PIANY and NYIA Hold CEO/Agency Conference

October 10, 2003

The Professional Insurance Agents of New York State Inc.’s inaugural Hudson Valley Regional Awareness Program, gave industry experts a chance to take part in the eighth annual CEO/Agency conference, sponsored by the New York Insurance Association. The conference was held last week at the Holiday Inn Suffern, N.Y.

Independent insurance agents and brokers, company representatives and other insurance professionals “expressed frustration over the lack of meaningful legislation regarding workers’ compensation issues, labor law reform and no-fault auto fraud,” said a PIANY bulletin. Robert Franzese, CEO of Capital Bauer Insurance Agency Inc. and past president of PIANY, led the discussion and panelists offered their perspectives and forecasts on the past, present and future of these issues.

The panelists included Angelo J. Baio, director of the Special Investigative Unit, Lancer Insurance Co.; Greg Massey, CPCU, CIC, CRM, vice president—Northeast region manager, Selective Insurance Group Inc.; Cecilia E. Norat, director of state relations, American International Group Inc.; F. John Riddell, senior vice president, Lancer Insurance Co.; Robert J. Ryan Jr., CIC, vice president, Ulster Savings Bank; and Virginia Wall, president, PELL & Associates.

Norat forecast that workers’ comp will become a major issue in New York’s 2004 legislative session. She emphasized that the industry needs to unite behind some needed cost-saving measures to offset the probable effort by labor to increase workers’ comp benefit levels, and identified the following as “promising areas for reform:
–New York’s high proportion of “permanent partial” disability cases, which, she said, is the highest in the nation—almost double the next-highest jurisdiction.
–Light-duty job incentives. Nora indicated that New York needs to adopt standards that will treat neck and back injuries according to a schedule of benefits, similar to that used for other injuries. She said medical guidelines for evaluating these cases have already been developed.
–Worker rehabilitation and the need to prevent drop-outs from the program;
–Systemic provisions that encourage a high degree of attorney involvement and drag out the settlement process;
–New York’s still-inadequate “managed care” provisions.

Throughout the session, the panelists called for “independent insurance agents to get involved in the political system,” and voiced concern that legislators do not understand the insurance industry and its problems. It noted a need for general contractors to contact their legislators to tell them they can’t find insurance, so legislators realize the severity of the problem.

“Contractors can obtain insurance at a very, very high price, but their insurance is restricted. The exclusions are horrendous on most policies,” Wall stated. “We all have to do something, but the insureds have to help.” Ryan noted that general contractors face another problem—insurance carriers are starting to cut back on policies they will write in New York state. “This is a real economic issue for contractors,” Massey commented. “Premium dollars and jobs are leaving the state over this one.”

At the beginning of their presentation on auto fraud, Riddell and Baio presented facts from the National Insurance Crime Bureau, which estimated the cost of fraud is $30 billion a year nationally and costs New York state drivers $432 million. “Insurance fraud is the number two white-collar crime behind tax evasion,” Riddell stressed.

“Reforms need to be made to combat no-fault auto fraud, such as classifying these acts as felonies rather than misdemeanors; extending the time for fraud challenges (currently, insurance companies only get 30 days to identify and investigate fraud); and certifying health care providers,” said the bulletin. The panel also noted that fraud is a consumer issue and said “drivers needed to know just how much fraud is costing them.”

The participants agreed that both insurance professionals and their affected clients will need to pull out the stops in 2004 in order to achieve change. This will take greater outreach and an education process “to bring customers into active, organized involvement.”

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