LEGISLATIVE POSITION PAPER

Transcription

1 LEGISLATIVE POSITION PAPER session ---

2 The Independent Insurance Agents & Brokers of New York is the oldest and largest producer association in New York State. We represent approximately 3,400 independent business owners and principals of 1,750 independent insurance agency locations in the State of New York, comprising more than The insurance industry has been an important component of the New York economy for decades with its economic significance growing steadily each year. It is imperative that New York maintains a stable insurance climate. A recent study (Ernest Goss, Ph.D., 2012) shows that between 2012 and 2016 New York s property and casualty industry will produce $150.1 billion in overall positive economic impacts and support an average of 168,163 jobs per year between 2013 and New York s P&C industry will also generate $9.8 billion in state and local taxes between 2013 and Our members are uniquely positioned as an integral part of their communities to assist on a broad range of economic development, tax, insurance, and other business issues that impact the consumers in New York. Independent agents and brokers are very sensitive and alert to the problems of the consumer because their entire business is based on dealing with the public daily in a personal clientprofessional relationship. As we face new challenges our members have pledged themselves to work even more aggressively with government and other industries to address the many crucial issues which confront us. We look forward to a cooperative effort with our legislators and regulators during the coming year. Meet THE TEAM 13,000 individuals who sell and service the personal and business insurance needs of consumers ALBANY LEGISLATIVE OFFICE Barrett Associates 95 Columbia Street Albany, NY PETER V. CARR, JR. MICHAEL V. BARRETT JILL R. MURATORI, ESQ. IIABNY Legislative Representatives p: f: e: mbarrett@albanygov.com RICHARD A. POPPA, CAE, AAI President & CEO JAMES SUTTON Chair of the Board KATHY WEINHEIMER Senior VP Industry Relations 2

3 LEGISLATIVE Accomplishments Passage of Certificates of Insurance Bill IIABNY won a major victory for agents with the passage of a new law to end improper certificates of insurance requests. The law will stop businesses and government agencies from pressuring insurance producers into issuing false or misleading certificates of insurance. Participation in New York s Health Insurance Exchange Insurance producers are able to sell policies in both the individual and Small Employer exchange marketplaces. Recovery of Funds for Dishonored Checks Insurance producers may now recoup from insurers the funds swept from their premium trust account when the insured has given the producer a bad check to pay the premium. State Insurance Fund Accountability The State Insurance Fund must now file annual audited financial statements with the Office of the State Comptroller. Department of Financial Services IIABNY helped shape the structure of the new agency, which combined the Insurance and Banking Departments, to make it better for producers and the industry. Thanks to the tireless work of our legislative team, ongoing support from our member agents, and cooperative effort from the legislature, IIABNY is pleased to announce our legislative accomplishments. Late notice of claim denials Insurance companies can no longer deny coverage for late reporting unless the late reporting has caused material prejudice. NYPIUA shutdowns a thing of the past The New York Property Insurance Underwriting Authority has been made a permanent entity, no longer requiring legislative reauthorization each year. NYPIUA coverage expanded NYPIUA is now authorized to provide broad form coverage that provides better coverage when used with an appropriate company wraparound endorsement. Export list updated Several hard-to-place specialty risks were added to the export list making it easier for excess lines brokers to secure coverage. Accident Surcharge Threshold Raised The at-fault automobile accident damage threshold has been increased from $1,000 to $2,000. 3

4 SCAFFOLD LAW REFORM Labor Law 240/241 IIABNY Supports Repealing or Reforming the Absolute Liability Standard in Labor Law 240 & 241. Sections 240 and 241 of the New York State Labor Law are commonly referred to as the Safe Place to Work Law or the Scaffolding Law. These sections of law establish an absolute liability standard on any contractor or property owner for a fall from any height by an employee. Under an absolute liability standard there is no consideration of fault or negligence and the contractor or building owner is held completely responsible, regardless of fault. This statute is the only such law remaining in the United States, pre-dates our Workers Compensation Laws and circumvents the sole remedy doctrine of workers compensation. Because of these antiquated laws, insurance on construction projects for both owners and contractors has become increasingly expensive and the market for this coverage severely restricted. Lack of coverage is preventing construction projects from proceeding, costing New York State jobs. When coverage can be obtained, the cost of construction is needlessly driven up. In these difficult economic times, any law driving up business costs and preventing job growth needs to be carefully examined. IIABNY participates in a broad-based coalition of over fifty advocacy groups representing small and large businesses, developers, insurers, builders, contractors, municipalities and taxpayers that is advocating for reform of New York s Scaffold Law. IIABNY supports legislation to repeal or reform the Scaffold law to provide for a comparative negligence standard for labor law claims and will continue to work with the coalition to pass legislation to accomplish the necessary reform. 4

5 IIABNY Supports Standardization of Events That Trigger Hurricane Deductibles in Homeowners Policies. IIABNY is concerned with the lack of standardization among homeowners insurance policies with respect to the definition of the event that triggers a policyholder s hurricane deductible. Hurricane deductibles are commonly used by insurance companies on homeowners policies in coastal regions. These deductibles can be flat (specific dollar amounts) or percentage deductibles (a percentage of the building value). The trigger point for these deductibles varies among companies and can be based on category of storm, whether a hurricane has made landfall, and where the hurricane force winds are measured. IIABNY believes that the lack of standardization in hurricane deductible triggers will cause significant consumer confusion in the event there is a hurricane that affects the state s coastal region. Neighboring homeowners equally affected by a coastal storm that have homeowner s policies with different triggering events may become quite frustrated to find that one homeowner has coverage for the damage and the other does not. Standardizing the event that triggers an insurer s hurricane deductible will protect consumers against this type of scenario. HURRICANE r e l at e d ISSUES IIABNY has repeated this message to policymakers in the wake of Superstorm Sandy in 2012, and Hurricane Irene and Tropical Storm Lee in As a result of IIABNY s advocacy on this issue, the Department of Financial Services (DFS) proposed rules regarding deductible triggers in the fall of 2010, including a new distinction between windstorm and hurricane deductibles. Unfortunately, there has been no further consideration given to these proposed rules. IIABNY will continue to work with the department, as well as lawmakers, to ensure that the issue is addressed. IIABNY will continue to work with the DFS, lawmakers, and insurance companies to develop rules that provide meaningful standardization of hurricane deductible triggers without negatively impacting market availability. IIABNY Opposes Further Restrictions on Homeowner s Insurance Non-Renewals. IIABNY supports availability of homeowners insurance in the coastal regions and is concerned with any regulatory actions that might lead to companies restricting their writings of business in these areas. The department proposed rules in the fall of 2010 that would change this so any reduction in a given county by two percent or more, or by 50 policies, whichever is greater, will require the insurer to file a formal withdrawal plan with the Department of Financial Services. The proposed rule also provides measures to alleviate market disruption. While the proposal was not advanced by the DFS, this and similar proposals resurface from time to time, for example, this idea was discussed again after Superstorm Sandy. While IIABNY supports the goal of reducing non-renewals, the proposal that has been discussed is unworkable as most companies do not maintain data by county. IIABNY is also concerned that it will lead to further problems in market availability. IIABNY will work with the DFS and legislature to make sure that any new non-renewal laws or rules work for agents, consumers and insurers. 5

6 IIABNY Supports Creating a Catastrophe Fund. The hurricanes and tropical storms that affected so many coastal residents in recent years have focused attention on the cumulative property exposures of insurance companies along the coastline and created coverage issues for consumers. IIABNY is extremely concerned about consumer impact but also with the ability of insurance companies to manage their exposure to catastrophes. The Department of Financial Services has considered the viability of creating a pool or some other plan that would allow companies to fund a facility that would, over time, accumulate resources that could be used to help coverage damages resulting from a catastrophe. IIABNY will continue to work with the DFS in developing some type of catastrophe pool or mechanism that is supported by a federal backstop or federal participation of some sort. HURRICANE r e l at e d ISSUES continued IIABNY Believes That Aggressive Implementation of Coastal Reform Legislative Initiatives is Necessary to Realize Benefits Intended for Coastal Property Owners. In 2008, IIABNY worked hard for the passage of Chapter 136 of the Laws of 2008, which included several provision aimed at improving the market for homeowners insurance in coastal regions. IIABNY believes that the Department of Financial Services must aggressively implement all the provisions of Chapter 136, including convening the C-Map Advisory Council and the Special Advisory Panel for Homeowners Coverage, to fully realize the benefits intended for coastal property owners. IIABNY will continue to work diligently with DFS to implement the provisions of the law including implementing a program to attract insurers to the New York State homeowners market. 6

7 IIABNY Supports Changing the Pre-funding Requirements of the Aggregate Trust Fund. The 2007 workers compensation reform legislation resulted in a change in the aggregate trust fund (ATF) law requiring insurance companies to estimate the amount of a permanent partial claim, pre-fund the claim, and pay the benefit into the State Insurance Fund. If the insurance company underestimates the amount of the claim it has to pay the difference. If it overestimates the amount, the money is not returned. This system, in addition to being unfair and costly to the insurance industry, creates an unfair competitive advantage for the State Insurance Fund which has no such requirement to pre-fund claims. The problem is also harmful to large businesses, hospitals, and municipalities that often have large deductible plans that may cover portions of a loss during the year. The new law will force these organizations to pay the full amount of the deductible up front, causing financial burdens for these types of entities. WORKERS COMPENSATION The legislature must enact legislation to correct the Aggregate Trust Fund situation that creates a serious problem for the industry and policyholders. The current ATF law adds costs to the system and is at odds with the cost reduction goal of the 2007 reform law. Without change, we believe insurance companies will rethink their commitment to write workers compensation in New York leading to less choice for businesses and their workers. IIABNY Believes Businesses Deserve the Same Type of Advance Notice of Substantial Premium Increases to Their Workers Compensation Policies They Receive for Other Types of Commercial Insurance Policies. Under current law, commercial policyholders are entitled to receive 60 to 120 days advance notice if the renewal premium for their policy will increase by more than 10 percent (with certain exceptions for increased exposure units, experience rating, loss rating, retrospective rating and audit.) The law requiring such notices protects the customer by giving him/her the opportunity to look for alternative coverage before their current policy expires. Unfortunately, the rules for workers compensation policies are not the same. A worker s compensation carrier is not required to provide any notice to a policyholder when the renewal premium will increase by more than 10 percent. Instead, businesses with worker s compensation policies often receive the bill for their renewal policy just days before the effective date, only to find that the premium has increased substantially. Since the policyholders were not given any advance notice of the increased renewal premium, they have lost the opportunity to look for alternative coverage and must renew their policy at the new, higher rate. In 2014, IIABNY developed legislation that would address this issue by requiring insurers to provide conditional renewal notices to workers compensation policyholders when their premium would increase more than 10 percent. IIABNY has been working with carriers on amendments to the bill that would address their concerns. IIABNY will continue to work with the industry to develop legislation to be introduced in the 2015 session that protects businesses from substantial premium increases to their workers compensation policies without prior notice. 7

8 IIABNY Supports Agent Involvement in the State s Health Benefit Exchange and Receipt of Fair Compensation for Their Services. In April 2012 Governor Cuomo issued an Executive Order that New York establish its own health insurance exchange. Since that time IIABNY has been working closely with policymakers responsible for developing the exchange, known as New York State of Health. Our primary goal has been to ensure that insurance producers be permitted to sell insurance policies within the exchange to all those seeking coverage and receive fair compensation for their valuable services. IIABNY was successful in achieving this goal, and due to our efforts, insurance producers are allowed to sell health insurance policies in both the individual and small employer marketplaces of New York s exchange. IIABNY continues to work with the exchange staff as operations have begun and we continue to address operational issues as they emerge, including working to revise the Exchange Broker Agreement to allow brokers to charge fees. IIABNY will also continue discussions with policy makers to determine if there are other issues that need to be addressed now that the Exchange is up and running. HEALTH INSURANCE IIABNY will continue its ongoing dialogue with the New York State of Health, as well as policymakers to address issues that arise going forward. 8

9 EXCESS SURPLUS LINES MARKET IIABNY Supports Changes to the Excess Lines Law to Facilitate the Ease of Doing Business. IIABNY was successful in 2009 in helping bring about necessary changes to the state s Export List. These changes will make it much easier for producers to place various hard-to-place risks with the excess and surplus lines market. Also federal legislation supported by IIABA enacted several improvements. In 2011, IIABNY was successful in having New York s law conformed to these federal requirements which make it easier for those excess lines brokers operating in multiple states to do business. While the changes to the Export List were a significant step forward towards streamlining excess lines placements, IIABNY will continue to work with other producer groups to obtain additional changes. These include: Waiving the diligent search requirement for policy renewals for the first and second year. Removing unnecessary broker reporting requirements; and Providing a presumption of due care for brokers that rely on ELANY s eligible authorized insurer list. IIABNY will work to advance legislation that waives the diligent search requirement for first and second year policy renewals, removes unnecessary reporting requirements, and provides a presumption of due care by brokers that rely on ELANY s authorized insurer list. 9

10 IIABNY Supports Legislation That Reforms or Repeals Insurance Law 3411 Relating to Auto Physical Damage Inspections. Section 3411 of the Insurance Law requires that all motor vehicles must be inspected before comprehensive or collision coverage can be provided. This requirement has outlived its usefulness because of technological advances and should be reformed or repealed. REPEAL PHYSICAL DAMAGE INSPECTION REQUIREMENTS This law was put in place 25 years ago as a way to reduce fraudulent physical damage claims. Since that time, technological advances and new fraud fighting tools have rendered this requirement useless. Insurance companies no longer rely on these inspections and the reports are rarely, if ever used. The reports require a photo inspection that is conducted by either the agent or broker or a third party such as CARCO. The photo requirement is inconvenient for policyholders who must bring their vehicle to a location for the photos. It is also an additional burden and business expense on the agent or broker who must take the photo. If a third party is used, there is an additional cost to the insurer associated with the report. The cost of these mandatory inspection reports is passed on to drivers in the form of higher premiums. Not only do drivers have to pay higher premiums but a driver can inadvertently lose physical damage coverage if the inspection is not completed within a time period specified in the law. IIABNY supports legislation that repeals or reforms Insurance Law 3411 to allow insurance companies to determine when a vehicle inspection is required. 10

11 IIABNY Supports Legislation That Will Permit Independent Insurance Agencies to Charge Reasonable Fees to Offset Service Costs. Insurance agents increasingly face demands that they perform services at a cost for their clients above and beyond obtaining insurance for them. These include purchasing motor vehicle records and printing and mailing policies. The New York State Department of Motor Vehicles charges $7 for a single motor vehicle record. It costs an agency more than $100 just to obtain a small number of MVR s for a single commercial client. The cost to print and assemble a single 50-page policy is at minimum between $2.50 and $3.00, and most commercial clients have multiple policies. Insurers do not account for these costs when they set commission levels. RECOUPING OUT OF POCKET EXPENSES New York insurance law Section 2119(c) permits insurance brokers (but not insurance agents) to charge their clients service fees and most businesses are allowed to charge their clients for additional services they provide. IIABNY believes that the legislature should update the law to permit independent insurance agents to do the same with proper written consent from the client. IIABNY supports legislation that will permit independent insurance agencies, at their option and with the client s written consent to charge reasonable fees to offset extraordinary service costs. 11

12 ONGOING ISSUES IIABNY Supports Adoption of a Single Insurance Producer License. Currently, New York is one of the few states that have a separate agents and brokers license. The majority of other states have adopted the Producer Licensing Model Act (PLMA) recommended by the National Association of Insurance Commissioners (NAIC) as a way for states to achieve licensing reciprocity and uniformity requirements required by the federal Gramm Leach Bliley Act (GLBA) of Keeping track of multiple agent and broker licenses is a real and unnecessary burden for insurance producers in New York. This burden would be eliminated if New York were to adopt a single insurance producer license. New York needs to adopt the single producer licensing provisions of the PLMA to bring it into conformity with the majority of states that have already adopted this uniform licensing standard. IIABNY supports the replacement of separate agents and brokers licenses with a single producers license. This change will facilitate multi-state licensing uniformity. IIABNY Supports Legislation to Tackle No-Fault Reform. IIABNY has been a consistent voice in the industry supporting measures that tackle the problem of fraud in the New York automobile market. While there has been some improvement because of strong regulatory initiatives, New York still has some of the weakest laws in the country to address fraud. IIABNY continues to work with an industry coalition, the NY First Auto coalition, which IIABNY initiated, to obtain legislation to address the problem of automobile fraud. The Legislature must pass meaningful fraud legislation that will help fight no-fault insurance fraud. IIABNY Supports Repeal of Antiquated Advertising Laws. The insurance law requires insurance producers that use advertisements which refer to an insurer, to display the insurer s full name and the name of the city, town or village of its principal office. This outdated law serves no public policy purpose in today s information age and is unnecessarily burdensome upon producers who must clutter phone book advertisements and web pages with meaningless text. The law may have been helpful to consumers in the days before widespread advertising on television and the internet. Today, the vast majority of consumers can identify insurers from company logos and other common names or abbreviations that may not necessarily be the insurer s full name. There is also no particular reason for advertisements to display the location of an insurer s principal office. Consumers are more concerned with the location of the company representative who will provide them with service. IIABNY secured introduction of a bill in the previous legislative session that would repeal the requirement that producer advertisements display an insurer s full name and principal office location IIABNY will seek to have a bill introduced and advanced again this session. 12