Big I Legislative Position Paper Aims at Serious Change

New York’s Big I has issued its annual position paper. Here are highlights.

WORKERS’ COMPENSATION

IIAA Supports Increasing the Payroll Threshold for Employers Subject to the Workplace Safety and Loss Prevention Program

υThe Workplace Safety and Loss Prevention Program was created in 1997 by statute to reduce workplace injuries and lower Workers’ Compensation costs for larger employers.

The program is required for all employers whose most recent annual payroll is in excess of $800,000 and whose most recent experience rating exceeds the level of 1.2. Employers who meet these criteria are notified by the New York Compensation Insurance Rating Board of the need to undergo a Workplace Safety and Loss Prevention Consultation and evaluation. Notifications are sent out by the Rating Board several times a year as determined by the Board. Employers must pay a fee for the consultation, which if conducted by the Department of Labor is $350 a day. Any remedial action recommended by the consultant must be implemented by the employer within six months.

Over the last 20 years, payrolls have increased substantially. The law, which was originally intended to apply to larger employers, is now capturing smaller ones because the payroll threshold has not been adjusted. While Big I New York supports compulsory safety and loss prevention programs, it believes that the $800,000 payroll threshold needs to be adjusted to reflect today’s payroll costs. Based upon the Employment Cost Index published by the U.S. Bureau of Labor Statistics, a payroll threshold of $800,000 in 1997 would equate today to approximately $1.2 million.

Big I New York developed legislation to reflect this updated payroll threshold. The legislation also would allow for annual adjustments to the threshold based on the Employment Cost Index.

Action Needed:

Big I New York secured legislation in both the Senate (S.4369/Hannon) and the Assembly (A.1458/Zebrowski) to amend the Workers’ Compensation Law to change the payroll threshold for employer participation in the Workplace Safety and Loss Prevention Program from $800,000 to $1.2 million. We will continue to advance these bills in the 2018 session.

LICENSING

IIAA supports legislation that will consolidate the three different business entity license renewal dates into one renewal date.

Currently, insurance agencies and brokerages licensed as business entities have three different renewal dates for their business entity licenses. The reason for this is based in part upon New York’s unique licensing system whereby insurance producers have separate insurance agent and insurance broker licenses, instead of one single producer license.

Therefore, business entities that hold an insurance broker’s license authorizing them to sell property/casualty and/or life/health insurance must renew their license on October 31 of even numbered years. Business entities licensed as an insurance agent to sell life/health insurance must renew their license on June 30 of odd numbered years. Business entities licensed as an insurance agent for property/casualty lines have a renewal date of June 30 of even numbered years.

It is quite common for a business entity to hold all four licenses (life/health agent, property/casualty agent, property/casualty broker and life/health broker) so it has to renew the entity license at three different times.

The licensing renewal requirements have become an administrative burden for these business entities. There is also no benefit to the Department of Financial Services to have three separate renewal dates.

Big I New York’s legislation would simplify the licensing system and establish just one license renewal date for business entities.

Action Needed:

Big I New York will advance legislation it developed—S.6445 (Seward) and A.8484 (Cahill)—to establish one common business entity renewal date.

SCAFFOLD LAW REFORM Labor Law 240/241

Big I New York Supports Repealing or Reforming the Absolute Liability Standard in Labor Law 240 & 241.

Sections 240 and 241 of the New York State Labor Law, enacted in 1885, are commonly referred to as the “Safe Place to Work Law” or the “Scaffold- ing Law.” These sections of law establish an “absolute liability” standard on any contractor or property owner for a fall from any height by an employee. Under an absolute liability standard there is no consideration of fault or negligence and the contractor or building owner is held completely respon- sible, regardless of fault. This statute is the only such law remaining in the United States, pre-dates our Workers’ Compensation Laws and circumvents the sole remedy doctrine of workers’ compensation.

Because of these antiquated laws, insurance on construction projects for both owners and contractors has become increasingly expensive and the market for this coverage severely restricted in New York. Lack of cover- age is preventing construction projects from proceeding, costing New York State jobs. When coverage can be obtained, the cost of construction is needlessly driven up. In these difficult economic times, any law driving up business costs and preventing job growth needs to be carefully examined.

Big I New York participates in a broad-based coalition of over fifty advocacy groups representing small and large businesses, developers, insurers, builders, contractors, municipalities, school districts and taxpayers that is advocating for reform of New York’s Scaffold Law.

Action Needed:

Big I New York supports legislation to repeal or reform the Scaffold law to provide for a comparative negligence standard for labor law claims and will continue to work with the coalition to pass legislation to accomplish the necessary reform such as S.6875 (Akshar) and A.5624 (McDonald).

AUTO INSURANCE ISSUES

Big I New York Supports Legislation That Reforms or Repeals Insurance Law 3411 Relating to Auto Physical Damage Inspections

Section 3411 of the Insurance Law requires that all motor vehicles must be inspected before comprehensive or collision coverage can be provided. This requirement has outlived its usefulness because of technological advances and should be reformed or repealed.

This law was put in place 25 years ago, to reduce fraudulent physical damage claims. Since that time, technological advances and new fraud fighting tools have rendered this requirement useless. Insurance companies no longer rely on these inspections and the reports are rarely, if ever used. The reports require a photo inspection that is conducted by either the agent or broker or a third party such as CARCO. The photo requirement is inconvenient for policyholders who must bring their vehicle to a location for the photos. It is also an additional burden and business expense on the agent or broker who must take the photo. If a third party is used, there is an additional cost to the insurer associated with the report. The cost of these mandatory inspection reports is passed on to drivers in the form of higher premiums. Not only do drivers have to pay higher premiums but a driver can inadvertently lose physical damage coverage if the inspection is not completed within a time period specified in the law.

Action Needed:

Big I New York supports legislation such as S.5768(Lanza)/A.1312(Zebrowski) that repeals or reforms Insurance Law 3411 to allow insurance companies to determine when a vehicle inspection is required.

HEALTH INSURANCE

Big I New York Opposes Legislation That Would Create a Single Payer Health System in New York

With the uncertainty in Washington over the fate of the Affordable Care Act, New York may be considering alternatives, including a single payor health system. This is not the right solution for New York. Big I New York believes that any alternative to our current system should build upon New York’s existing strengths and not recreate a whole new system that likely will be too costly and unsustainable. A government-run single payer system would be prohibitively expensive and would disrupt other insurance coverage, including existing Medicare coverage for seniors and existing employer-sponsored health insurance coverage.

Action Needed:

Big I New York will oppose A.4738 (Gottfried)/S.4840 (Rivera), legislation that would create a single payer health system in New York. We will continue to work cooperatively with the industry and policymakers to build upon the current strengths in the system and maintain a competitive and vibrant marketplace that will provide quality coverage at an affordable price. We will also support measures that will bring down the high costs of health care.

ANTI-ARSON

Big I New York Supports Efforts to Repeal New York’s Anti-Arson Law in Its Entirety.

Recent legislation scaled back the current law to remove cities with a population of less than $1 million (as of a 1970 census). The law now only applies to the City of New York.

In the late 1970’s there was an increase in arson activity in some major cities. This prompted the Legislature to create Section 3403 of the Insurance Law which directed the insurance superintendent to develop an “anti-arson application” for people seeking property insurance for fire or explosion to complete.

If a policyholder fails to complete this application, which is required upon initial application for insurance and on each subsequent renewal of the policy, the insurer must cancel the policy. Many policyholders simply forget or fail to complete the form in time, forcing the company to cancel the policy unnecessarily.

The anti-arson application has outlived its usefulness. Insurance companies today are required by law to have fraud prevention plans, which are filed with the State, on how they detect, investigate, and prevent fraudulent activities. These fraud prevention plans are far more effective than the anti-arson application form which simply asks a series of questions. The law is just a paperwork burden for policyholders who risk losing coverage if the paperwork is not completed.

Action Needed:

We will support legislation to repeal the anti-arson law.

REGULATORY ISSUES

And Seeks to Create Greater Suitability In Life & Annuity Transactions

The DFS proposed change to Regulation 187, Suitability in Annuity Transactions. The proposal seeks to add all life insurance to the current regulation that applies only to annuity transactions. It also adds a new “best interests” standard to these transactions. We see many troubling areas in the proposal, most notably its application to all life transactions. Many of the suggested changes will complicate the already cumbersome process of selling life insurance that will result in fewer sales of important life insurance products to New York consumers.

Action Needed:

We will work with others in the industry and with the DFS to amend the proposal so that it more narrowly focused on the appropriate types of transactions and includes requirements that are clear and workable for both producers and consumers.