WC: No Reforms from Albany

By Martin Koles, M. Koles & Associates LLC

Once again, New York State’s Legislative session ended without reform of the coercive and anti-competitive practices of the New York State Insurance Fund (NYSIF). As a director and former president of PIA and executive board member of CIBGNY, I can attest that the associations and their member agents and brokers across the state have long fought to level the playing field, originating and supporting the following measures this session:

We supported a bill that would eliminate a 30-day notice requirement imposed on employers with policies in the New York State Insurance Fund when they want to cancel or move their policy from the NYSIF, a penalty that does not apply to policyholders of private insurers.

We supported the elimination of the NYSIF’s aggressive short-rate penalty when a business cancels coverage or moves a policy mid-term out of the Fund to a standard insurance company.

NYSIF’s 30-day notice requirement

The 30-day notice requirement restricts the ability of New York State businesses to move their workers’ compensation policies to more affordable and less restrictive insurance carriers. Most businesses prefer to place their coverage with private insurers as opposed to the NYSIF.

NYSIF cancellation rules

NYSIF rules provide that a policyholder may request cancellation of a policy if he or she is no longer required by law to secure coverage, or if one wishes to secure coverage with another carrier. In either instance, the policyholder must submit a written request signed by the owner, or corporate officer, or authorized representative, and must include the reason for cancellation.

In practice, when NYSIF receives notice of intent to cancel, it will cancel the policy 30 days from the postmark or requested cancellation date, whichever is later. NYSIF quickly notifies all certificate holders of the pending cancellation even though you only advised them of your intent to look for a new insurance company.

NYSIF applies a front-loaded, short-rate premium penalty when a policyholder requests cancellation on the anniversary date with fewer than 30 days’ notice, when the policyholder requests cancellation on a date that is different from the anniversary date, or when the policy is canceled for nonpayment.

Further, the NYSIF is not required to write a policy for any business that is owned, or controlled by, any person who, directly or indirectly, owned or controlled a business that owed NYSIF premium at the time of cancellation. Nor is the Fund required to write a policy for any person who is, or who was at the time of cancellation, the president, vice president, secretary or treasurer of an employer that owes NYSIF premium until the billed premium on the canceled policy is paid in full. This applies even if applying for insurance for a completely different business entity that happens to have any common ownership or executive management.

There seems to be general agreement among the insurance industry agent and brokers and New York’s business owners that these inequities and practices are unfair.

So, why does common-sense legislation to address this not move forward? Because the NYSIF makes a substantial profit year after year. The state budget takes these funds from the reserves of the NYSIF to cover the state operating expenses. It has been reported that the NYSIF has transferred $2.3 billion from its surplus to the State Treasury. Even if the NYSIF wasn’t constantly generating loads of excess cash, all liabilities of the Workers’ Compensation Fund are guaranteed by the state, should the Workers’ Compensation Fund become insolvent. The law guarantees that claims will never go unpaid.

No wonder the public has lost faith that its New York government will act in its interest. If our representatives won’t pass these reasonable, common-sense measures, what will they get done?

 

Martin Koles is an active advocate in the agent and broker trade associations. He is a past president of the Professional Insurance Agents of New York and a current executive board member of the Council of Insurance Brokers of Greater New York. He is a principal at, M. Koles & Associates LLC, Forest Hills, NY specializing in coverage for diplomats, the entertainment industry, affordable housing, and the transportation dispatch industries