Agent/Broker Compensation Disclosure
The New York State Insurance Department issued its notice of adoption of Regulation 194 - "Trustworthiness and Compentence of Insurance Producers, Especially Relating to Compensation Agreements with Insurers" in the NYS Register on February 10, 2010. The Regulation will be effective January 1, 2011. IIABNY has worked tirelessly on this issue since a draft was first released in February 2009.
Producer compensation disclosure continues to be IIABNY’s number one advocacy priority. While we were successful in achieving substantial changes that are favorable for producers in the three drafts that preceeded the final regulation, we still have significant concerns with certain aspects of the final regulation.
IIABNY filed its legal action, known as an Article 78 proceeding, on May 25, 2010 in State Supreme Court in Albany. Although Acting State Supreme Court Justice Richard Platkin ruled on November 19, 2010 to uphold the regulation, IIABNY and CIBGNY are still reviewing available options and filed a Notice of Appeal with the Court on December 20, 2010. For the latest updates view a special resource page on this issue.
Sharing of Agent-created Prospect Files (Board policy adopted May 2008)
IIABNY Board policy on Sharing of Agent Created Prospect Files
IIABNY contacted company CEOs and managers and distributed the Board policy, adopted at the May 2008 annual meeting, stressing that the association will stand firm in its defense of agent and broker ownership of client and policyholder information.
Circular Letter No. 20 (2008) was issued on Oct. 16, 2008 by the New York State Insurance Department to all insurers, reinsurers and insurance producers licensed in the state. The circular letter sets forth the Insurance Department’s expectations regarding “contract certainty”, a term that refers to “complete and final agreement of all terms to an insurance policy or reinsurance contract by the date of inception, and the issuance and delivery of the policy or contract before, at, or promptly after inception.” The circular letter stemmed from the department’s involvement in the World Trade Center settlement negotiations, which brought to light various industry practices that can create uncertainty about the scope and intent of coverage that is bound but no policy has yet been produced. The circular letter goes on to say that the department expects the industry in New York to adhere to principles and practices that will “enhance contract certainty” and producers and insurers are expected to develop “practices to assure that policy documentation is delivered to the insured before, at, or promptly after inception” within 12 months of the date of the circular letter, or by Oct. 16, 2009.
Since most policies are written on standardized forms that are subject to prior approval by the Insurance Department, Circular Letter No. 20 (2008) specifically focuses on those policies where, because of the unique nature or size of the risk, issues regarding contract certainty are apt to surface, including large commercial insureds written on a manuscript basis, the special risk market (written under Insurance Law Article 63), policyholders on the E&S market and other insurers via reinsurance.
The Excess Lines Association of New York (ELANY) published the following guidelines* to help E&S brokers comply with the circular letter:
Where the producer and the carrier chosen have a significant amount of business particularly in one line of coverage, the producer can request the policy be issued using certain forms by issue date based on the forms recently issued by the carrier. In many cases, the choice of forms would thereby be addressed at the time of quoting instead of post binding.
Where the policy is a renewal, the producer can suggest the renewal policy be issued on the same forms as the expiring policy.
Track receipt of final policy documentation by carrier and use the results as one criteria in evaluating the quality of service provided by each carrier.
*Excerpted from ELANY bulletin 2008-30 (12/19/08)
Late Notice of Claims
IIABNY achieved a major legislative victory at the end of the 2008 session with the passage of legislation that finally defines late notice of claims. IIABNY was instrumental in the veto of an earlier version (2007) of the legislation because of other onerous provisions in the bill, but fought to achieve the much needed definition of "late notice".The bill was signed into law by Gov. Paterson on July 21, 2008 and was effective on January 17, 2009.
Late Notice of Claim Law
E&O Report (February 2009) on Late Notice Law (must be logged in to view this document)
IIABNY Board of Directors Resolution on Denial of Claims for Late Notice (August 2007)
Claims Reporting & Effect on Claims Frequency Policy Statement (August 2006)
Other Company & Industry Issues