” 24 June 10, 2019 / INSURANCE ADVOCATE

The policy defines “insured premises” to include “that part of residential premises not owned by an insured while temporarily used by an insured.” “Recreational motor vehicle” is defined as “a motorized vehicle . . . , trailer or attached apparatus designed or used for recreation, vacation or leisure-time activities.”

THE LITIGATION

Following the accident, Yocom sued Swanson, the Stamschrors, Midway Recreation Park, Inc., and the entity that leased Midway Recreation Park for the race. Yocom alleged various acts of negligence with regard to use, maintenance, and oversight of the raceway. She settled her claims against Swanson for his $300,000 liability limit pursuant to a Miller-Shugart agreement. She then sued the insurer to recover that amount from RAM Mutual. Both parties moved for summary judgment on the issue whether the policy affords coverage to Swanson. In support of her motion, Yocom submitted a 2013 county property tax statement showing the Stamschrors’ property is

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/

classified as agricultural homestead and residential homestead for tax purposes. The district court determined that the policy does not provide incidental-liability coverage because Midway Recreation Park is not a “residential premises . . . used by the insured.” Accordingly, the district court granted summary judgment to RAM Mutual.

DECISION

The interpretation of an insurance policy is a question of law as applied to

[ ON MY RADAR ] the facts presented. Insurance policies, like other contracts, are governed by the language used, which is given its usual and accepted meaning. Because insurers draft insurance policies, any ambiguity is construed in favor of the insured, but the court has no right to read an ambiguity into plain language of an insurance policy in order to construe it against the one who prepared the contract. Yocom asserted that the district court erred by interpreting “residential premises” to exclude the property on which she was injured. She contended that the district court erred by “ignoring” evidence that the county classified the entire property as residential. The Accident Did Not Occur on “Residential Premises.” It is undisputed that the golf cart Swanson was driving at the time of the accident is a “recreational motor vehicle” for purposes of incidental-liability coverage. Accordingly, the sole coverage issue is whether Swanson was operating the golf cart on “that part of residential premises not owned by an insured while temporarily used by an insured.” The policy does not define “residential premises.” But it defines “residence” as “a building used principally for family residential purposes.” When read together, “residential premises” refers to a building in which someone lives. The policy generally defines “insured premises” as “the residence shown on the declarations as the described location” and “related private structures and grounds at that location.” The incidental liability coverages extend this definition to residential premises owned by someone other than the insured, but do not alter the general “insured premises” definition. In other words, the policy contemplates coverage for injuries that occur at private family homes. Applying this meaning of “residential premises,” the Minnesota appellate court could only conclude that Swanson is not entitled to incidental liability coverage in connection with this accident. Yocom provides no evidence that the area Swanson was using—the raceway—was “part of residential premises.” She does not allege that the raceway area was residential in nature; the accident occurred

while she and Swanson were attending a public motocross event. She offers no evidence that any person actually lived at the house located on the 40-acre property or the house’s proximity to the raceway. And in all of her submissions to the district court, Yocom fails to even suggest that Swanson used the property for residential purposes. Therefore, the court of appeals concluded the policy does not cover Yocom’s injuries. County Tax Records Do Not Create Genuine Issues of Material Fact. Yocom urged the court to treat county tax records as conclusive evidence that her injuries occurred while Swanson was temporarily using another’s residential premises. Alternatively, she asserted the records create a fact issue precluding summary judgment. The county records do not purport to describe how any part of the property is actually used, let alone the raceway portion where the public motocross event took place. Merely creating a metaphysical doubt as to a factual issue is not sufficiently probative with respect to an essential element of the case to permit reasonable persons to draw different conclusions and will not defeat summary judgment. The undisputed material facts show Swanson and Yocom were both at the raceway, for a public motocross race, when the accident occurred. There is no evidence that either party was at or near a house. And even if we credit Yocom’s argument that a property can simultaneously be used for both residential and non-residential purposes, she offers no evidence of such use by the Stamschrors. In sum, RAM Mutual’s policy does not cover Yocom’s claims against Swanson.

ZALMA OPINION

Only a lawyer would have the gall to argue that a raceway is a residence premises. Since the accident took place while both participants were attending a motocross event and were not in, on, upon or even near a house, the policy language defeated coverage. It is amazing that even after losing at trial the parties were willing to go forward with an appeal on such slim claims of coverage.[IA]

IN THE ASSOCIATIONS CONTINUED FROM PAGE 10

in the Capitol and the need for legislation to allow for innovation and modernization in the New York insurance marketplace. Another fantastic Friday session followed with an engaging presentation from Stephanie Gould Rabin, head of corporate strategy and senior vice president at Holborn Corporation. The session Is There a Demand for Insurance On-Demand? featured interactive audience polling, analysis of recent consumer surveys and discussed the trends and implications of the emerging on-demand product. To wrap up the conference program was the annual Small Company Roundtable moderated this year by Edward Harper of Statewide Underwriting Services. Often a conference favorite, NYIA finds that our members excel when given the chance to collaborate and use each other as peer resources. The roundtable always provides a rewarding platform to build stronger relationships. The NYIA Annual Conference is always a must-attend for anyone who wants to stay up to date of the issues occurring in one of our country’s most unique insurance marketplaces. Save the date now for next year’s event that will be held May 27–29 at the Hilton Westchester in Rye, New York.[IA]

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com INSURANCE ADVOCATE / June 10, 2019 25

[ LOOKING BACK ]

INSURANCE ADVO CATE - 25 YEARS AGO

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com 26 June 10, 2019 / INSURANCE ADVOCATE

INSURANCE ADVO CATE - 25 YEARS AGO

[ LOOKING BACK ]

INSURANCE ADVOCATE / June 10, 2019 27

[ COURTSIDE ]

LAWRENCE N. RO GAK

In de novo Proceeding, Attorney Fees are Fixed by Court, Not Regulation 68 Matter of Country-Wide Ins. Co. v TC Acupuncture P.C. Edited by Lawrence N. Rogak Master arbitration awards in NY PIP may be reviewed de novo by a court. In such cases, the claimant’s attorney fees are not based on the limits in Regulation 68, but instead are determined by the court based on a “reasonableness” standard.— LNR uOrder, Supreme Court, New York County (Erika M. Edwards, J.), entered June 22, 2017, which awarded attorneys’ fees in the amount of $749.38, unanimously reversed, on the law, without costs, the award vacated, and the matter remanded for a calculation of reasonable attorneys’ fees in accordance with 11 NYCRR § 65-4.10(j)(4). The court failed to consider 11 NYCRR 65-4.10(j)(4), which applies to this appeal of a master arbitration award. Instead, the court applied 11 NYCRR 65-4.6, the regulation applicable to attorneys’ fee awards at an initial arbitration, and calculated the award as 20% of the arbitration demand of $3,746, awarding $749.38. Pursuant to Insurance Law § 5106(a), if a valid claim or portion of a claim for no-fault benefits is overdue, “the claimant shall also be entitled to recover his attorney’s reasonable fee, for services necessarily performed in connection with securing payment of the overdue claim, subject to the limitations promulgated by the superintendent in regulations.” Here, in a proceeding for judicial review of an award by a master arbitrator, the attorneys’ fee award “shall be fixed by the court adjudicating the matter” (Matter of GEICO Ins Co. v AAAMG Leasing Corp., 148 AD3d 703, 705 [2d Dept 2017] citing Insurance Department Regulations [11 NYCRR] § 65-10[j][4]). 28 June 10, 2019 / INSURANCE ADVOCATE

Pursuant to Insurance Law § 5106(a), if a valid claim or portion of a claim for no-fault benefits is overdue, “the claimant shall also be entitled to recover his attorney’s reasonable fee, for services necessarily performed in connection with securing payment of the overdue claim, subject to the limitations promulgated by the superintendent in regulations.”

Because this is an appeal from a master arbitration award, we remand the matter for a calculation of fees in accordance with 11 NYCRR 65-4.10(j)(4) (see Matter of Country-Wide Ins. Co. v Bay Needle Care Acupuncture, P.C., 162 AD3d 407, 408 [1st Dept 2018]). We note that the fees would only apply to this appeal. In addition, we reject as unpreserved appellant’s claims that it is entitled to further fees for the underlying arbitration under 11 NYCRR § 65-4.6(c) or (d).[IA] 2019 NY Slip Op 04087 Decided on May 28, 2019 Appellate Division, First Department

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.

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[ GUEST OPINION ]

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

Free Medical Care: A Deal With the Devil? uListening to the campaign promises spewed out by the bevy of folks running for president brings the old but enduring story of Faust to mind. Despite being successful, Faust wanted more knowledge and possessions. To that end, he made a deal with Mephistopheles (aka the Devil) who promised to give him everything he wanted in exchange for his soul. Who isn’t tempted by a bargain or better yet, something for nothing? Free income, free college, and free medical care. What do we have to lose? Selfrespect, the opportunity to succeed at a career suited to one’s talents, your privacy and control over your own body. Intended to ameliorate poverty, universal basic income can be counterproductive. Some promise income for merely having a pulse and others envision the government equivalent of a mama bird regurgitating food into the open mouths of her chicks. Neither option gives a sense of pride and accomplishment or the foundation for character development. The high cost of college is the justification for free tuition. One key reason for the continually escalating tuition is readily available student loans: no matter the cost, the student can continue to borrow. Endless direct-from-the-government money would likely cause further increases. Further, one-third of college students drop out. The majority of these students were poorly prepared for, and not fully committed or suited to college. It is a bad idea to remove an incentive for perseverance, allow uncommitted students to waste their time on the government dime, or worse be stigmatized as a failure. Finally, as Senator Amy Klobuchar bravely pointed out, the taxpayers cannot afford it. With regard to medical care, all “medically necessary” health services, including dental, vision, hearing, mental health, long-term care, home and community-based services, physical therapy, prescription drugs with no premiums,

deductibles or co-pays from cradle to grave sound pretty good. Sold! Frankly, given the direction so-called reproductive health is going, you may never make it to the cradle. And with the current laser-focus on hospice for all, you may get to your grave a little faster. Will free medical care halt one of the biggest drivers of poor health and medical costs? According to the Centers for Disease Control and Prevention (CDC), 40 percent of people in the United States are obese. And 47 percent of our $3.5 trillion per year of healthcare spending goes to treat the effects of obesity, with another 8.7 percent attributable to cigarette smoking. People have known for years that eating too much makes you fat and smoking contributes to heart and lung disease. Free care would worsen the problem because patients will expect more pills and procedures to cure their lifestyle-created illnesses rather than taking care of themselves. Not only is the promise of free stuff an attempt to buy votes, but the politicians themselves have sold their souls to special interests. And we never know whether they are working for the metaphorical Devil or for you, the voters. According to the C enter for Responsive Politics, in 2018, both sides of the Congressional aisle received a total of $134,590,142 in contributions from the health sector (health professionals, device and pharmaceutical manufacturers, hospitals and nursing homes). The health sector was the top spender of lobbying money – some $562,968,799 spread among 2,810 hired guns. Pharmaceuticals/Health Products topped the list with $281,872,969. On the bright side, when given the full picture, people are not that easily bought. A recent Kaiser Family Foundation study found that 70 percent of those polled approved of Medicare for All when told the plan would eliminate insurance premiums (which are sky-high thanks to ObamaCare). But up

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.

to 70 percent opposed Medicare for All when told it would lead to treatment delays, tax increases, or loss of their option for private insurance. Perhaps those polled read that private insurance is allowed in all but two countries with universal coverage, and patients in all countries have some outof-pocket expenses. Perhaps they realized that when the citizen money tree has been picked clean, promised services must be reduced. Perhaps they realized that free stuff can be used as a cudgel to keep the recipients in line and trap them in a system with no escape. Perhaps they were of a certain age where they were warned that the tasty-looking Halloween candy might be laced with razor blades. Or more likely, those infamous words, “If you like your doctor, you can keep your doctor” were flashing before their eyes or echoing in their ears. Free stuff is an age-old snare, a temptation that can steal one’s critical thinking abilities. Despite the old saw that there is a sucker born every minute, there are always those who will not be fooled. Which will you be? [IA] INSURANCE ADVOCATE / June 10, 2019 29

[ LEGAL UPDATE ]

SARI GABAY, ESQ.

Commingling of Funds u As recent Ne w York State Department of Financial Services’ disciplinary actions show, several brokers have been the subject of disciplinary action for commingling funds insurance premium funds with business operating expense funds and/or using premium funds for personal expenses. Other related actions have involved insurance agents collecting premium payments and failing to timely remit such funds to the applicable insurer. As a general rule, under New York law, an insurance broker has a duty not to commingle premium funds it receives for transmissions to an insurance company nor to commingle return premiums it receives for transmission to an insured and funds must be transmitted promptly. Specifically, New York Insurance Law § 2120 imposes a fiduciary duty upon insurance agents and brokers regarding funds received or collected. This statute prohibits the commingling of any such funds with the insurance agent’s or broker’s own funds, unless there is consent to commingle. This statute further requires “prompt” remittance of such funds, although no set number of days is specified. In addition, Ne w York State Insurance Regulation 29 (“Fiduciary responsibility of insurance agents and brokers; premium accounts”), which was promulgated to facilitate compliance with Section 2120, sets forth requirements for holding such funds and imposes limitations on withdrawals from premium accounts. Specifically, it prohibits withdrawals from a premium account for anything “other than for payment of premiums to insurers, payment of return premiums to assureds, transfer to an operating account of (i) interest, if the principals have consented thereto in writing and (ii) commissions, or withdrawal of voluntary deposits, provided, however, that no withdrawal may be made if the balance remaining in the premium account thereafter is less 30 June 10, 2019 / INSURANCE ADVOCATE

New York State Insurance Regulation 29 (“Fiduciary responsibility of insurance agents and brokers; premium accounts”), which was promulgated to facilitate compliance with Section 2120, sets forth requirements for holding such funds and imposes limitations on withdrawals from premium accounts. than aggregate net premiums received but not remitted.” Although no New York Insurance Law or regulation sets forth a specific time frame upon which an insurance agent or broker must remit such collected premiums, a standard of reasonableness would likely be imposed. Indeed, the Office of General Counsel has opined that “where it is obvious that an insurance agent or broker failed to remit collected premiums within a reasonable period of time (i.e., keeping collected premiums until a notice of cancellation has been sent, and until the day before the policy is set to cancel, when the premiums had been sent by the insured in a timely fashion), such circumstance may be evidence of an agent’s or broker’s untrustworthiness and may form the basis of a Department investigation.” Thus, unless there is a specific agreement with the principal, any unnecessary delays in remitting premium funds should be avoided. In short, absent certain exceptions, an insurance agent or broker may not commingle premium funds with non-premium funds. Nor may an insurance broker deduct unpaid commissions from premiums collected absent a written agreement without authorization. All funds collected should be

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.

remitted promptly, and without unnecessary delay, particularly a delay that could prejudice the insured. It is advisable to frequently review premium accounts and any automatic payments or other withdrawals or debits that may be inappropriate such as bank services fees and to be extremely careful in delegating any online bill pay and bookkeeping duties. A sub-licensee is the designated responsible person and therefore accountable for shortfalls in a premium account or mishandling of funds, which may go unnoticed until a check bounces or an investigation calls for the production of bank account statements. [IA]

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