NYIA Annual Conference: Newly Confirmed Financial Services Superintendent Outlines Vision in Keynote Address

Benjamin Lawsky, the newly confirmed, first-ever Superintendent of the New York State Department of Financial Services outlined his vision for the state insurance and banking industries during his keynote address at the New York Insurance Association (NYIA) Annual Conference on Thursday, June 2 in Verona, New York.

Superintendent Lawsky noted that there were four main reasons the Governor made consolidation of the insurance and banking departments a priority: to create a leaner and less costly regulator, guard against systemic risk, to protect consumers, and modernize regulation. He commented that the overarching reason was to create an environment where insurance and banking can thrive. He said the Governor is keenly aware that the state needs to create jobs. The number one goal of the Department of Financial Services is to promote the growth of the business of banking and insurance. He shared that he had spent the previous day in Utica, New York where he saw numerous boarded up businesses— it is clear how desperate it is for business to once again thrive in all areas of the state.

Efforts have begun to logistically combine the two departments. Superintendent Lawsky is already contemplating options for space, technology solutions are being considered that will meet the needs of regulating both banking and insurance, he is looking at hiring—making sure the right people are in place at all levels and that the department is led by smart management.

“I got the distinct impression from the Superintendent that he truly wants to modernize the regulation of financial services in the state and make New York a place where companies want to business,” Ellen Melchionni, president of NYIA said. “He takes his job seriously and wants to do it right. NYIA will be working closely with him and his team to ensure that areasof concerns to companies are addressed, including stopping the improper use of insurance industry assessments, making substantial changes to the rate and form filing process, and streamlining financial examinations.”

Superintendent Lawsky mentioned a separate issue that is critical to auto insurers writing in New York: no-fault fraud. He said the issue is important to him and has some ideas on what can be done on the regulatory side. He looks forward to teaming up with companies to develop a win-win situation.

Later in the conference individuals from the New York State Insurance Department and New York State Banking Department elaborated on Superintendent Lawsky’s vision for the Department of Financial Services in The Über Agency: What does it mean for P&C insurance companies? panel. Martin Schwartzman, first deputy superintendent of the New York State Insurance Department, MarthaLees, general counsel and deputy superintendent of the New York State Insurance Department and Regina Stone, senior official and deputy superintendent of banks of the New York State Banking Department provided their insights on the implementation phase of the consolidation. Panel moderator and NYIA’s second vice chair, Bernard Turi, senior vice president of Utica National Insurance Group facilitated a discussion about the operations of the new agency. Several key insights were provided from the panelists. It was made clear that numerous aspects of the department will be in place by October 3, including the Financial Fraud and Consumer Protection Unit (FFCPU). Insurance and banking will overall be regulated in silos, but there will be certain departments, including FFCPU and human resources that will be merged. The panelists said that it is time to reengineer— if the consolidation is done right, it will be a very dynamic organization with a continual improvement program in place.

Earlier that morning several CEOs offered their perspective on where we are headed as an industry, during the Oh the Places We’ll Go: Envisioning the future of the industry panel presentation. NYIA’s chair, Richard Zick, president and CEO of Utica First Insurance Company moderated the discussion. The panelists were Warren Heck, chairman of the boad and CEO of Greater New York Mutual Insurance Company, Michael Lee, president and CEO of Tower Group, Inc., Philip Lewis, president of Leatherstocking Cooperative Insurance Company, and Robert Zak, president and CEO of Merchants Insurance Group. The group provided insights on the continued trend of increased merger and acquisition activity, concerns with Solvency II coming to the United States when conservative accounting standards are already in place and the implications of the expected deteriorating value of bonds.

On Friday NYIA was joined by Senator Joseph Griffo of Utica, New York who provided opening remarks. His speech led directly into the Town Hall Meeting of insurance committee leaders—Senate Insurance Committee Chair James Seward, Senate Insurance Committee Ranking Member Neil Breslin, Assembly Insurance Committee Chair Joseph Morelle and Assembly Insurance Committee Ranking Member William Barclay. William Melchionni, NYIA’s legislation and regu-lation committee chair and senior state relations officer for American International Group, Inc. facilitated the session. The legislators discussed the state’s property and casualty priorities, including reining in the 332 assessments and cost savings for insurers with the creation of the Department of Financial Services, the need for no-fault reform and their desire to enact commercial modernization.

The conference also took a look at two hot issues—predictive analytics and coastal insurance. NYIA board member, Louis Masucci, vice president underwriting of Magna Carta Companies moderated the What’s in the Black Box: Predictive analytics panel made up of Sam LaDuca, vice president and chief actuary of Merchants Insurance Group, Dax Craig, president and CEO of Valen Technologies, Inc., and Anthony Yoder, supervising casualty actuary of the New York State Insurance Department. The panel informed the audience that predictive analytics can be an effective underwriting tool that benefits both consumers and companies, but the proper measures need to be put into place before implementing this additional means of determining risk.

The Coastal Insurance: It’s a shore thing panel composed of company, agent and reinsurer representatives was moderated by NYIA first vice chair, Jeffrey Rice, president and CEO of Wayne Cooperative Insurance Company. The panelists were Michael O’Malley, senior vice president state government affairs of Chubb & Son, John Reiersen, president and CEO of Kingstone Insurance Company, Richard Poppa, president and CEO of the Independent Insurance Agents and Brokers of New York, Inc., Steven Ruchman, partner of B&B Coverage LLC, and David Durbin, senior vice president, risk and research of Partner Reinsurance Company of the U.S. The panel, not surprisingly, had differing perspectives, but it was clear that there were many areas of consensus on how to ensure that the coastal insurance market remains viable in New York. Panelists had suggestions on how to tweak the systems in place, but there seemed to be overall agreement that there is not an availability crisis on the coast.