N.Y. Superintendent: A Handshake and Heads-Up

The Independent Insurance Agents & Brokers of New York looks forward to working with New York’s next Superintendent of Insurance and is hopeful the major strides begun by his predecessor will continue to benefit the state’s economy, homeowners, motorists and business owners. In early January, Gov. George Pataki announced that his choice to fill the job of superintendent would be Howard Mills, a former member of the state Assembly. Mills will have his hands full. Yet, his 15 years in elective office and his experience on the Assembly Insurance Committee could prove helpful in addressing some of the crucial issues he faces.

Agent-Broker Compensation
Mills won’t have to wait long before he has to turn his attention to one of the biggest insurance stories. The ramifications of the investigation launched by Attorney General Eliot Spitzer into allegations of bid rigging and illegal “steering” of business at the giant brokerage houses are still being felt throughout the industry and in other states. We intend to help the new superintendent quickly gain an understanding of the voluntary approach to transparency and full disclosure of agent-broker compensation IIABNY is advocating. We are hopeful that he will understand that the misconduct uncovered is the result of a tiny few.

TRIA
IIABNY believes New York is at the epicenter of a potential economic meltdown if the U.S. Congress fails to extend the Terrorism Risk Insurance Act that is due to expire at the end of 2005. New York’s property owners, particularly those with commercial property in New York City, bore the brunt of the insurance fallout from Sept. 11, 2001. Without TRIA, insurers will be compelled to exclude terrorism coverage in 2006 through conditional endorsements, not write any property coverage at all, or in states like New York that have not permitted exclusions, write the coverage and expose capital to catastrophic risk. The state’s chief regulator bears a special responsibility to serve as a strong advocate for reauthorization of TRIA as early in the year as possible.

Workers’ Compensation Reform
New York’s superintendent needs to do more than approve or disapprove rate hikes in the state’s workers’ compensation insurance system. The state’s employers pay some of the highest premiums in the nation, while most injured workers who qualify for benefits receive some of the smallest checks. A legislative overhaul is long overdue, and Mills will be in a position to lobby his former colleagues to pass sorely-needed cost-cutting measures, such as capping permanent partial disability benefits for the relatively few so the vast majority of injured workers can received higher benefit payments.

240/241
Some might argue that the superintendent has only a limited role in the drive to amend Sections 240/241 of the Labor Law. We disagree. The construction liability insurance market has been decimated by these outdated absolute liability standards. As with workers’ compensation, Mills can do much to persuade the Assembly to approve a negligence standard that is both fair to employers and employees. He cannot afford to sit idly by as the market continues to crumble.

Auto Insurance Fraud
Recently, a group of auto insurers in New York announced reduced rates. We shout out a muted hallelujah. The move to shorten the amount of time criminals have to exploit the state’s no-fault auto insurance system is paying dividends. However, the benefits may be limited and short-lived without increasing the penalties against those who commit the fraud in the first place. IIABNY supports the reforms introduced by the Pataki Administration and approved by the Senate. The new superintendent can demonstrate his value to his new boss by helping break the Assembly logjam that is holding up this reform.

A Closing Note on Serio
With the departure of Gregory V. Serio to the private sector, New York’s consumers and independent insurance agents and brokers are losing one of the most capable and best friends they ever had in the office of superintendent. Under his leadership, the department streamlined the product approval process, introduced online processing of licenses and implemented the Healthy NY program. Additionally, Serio developed the state’s disaster coalition and insurance emergency operations center and the Health Care Roundtable. He exhibited the kind of tenacity often lacking in public officials when he fought off two years of legal challenges to Regulation 68. As a result, New York motorists are now bearing the fruit in the form of rate reductions. Of special note: He showed true leadership as a calming and reassuring presence in the aftermath of Sept. 11, 2001. If Serio is equally successful in the private sector as he was as superintendent, his new employers will undoubtedly view his performance as grand as we do.

Poppa is president and chief executive officer, Independent Insurance Agents & Brokers of New York Inc., in Dewitt, N.Y. He can be contacted at
dpoppa@iiabny.org.