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August 19, 2009
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| In this Issue
• Key NY Legislator Meets with IIABNY Board
• New Superintendent Readies Himself to Guide State Insurance Dept.
• Magazine Reports Mega-brokers in NY Might See More Contingent Payments in Future
• Insurers Have Flexibility on Flood Rate 'Grandfathering'
• NYCIRB Updates Rating Values, Manual Rules, Instructions
• Prepare Yourself to Talk to Clients about Flood Insurance
• Big 'I' Debuts 'Oh, By the Way…Flood Sale' Webinar
| Hot Links Local Events | Education Calendar | E&O Reports |Capitol Reports | The Situation Room | Technology
Word on the Street Podcast | Ask Tim Podcast
| | |  | | | Assembly Insurance Committee Chairman Joseph
Morelle (D-Irondequoit) addressed IIABNY's board
of directors last week in Skaneateles. |
Key NY Legislator Meets with IIABNY Board
Like many of his colleagues, state Assemblyman Joseph Morelle (D-Irondequoit) is meeting with a variety of constituents during the month of August. Last week, Morelle stepped outside his Monroe County district to talk insurance and politics with IIABNY’s board of directors at the Skaneateles Country Club. In a wide-ranging discussion, Morelle expressed his views on producer compensation disclosure, regulating credit default swaps and congressional efforts to reform the nation’s health insurance system. As chair of the Assembly Insurance Committee, he acknowledged the difficulty at the state level to plan health insurance legislation while the U.S. Congress deliberates what form, if any, a national health insurance program might take. He also suggested an "open and fair debate" should occur on the role of the New York State Insurance Fund. Immediately following his presentation to the board, Morelle attended a reception hosted by IIABNY. A photo gallery of Morelle’s appearance in Skaneateles is posted online at the IIABNY page on Facebook. | | | Top of page | | |  | | James J. Wrynn | |
New Superintendent Readies Himself to Guide State Insurance Dept.
James J. Wrynn will officially take over the leadership reins of the state Insurance Dept. on Thursday when he assumes office as superintendent-designate. Wrynn was appointed last week by Gov. David Paterson to serve as New York’s next superintendent of insurance, filling the vacancy created when Eric Dinallo resigned in July to join the faculty at New York University. The appointment will become permanent pending his confirmation by the State Senate. Wrynn, who will replace acting Superintendent Kermitt Brooks, had served as executive director of the State Insurance Fund since April when he was appointed by Gov. Paterson. For more information about Wrynn, see the article posted Aug. 14 in IIABNY’s The Situation Room. | | | Top of page | | | Magazine Reports Mega-brokers in NY Might See More Contingent Payments in Future
Could contingent commissions be making a comeback in New York among the mega-brokers that reached settlements over allegations they illegally steered business and engaged in other market misconduct practices? According to Business Insurance magazine, the New York State Insurance Department, (a party to the 2005 settlements reached with Marsh & McLennan, Aon and Willis Group) is, at least, willing to revisit the issue. An unnamed NYSID spokesman told BI in an article published Aug. 10 that: "Right now, we are focused on increasing disclosure across the board," referring to the department's efforts to regulate producer disclosure standards. "Our goal is to level the playing field, and at some point we will need to revisit the settlement agreements and see if they still work. But our primary focus right now is our producer compensation disclosure regulation," he said. Restrictions on the three brokerages accepting contingent commissions were loosened in 2006 by then-New York Attorney General Eliot Spitzer. Under an amendment to the 2005 settlement, the payments are allowed in New York only when the firms serve as a managing general agent or underwriting manager. | | | Top of page | | | Insurers Have Flexibility on Flood Rate 'Grandfathering'
Thousands of New Yorkers have experienced a change of flood zone in the past couple of years due to the Federal Emergency Management Agency’s re-mapping project. The National Flood Insurance Program manual contains rules that permit the "grandfathering" of existing rates in some cases when a change in flood zone results in higher rates. However, the rules do not guarantee a long-term grandfathering of rates or even any grandfathering at all. The NFIP’s rating rules, section XIV, Special Rating Situations, C.1. state: To recognize policyholders who have built in compliance with the (Flood Insurance Rate Map) and/or remained loyal customers of the NFIP by maintaining continuous coverage, the Federal Emergency Management Agency has "Grandfather rules." These rules allow such policyholders to benefit in the rating for that building. For such buildings, the insured would have the option of using the current rating criteria for that property or having the premium rate determined by using the (Base Floor Elevation) and/or flood zone on the FIRM (old map) in effect when the building was originally constructed (for those built in compliance) or when coverage was first obtained (for those with continuous coverage). This results in a cost savings to insureds when the new map resulting from a map revision would result in a higher premium rate… Always use the new map if it will provide a more favorable premium (lower rate)… Policies written to cover either Post-FIRM or Pre-FIRM construction may be renewed and rated based on the FIRM and/or BFE in effect when the policy was initially rated as long as the coverage is continuous and the building has not been altered to make the reference level lower than the BFE on that FIRM.
As written, the NFIP rules do not require grandfathering of rates on renewal business, though they permit the option. At least one IIABNY member has reported that insurers are being inconsistent on this. Some carriers are rewriting policies that were in the Preferred Risk Program on standard policies at the first renewal. Others are grandfathering for one year only. Still others are grandfathering policies indefinitely. IIABNY members with insureds whose flood zones have changed may want to contact their carriers to find out the approach they are taking on grandfathering. | | | Top of page | | | NYCIRB Updates Rating Values, Manual Rules, Instructions
Following the annual release of updated loss costs from the New York Compensation Insurance Rating Board, the rating organization has issued a flurry of recent announcements: On Aug. 3, the board announced the New York Insurance Department approval of revised factors that apply to policies written under retrospective rating plans and revised Small Deductible Loss Elimination Ratios. The changes are effective on Oct. 1. The Aug. 14 bulletin announced some technical changes to the instructions for completing the declarations page for New York workers’ compensation policies. These changes take effect on Sept. 1.
| Top of page | | | Prepare Yourself to Talk to Clients about Flood Insurance
All New York licensed resident producers selling flood insurance through the National Flood Insurance Program must comply with the minimum flood education training requirements of section 207 of the Flood Insurance Reform Act of 2004. Failure to comply with this basic training requirement may jeopardize the producer’s authority to write insurance through the NFIP. IIABNY is offering the mandatory National Flood Insurance Course this fall at locations across New York. The course explains how the NFIP works, including the "Write-Your-Own Program." Myths and facts about who needs flood insurance will be covered, and attendees will learn how to read flood insurance maps and determine flood zones. Standard flood insurance policies will be reviewed, and ideas for selling flood insurance and avoiding the potential for errors and omissions will be discussed. The course is approved for three continuing education credits for PC, BR, C3 and PA licenses. Register on-line. For more information, e-mail the IIABNY Education Department or call (800) 962-7950. | | | Top of page | | | Big 'I' Debuts 'Oh, By the Way…Flood Sale' Webinar
Interested in learning flood marketing techniques? Participate in the "Oh, By the Way...Flood Sale" Webinar presented by IIABA Flood Program Manager Linda Mackey. Topics in the fast-paced 45-minute presentation include: reasons to sell flood insurance; reasons consumers should buy; limited product knowledge; misconceptions by agents and consumers; talking points and myth busters; the flood risk; and flood resources — facts and statistics. Webinar dates To register click on the desired date, or send an e-mail message and indicate the session you would like to attend. | | | Top of page |
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