<?xml version="1.0" encoding="UTF-8"?><rss version="2.0" xmlns:content="http://purl.org/rss/1.0/modules/content/" xmlns:wfw="http://wellformedweb.org/CommentAPI/" xmlns:dc="http://purl.org/dc/elements/1.1/" xmlns:atom="http://www.w3.org/2005/Atom" xmlns:sy="http://purl.org/rss/1.0/modules/syndication/" xmlns:slash="http://purl.org/rss/1.0/modules/slash/" > <channel> <title>October 7 | Insurance Advocate</title> <atom:link href="https://www.insurance-advocate.com/category/2020/october-7/feed/" rel="self" type="application/rss+xml" /> <link>https://www.insurance-advocate.com</link> <description>Since 1889</description> <lastBuildDate>Wed, 25 Nov 2020 17:02:22 +0000</lastBuildDate> <language>en-US</language> <sy:updatePeriod> hourly </sy:updatePeriod> <sy:updateFrequency> 1 </sy:updateFrequency> <generator>https://wordpress.org/?v=6.7.2</generator> <item> <title>Cover October 7</title> <link>https://www.insurance-advocate.com/2020/10/07/cover-october-7/</link> <dc:creator><![CDATA[Insurance Advocate]]></dc:creator> <pubDate>Wed, 07 Oct 2020 18:21:43 +0000</pubDate> <category><![CDATA[October 7]]></category> <category><![CDATA[Covers]]></category> <guid isPermaLink="false">https://www.insurance-advocate.com/?p=12501</guid> <description><![CDATA[<p><img width="567" height="783" src="https://www.insurance-advocate.com/wp-content/uploads/2020/10/Cover-oct.jpg" class="attachment-full size-full wp-post-image" alt="" decoding="async" fetchpriority="high" srcset="https://www.insurance-advocate.com/wp-content/uploads/2020/10/Cover-oct.jpg 567w, https://www.insurance-advocate.com/wp-content/uploads/2020/10/Cover-oct-217x300.jpg 217w, https://www.insurance-advocate.com/wp-content/uploads/2020/10/Cover-oct-500x690.jpg 500w" sizes="(max-width: 567px) 100vw, 567px" /></p>]]></description> <content:encoded><![CDATA[<p><img width="567" height="783" src="https://www.insurance-advocate.com/wp-content/uploads/2020/10/Cover-oct.jpg" class="attachment-full size-full wp-post-image" alt="" decoding="async" srcset="https://www.insurance-advocate.com/wp-content/uploads/2020/10/Cover-oct.jpg 567w, https://www.insurance-advocate.com/wp-content/uploads/2020/10/Cover-oct-217x300.jpg 217w, https://www.insurance-advocate.com/wp-content/uploads/2020/10/Cover-oct-500x690.jpg 500w" sizes="(max-width: 567px) 100vw, 567px" /></p><!--themify_builder_content--> <div id="themify_builder_content-12501" data-postid="12501" class="themify_builder_content themify_builder_content-12501 themify_builder tf_clear"> </div> <!--/themify_builder_content-->The post <a href="https://www.insurance-advocate.com/2020/10/07/cover-october-7/">Cover October 7</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></content:encoded> </item> <item> <title>Primer: Rescission of Insurance</title> <link>https://www.insurance-advocate.com/2020/10/07/primer-rescission-of-insurance/</link> <dc:creator><![CDATA[Barry Zalma]]></dc:creator> <pubDate>Wed, 07 Oct 2020 17:11:12 +0000</pubDate> <category><![CDATA[October 7]]></category> <category><![CDATA[Cover Story]]></category> <category><![CDATA[On My Radar]]></category> <guid isPermaLink="false">https://www.insurance-advocate.com/?p=12477</guid> <description><![CDATA[<p>An insurance policy is nothing more than a contract. It is a special type of contract because – by law – it contains an implied covenant of good faith and fair dealing. What that means is that neither party to the contract must do nothing to prevent the other from obtaining the benefits of the contract. When a prospective insured violates the covenant of good faith and fair dealing by misrepresenting or concealing a material fact that deceives an insurer to take on a risk that would not have been taken had the truth been known the law allows the insurer – upon a presentation of sufficient admissible evidence – to rescind the policy and treat it as if it never came into existence.</p> The post <a href="https://www.insurance-advocate.com/2020/10/07/primer-rescission-of-insurance/">Primer: Rescission of Insurance</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description> <content:encoded><![CDATA[<p class="p1">An insurance policy is nothing more than a contract. It is a special type of contract because – by law – it contains an implied covenant of good faith and fair dealing. What that means is that neither party to the contract must do nothing to prevent the other from obtaining the benefits of the contract.</p> <p class="p1">When a prospective insured violates the covenant of good faith and fair dealing by misrepresenting or concealing a material fact that deceives an insurer to take on a risk that would not have been taken had the truth been known the law allows the insurer – upon a presentation of sufficient admissible evidence – to rescind the policy and treat it as if it never came into existence.</p> <p class="p1">Developing the evidence is not easy. It requires the effort of an insurance professional to collect the evidence – whether documentary or by oral testimony – to convince a judge or jury that the insurer acted properly, that the insured deceived the insurer and that the court should order that the policy was void ab initio (from its inception).</p> <p class="p3"><b>What an Insurer Must Prove to Rescind a Policy of Insurance</b></p> <p class="p1">In many states, following ancient British precedent that predated the formation of the United States, an insurer that discovers a factual basis establishing that an insured obtained a policy by deceiving the insurer about the risk applied for by the insured the insurer may declare the policy void from its inception and treat it as if it never existed. In simple language, if the insurer discovers, either before or after a loss, that the policy was acquired as a result of a misrepresentation or concealment of a material fact, it may rescind the policy. In most states the ancient Marine Rule (first stated in 1766 in the British House of Lords in a case called <i>Carrter v. Boehn</i>) is followed and rescission is available regardless of whether the insured fraudulently or innocently misrepresented or concealed a material fact.</p> <p class="p1">It is axiomatic in the United States that an insurance company is entitled to determine for itself what risks it will accept, and therefore to know all facts relative to the risk the insured seeks to transfer to the insurer. It has the unquestioned right to select those whom it will insure and to rely upon him who would be insured for such information as it desires as a basis for its determination to the end that a wise discrimination may be exercised in selecting its risks. To effectively rescind a policy of insurance in a state that applies the Marine Rule the insurer must be able to prove by a preponderance of the evidence that it entered into the contract of insurance because it was deceived about a fact material to its decision to insure or not insure.</p> <p class="p1">To prove it is entitled to rescind the investigation conducted by the insurer must establish:</p> <p class="p1">•That the insured submitted an application for insurance seeking an offer of insurance from the insurer.</p> <p class="p1">•That the insurer reasonably relied upon the facts represented by the application when it made its decision to offer to insure.</p> <p class="p1">•That the application contained one or more misrepresentations of material fact or that the insured concealed one or more material facts.</p> <p class="p1">•That but for the misrepresentation the insurer would not have issued the policy on the same terms and conditions as it did had it known the true facts.</p> <p class="p1">•That but for the concealment of material facts the insurer would not have issued the policy on the same terms and conditions as it did had it known the true facts.</p> <p class="p1">•That it established materiality by contact with the underwriter who made the decision to insure who is willing and able to testify that had he or she known the true facts he or she would not have agreed to insure on the same terms and conditions.</p> <p class="p1">•That the insured was advised, in writing, that the policy was rescinded and that the insurer either returned the premium or offered to return the premium.</p> <p class="p1">In states like Louisiana that do not apply the Marine Rule the facts established must, in addition to the seven elements above, prove that the insured intended to deceive the insurer.</p> <p class="p1">In all states the evidence needed to establish a ground, or multiple grounds, for rescission investigation needed can be obtained by the adjuster or SIU investigator interviewing, at least, the following:</p> <p class="p1">•The insured(s);</p> <p class="p1">•The insurance broker;</p> <p class="p1">•The insurance agent;</p> <p class="p1">•The underwriter who made the decision to insure; and</p> <p class="p1">•Independent witnesses.</p> <p class="p1">In addition, the investigation must be supported and enhanced by retaining competent, local, insurance coverage counsel to conduct an examination under oath of the insured(s) and collect relevant documents from the insured(s), the insurance agent or broker and the underwriter.</p> <p class="p1">Once the investigation is completed then, and only then, should an experienced insurance coverage counsel – either the lawyer who took the examinations under oath or a separate independent coverage counsel – working in the location where the policy was issued to be performed who will opine upon the viability of the evidence, whether the evidence establishes facts sufficient to show that facts material to the decision to insure were misrepresented or concealed and whether the misrepresentation or concealment were presented to the insurer with an intent to deceive. With that information counsel should provide advice to the insurer whether state law allows for rescission based upon the facts determined by investigation and the law of the jurisdiction.</p> <p class="p3"><b>The Legal Bases for Rescission of Insurance</b></p> <p class="p1">Rescission is an equitable remedy based in the ancient Ecclesiastical courts of Medieval England where all the judges were clergy whose stated purpose was to do fairness. The Ecclesiastical courts did not deal with damages nor were they allowed to enter money judgments. Rather, they resolved disputes between people fairly. They would enforce a contract by ordering the parties to perform as promised. They would allow for rescission that would void a contract from its inception if the contract was entered into by fraud or mistake.</p> <p class="p1">The Supreme Court of Texas has explained that rescission is merely a shorthand name for “the composite remedy of rescission and restitution.” <i>Cruz v. Andrews Restoration, Inc.,</i> 364 S.W.3d 817, 825 (Tex.2012) (citing Restatement (Third) Of Restitution and Unjust Enrichment § 54 cmt. a (2011)).<span class="Apple-converted-space"> </span>Rescission is not a one-way street. It requires a mutual restoration and accounting, in which each party restores property received from the other.</p> <p class="p1">The risk that an insurance policy might be rescinded as the result of misrepresentation or concealment clearly operates as a brake on any temptation by the insured to misrepresent or conceal facts from an insurer in order to obtain coverage at a lower premium or on terms that would not be offered if the true facts were disclosed. The law of rescission is a major enforcement tool in maintaining the integrity and commercial dynamics of the insurance marketplace.</p> <p class="p1">If there is a breach of warranty, a material concealment, or a material misrepresentation, rescission is a remedy available for selection by the insurer or the insured. It can be the most effective remedy depending on the law of the state where the policy was issued or is to be performed. In states that apply the Marine Rule, rescission is available for even an innocent misrepresentation or concealment of material fact. In states that do not honor the Marine Rule the grounds for rescission are more stringent. When an insurer believes it has been deceived by an insured into issuing an insurance policy advice from local coverage counsel is needed before a decision can be made to rescind a policy.</p> <p class="p1">The rescission remedy is often used as an effective tool against a fraudulent claim. Since property and casualty insurers in the US are the victims of between $80 billion and $300 billion in fraud annually any defense to a fraudulent claim is important to an insurer’s anti-fraud efforts.</p> <p class="p1">Experience has shown that people who are intent on perpetrating the crime of insurance fraud know crime better than they know the law of insurance. Where they may not be caught setting a fire or faking an invoice they will often err when acquiring the policy.</p> <p class="p1">A mutual mistake of material fact, a unilateral mistake of material fact, the breach of warranty, a material concealment, or a material misrepresentation can all be grounds for rescission. To do otherwise would be to make a gift to the person who deceived the insurer.</p> <p class="p1">There is a split of authority as to whether materiality is a question of law or a question of fact. Courts that have held that materiality is one of law have reasoned that the fact that the insurer has demanded answers to specific questions in an application for insurance is in itself usually sufficient to establish materiality as a matter of law. [<i>Cohen v. Penn Mut. Life Ins. Co.</i> (1957) 48 Cal.2d 720, 726; W<i>est Coast Life Ins. Co. v. Ward</i> (2005) 132 Cal.App.4th 181, 187.] Courts holding that the question of materiality is one of fact have reasoned: “An incorrect answer on an insurance application does not give rise to the defense of fraud [and rescission] where the true facts, if known, would not have made the contract less desirable to the insurer.” [<i>Ransom v. Penn Mut. Life Ins. Co.</i> (1954) 43 Cal.2d 420]</p> <p class="p1">Most courts recognize it is unfair to make an insurer abide by a contract that was not obtained fairly. The ancient maxim that “No one may profit from his wrong” is applied. In modern practice, the trial judge sits as both a court of law and a court of equity, changing hats and methodology as the case requires. Whether a contract should be rescinded is a decision made only by the court sitting as a court of equity. Its direction is to make a ruling that is fair to all parties. When the court grants rescission it always requires that the insured receive a return of the premium it paid so that both parties are in the same position they were in when the contract, now rescinded, was made.</p> <p class="p1">Rescission is an equitable process that allows a court to conclude that it would be unfair to the parties to allow a contract to continue. It places the parties back in the position they were in before the contract date.</p> <p class="p1">Insurers should use the remedy with care. If an insurer elects rescission without enough evidence it can bring the wrath of the courts down on the insurer and may be the basis for allegations of extra-contractual torts. If sufficient evidence exists, most courts will grant judgment in favor of the insurer and rescission will deprive the insured of all rights under the policy.</p> <p class="p1">The grounds for a rescission use key terms such as concealment and misrepresentation. The California Insurance Code (applying the Marine Rule) defines the terms as follows:</p> <p class="p1">Neglect to communicate that which a party knows, and ought to communicate is concealment. [California Insurance Code § 330.]</p> <p class="p1">A representation is false when the facts fail to correspond with its assertions or stipulation. [California Insurance Code § 358.]</p> <p class="p1">The effect of a concealment or a false representation on a policy of insurance is that it entitles the other party to rescind. [California Insurance Code § 331 and § 359.]</p> <p class="p1">In <i>LA Sound USA Inc. v. St. Paul Fire & Marine Insurance Co.</i>, 156 Cal. App.4th 1259 (2007), an insurer rescinded a directors and officers liability policy because of material misrepresentations in the application. The insured argued that the insurer could not rescind because it had not provided written notice of rescission or offer to restore the premiums paid. The court rejected this argument, noting that the insurer had filed an answer to the insured’s complaint in which the insurer alleged the affirmative defense of misrepresentation and filed a cross-complaint seeking rescission. The court held that the pleadings satisfied the carrier’s responsibility to provide notice and to offer restoration</p> <p class="p1">.</p> <p class="p3"><b>In Nebraska:</b></p> <p class="p1">Nebraska’s law of Rescission is clear. This equitable remedy dissolves and renders a written agreement a nullity. Haumont v. Security State Bank, 374 N.W. 2d 2, 7 (Neb. 1985). Rescission requires “a judicial effort to place the contractual parties in, as nearly as possible, substantially the same condition which existed when the contract was entered.” <i>Kracl v. Loseke</i>, 461 N.W. 2d 67, 76 (Neb. 1990). In ordering Rescission, a court must require all parties to return whatever they gained under the rescinded document. <i>Gnuse v. Garrett</i>, 261 N.W. 143, 144 (Neb. 1935). Lincoln Benefit Life Co. v. Edwards, 243 F.3d 457, 243 F.3d 457 (8th Cir. 03/15/2001).</p> <p class="p3"><b>In New Jersey:</b></p> <p class="p1">Under New Jersey law, an insurer may rescind a policy when the insured makes a false statement in the insurance application that materially affects the acceptance of the insurance risk. (Concerning professional liability insurance) See also <i>Gallagher v. New England Mutual Life Ins. Co. of Boston</i>, 19 N.J. 14, 20 (1955). “In general, a representation by the insured, whether contained in the policy itself or in the application for insurance, will support the forfeiture of the insured’s rights under the policy if it is untruthful, material to the particular risk assumed by the insurer, and actually and reasonable relied upon by the insurer in the issuance of the policy.” <i>Allstate Ins. Co. v. Meloni</i>, 98 N.J. Super. 154, 158-59 (App. Div. 1967). See <i>Merchants Indem. Corp. of New York v. Eggleston</i>, 68 N.J. Super. 235, 244 (App. Div. 1961), affirmed, 37 N.J. 114 (1962). In applying the doctrine of equitable fraud to an insured’s answers to questions posed in insurance applications, when the question is subjective—as here where it asks whether the law firm is aware of any circumstances which may result in a claim being made against the firm—equitable fraud is present only if the answer was knowingly false. Ledley v. William Penn Life Ins. Co., supra, 138 N.J. at 635-37; <i>Liebling v. Garden State Indem.</i>, supra, 337 N.J. Super. at 454. <i>First American Title Insurance Company v. Lawson</i>, No. A-0992-01T5 (N.J. Super. App. Div. 06/04/2002).</p> <p class="p1">The court can grant either rescission of the insurance contract or an affirmative defense to an insured’s claim without requiring proof of any additional facts in support of the requested remedy or defense. Depending on the facts, the rescission is based on either a misrepresentation or a mistake of fact.</p> <p class="p1">A contract may be rescinded on the basis of a material mutual mistake even if it is clear that everyone acted in complete good faith.</p> <p class="p1">In <i>N.Y. Life Ins. Co. v. Johnson</i>, 923 F.2d 279 (3d Cir. 1991), the court stated:</p> <p class="p1">While a Court might sympathize with a beneficiary who does not receive the proceeds of a policy obtained by the insured’s fraud, there are strong reasons of public policy supporting the rule which we believe prevails in Pennsylvania. If the only consequence of a fraudulent misrepresentation in a life insurance application is to reduce the amount paid under the policy, there is every incentive for applicants to lie. If the lie is undetected during the two-year contestability period, the insured will have obtained excessive coverage for which he had not paid. If the lie is detected during the two-year period, the insured will still obtain what he could have had if he had told the truth. In essence, the applicant has everything to gain and nothing to lose by lying. The victims will be the honest applicants who tell the truth and whose premiums will rise over the long run to pay for the excessive insurance proceeds paid out as a result of undetected misrepresentations in fraudulent applications. Id. at page 6. (Emphasis added.)</p> <p class="p1">Mr. Johnson answered a life insurance application regarding smoking in the negative although he had smoked for thirteen years and was smoking ten cigarettes a day during the month he applied for the policy. If New York Life had known the true facts, it would have issued the policy—but at a substantially higher premium. Johnson died of causes unrelated to smoking.</p> <p class="p1">Rescission not only deprives the insured of the indemnity he or she seeks, but it causes the insurance to disappear entirely as if it never existed.</p> <p class="p1">In general, concealment involves the suppression or withholding of information. An intentional concealment of a material fact by an applicant for insurance provides the insurer with a valid defense to a claim or the basis for rescission of the insurance contract. In this case the applicant concealed the names of the treating physicians. In most states, not including California, if the applicant’s failure to reveal information is not an intentional concealment, such conduct does not constitute a sufficient basis for a defense by an insurer.</p> <p class="p1">In <i>W. Coast Life Ins. Co. v. Hoar</i>, 558 F.3d 1151 (10th Cir. 2009), the Tenth Circuit allowed an insurer to rescind a policy because of the insured’s failure to advise the life insurer of his engagement in hazardous activities.</p> <p class="p1">In <i>Admiral Ins. Co. v. Debber</i>, 295 Fed. Appx. 171 (9th Cir. 2008), rescission was affirmed because the insured misrepresented and concealed facts material to the decision of the insurer to insure, that it had two prior claims. The court concluded that “a material misrepresentation or concealment in an insurance application, whether intentional or unintentional, entitles the insurer to rescind the insurance policy ab initio.”</p> <p class="p1">The California Court of Appeal reaffirmed the general rule with regard to concealment and misrepresentation and the rescission of insurance policies. In <i>Imperial Cas. & Indem. Co. v. Sogomonian</i>, 198 Cal. App. 3d 169, Cal. Rptr. 639 (Ct. App. 1988), a leading California case on materiality, the insured answered two questions on the application falsely. Mr. Sogomonian advised the insurer that he had never incurred a loss and that no insurer had ever canceled, non-renewed, or refused him insurance. The claims investigation established six prior losses, including a landslide that damaged the property downslope and a water damage claim from a leaking roof that was paid on the same day he signed his application. Investigation also established that two insurers had canceled insurance for Mr. Sogomonian, including the insurer immediately preceding the application, because of poor housekeeping. The Imperial Casualty & Indemnity Company underwriter testified that had she known the true facts she would not have insured Sogomonian against the risk of loss of his home and its contents. The court stated: “An insurance company is entitled to determine for itself what risks it will accept, and therefore to know all facts relative to the applicant’s physical condition. It has the unquestioned right to select those whom it will insure and to rely upon him who would be insured for such information as it desires as a basis for its determination to the end that a wise discrimination may be exercised in selecting its risks [citations]…”</p> <p class="p1">When an insurer is seeking rescission, the trial court must balance the equities to determine whether the plaintiff is entitled to the relief he or she seeks. [Johnson v QFD, Inc, 292 Mich App 359, 370 n 3; 807 NW2d 719 (2011)]. Courts are not required to grant rescission in all cases. For example, rescission should not be granted in cases where the result thus obtained would be unjust or inequitable or where the circumstances of the challenged transaction make rescission infeasible. Moreover, when two equally innocent parties are affected, the court, in the exercise of its equitable powers, must determine which blameless party should assume the loss.</p> <p class="p1">When an insurance company seeks rescission, the trial court’s next step is to determine whether the insurance company’s claim concerning the third-party is justified by the equities of the case.</p> <p class="p1">In states like Louisiana, that by statute does not apply the Marine Rule, to void coverage due to a misrepresentation in the insurance application, the insurer must prove that:</p> <p class="p1">• the insured made a false statement;</p> <p class="p1">• the false statement was material; and</p> <p class="p1">• it was made with intent to deceive. [<i>Willis v. Safeway Ins. Co. of La</i>., 968 So. 2d 346, 350 (La. App. 2007)]. <span class="s2">[</span><span class="s3"><b><i>I</i></b></span><span class="s4"><b>A</b></span><span class="s2">]</span></p> <!--themify_builder_content--> <div id="themify_builder_content-12477" data-postid="12477" class="themify_builder_content themify_builder_content-12477 themify_builder tf_clear"> </div> <!--/themify_builder_content-->The post <a href="https://www.insurance-advocate.com/2020/10/07/primer-rescission-of-insurance/">Primer: Rescission of Insurance</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></content:encoded> </item> <item> <title>Andrew J. McMahon Named Guardian Chief Executive Officer</title> <link>https://www.insurance-advocate.com/2020/10/07/andrew-j-mcmahon-named-guardian-chief-executive-officer/</link> <dc:creator><![CDATA[Insurance Advocate]]></dc:creator> <pubDate>Wed, 07 Oct 2020 07:19:19 +0000</pubDate> <category><![CDATA[October 7]]></category> <category><![CDATA[In The News]]></category> <guid isPermaLink="false">https://www.insurance-advocate.com/?p=12496</guid> <description><![CDATA[<p>The Guardian Life Insurance Company of America’s Board of Directors announced that Andrew J. McMahon became Chief Executive Officer and President on October 1 and has joined the Board. He succeeds Deanna M. Mulligan, who will serve as Board Chair through year-end, when she will retire after leading the company for a decade. The appointments […]</p> The post <a href="https://www.insurance-advocate.com/2020/10/07/andrew-j-mcmahon-named-guardian-chief-executive-officer/">Andrew J. McMahon Named Guardian Chief Executive Officer</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description> <content:encoded><![CDATA[<p class="p1">The Guardian Life Insurance Company of America’s Board of Directors announced that Andrew J. McMahon became Chief Executive Officer and President on October 1 and has joined the Board. He succeeds Deanna M. Mulligan, who will serve as Board Chair through year-end, when she will retire after leading the company for a decade.</p> <p class="p1">The appointments are consistent with the company’s leadership transition plan announced in May.</p> <p class="p1">“We are grateful to Deanna and Andrew for working closely together to ensure a smooth transition,” said Guardian Lead Director, Deborah Duncan. “With Deanna acting as Chair, Guardian is taking the final step in our CEO transition. We thank her for her exceptional leadership over the last 10 years.<span class="Apple-converted-space"> </span>Deanna strengthened the company in so many ways, creating a solid foundation on which Andrew will build the Guardian of the future. Andrew’s growth mindset, focus on putting customers first, deep industry experience and digital expertise are critical to our success going forward.”</p> <p class="p1">Ms. Mulligan joined Guardian in 2008 to lead the company’s Individual Life & Disability business. She was named President and Chief Operating Officer in November 2010 and appointed CEO in July 2011. <span class="Apple-converted-space"> </span>Her experiences as CEO of the company led her to author a book,<span class="Apple-converted-space"> </span>“Hire Purpose: How Smart Companies Can Close the Skills Gap,” which will be released in late October.</p> <p class="p1">“I am honored to be named Board Chair, and grateful to everyone at Guardian for their support and hard work over the last 10 years,” Ms. Mulligan said. “There is no one better suited than Andrew to take Guardian forward, and I am excited to pass the leadership of Guardian to him. He has proven himself to be a dynamic leader who understands the acceleration of change in our industry and is committed to furthering the values-driven culture that has guided Guardian for 160 years.”</p> <p class="p1">Mr. McMahon joined Guardian in 2017 as Executive Vice President, Strategy and Customer Development, and took on leadership of the Individual Markets business in 2019. He was named President last November, and successor to Ms. Mulligan in May.</p> <p class="p1">“Thanks to Deanna, I will be operating from a position of strength on day one,” Mr. McMahon said.<span class="Apple-converted-space"> </span>“She has done so much<span class="Apple-converted-space"> </span>for Guardian – particularly in shaping its culture and embedding our values in everything we do. My job is to build on those accomplishments, continue to evolve Guardian and find new ways to serve fast-changing consumer and business demands in an increasingly competitive, digitally-driven environment.”</p> <p class="p3"><b>About Guardian</b></p> <p class="p1">Every day, Guardian provides Americans the security they deserve through our insurance and wealth management products and services. Since our founding in 1860, our long-term view has helped our customers prepare for whatever life brings whether starting a family, planning for the future or taking care of employees. Today, we’re a Fortune 250 mutual company and a leading provider of life, disability, dental, and other benefits for individuals, at the workplace and through government sponsored programs. The Guardian community of over 9,000 employees and our network of over 2,500 financial representatives are committed to serving with expertise when, where and how our clients need us. Our commitments rest on a strong financial foundation, which at year-end 2019 included $9.3 billion in capital and $1.7 billion in operating income.<span class="Apple-converted-space"> </span></p> <!--themify_builder_content--> <div id="themify_builder_content-12496" data-postid="12496" class="themify_builder_content themify_builder_content-12496 themify_builder tf_clear"> </div> <!--/themify_builder_content-->The post <a href="https://www.insurance-advocate.com/2020/10/07/andrew-j-mcmahon-named-guardian-chief-executive-officer/">Andrew J. McMahon Named Guardian Chief Executive Officer</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></content:encoded> </item> <item> <title>Brightway Insurance opens new Agencies in FL, NY and TX</title> <link>https://www.insurance-advocate.com/2020/10/07/brightway-insurance-opens-new-agencies-in-fl-ny-and-tx/</link> <dc:creator><![CDATA[Insurance Advocate]]></dc:creator> <pubDate>Wed, 07 Oct 2020 06:18:36 +0000</pubDate> <category><![CDATA[October 7]]></category> <category><![CDATA[In The News]]></category> <guid isPermaLink="false">https://www.insurance-advocate.com/?p=12494</guid> <description><![CDATA[<p>While the country’s response to the Coronavirus has caused many business operations to pause, Brightway Insurance remains committed to customers and to people who want to build their own Brightway business with the holistic support the company offers. More consumers in Florida, New York and Texas now have access to more choice and expert counsel […]</p> The post <a href="https://www.insurance-advocate.com/2020/10/07/brightway-insurance-opens-new-agencies-in-fl-ny-and-tx/">Brightway Insurance opens new Agencies in FL, NY and TX</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description> <content:encoded><![CDATA[<p class="p1">While the country’s response to the Coronavirus has caused many business operations to pause, Brightway Insurance remains committed to customers and to people who want to build their own Brightway business with the holistic support the company offers. More consumers in Florida, New York and Texas now have access to more choice and expert counsel when shopping for insurance as Brightway will open three stores Monday, May 11.</p> <p class="p3">•Jose Diaz and Monica Vega will open Brightway, The Diaz-Vega Agency in Tarpon Springs, Fla.</p> <p class="p3">•Shannah Gunn will open Brightway, The Gunn Agency in Austin, Texas</p> <p class="p3">•Matthew Schor will open Brightway, The Schor Family Agency in East Rockaway, N.Y.</p> <p class="p1">Brightway is a recession-proof company in the multi-billion-dollar Personal Lines insurance industry. Its low-risk, high-reward business opportunities allow people from a wide variety of backgrounds to prosper. A centralized team of experts provides training and support in areas including Customer Service, Accounting, Marketing, Distribution, Business Analytics, Carrier Appointments, Licensing, Onboarding, Training, Hiring and Retaining personnel. The company’s signature after-the-sale service empowers franchisees to focus on new business sales and provides their customers the personalized service they deserve.</p> <p class="p1">In addition to providing holistic business support, Brightway has relationships with hundreds of insurance companies, giving Franchise Owners the ability to offer more choice in insurance brands to consumers. During tough financial times, having options is incredibly important for consumers.</p> <p class="p1">While many businesses depend greatly on the economy to profit off of the sale of goods, Brightway Franchise Owners earn residual income year-after-year for as long as each policy sold is in place, no matter the economic forecast. And, the company recently announced flexibility to its franchise contract to make it easier to open a new Brightway franchise while COVID-19 shutdowns exist. If you’re interested in becoming a Brightway Franchise Owner, please visit BrightwayDifference.com</p> <!--themify_builder_content--> <div id="themify_builder_content-12494" data-postid="12494" class="themify_builder_content themify_builder_content-12494 themify_builder tf_clear"> </div> <!--/themify_builder_content-->The post <a href="https://www.insurance-advocate.com/2020/10/07/brightway-insurance-opens-new-agencies-in-fl-ny-and-tx/">Brightway Insurance opens new Agencies in FL, NY and TX</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></content:encoded> </item> <item> <title>Forbes Advisor Unveils First-Ever Best Life Insurance Companies Awards</title> <link>https://www.insurance-advocate.com/2020/10/07/forbes-advisor-unveils-first-ever-best-life-insurance-companies-awards/</link> <dc:creator><![CDATA[Insurance Advocate]]></dc:creator> <pubDate>Wed, 07 Oct 2020 05:17:53 +0000</pubDate> <category><![CDATA[October 7]]></category> <category><![CDATA[In The News]]></category> <guid isPermaLink="false">https://www.insurance-advocate.com/?p=12492</guid> <description><![CDATA[<p>Pacific Life was named top life insurance company of 2020, followed by Northwestern Mutual and Penn Mutual Life Insurance Co. Forbes Advisor, a trusted destination for money news and reviews, and a financial product marketplace, announced Pacific Life as the winner of its 2020 Best Life Insurance Companies Awards. Northwestern Mutual and Penn Mutual were […]</p> The post <a href="https://www.insurance-advocate.com/2020/10/07/forbes-advisor-unveils-first-ever-best-life-insurance-companies-awards/">Forbes Advisor Unveils First-Ever Best Life Insurance Companies Awards</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description> <content:encoded><![CDATA[<p class="p1">Pacific Life was named top life insurance company of 2020, followed by Northwestern Mutual and Penn Mutual Life Insurance Co.</p> <p class="p1">Forbes Advisor, a trusted destination for money news and reviews, and a financial product marketplace, announced Pacific Life as the winner of its 2020 Best Life Insurance Companies Awards. Northwestern Mutual and Penn Mutual were awarded the second and third best companies.</p> <p class="p1">In its evaluation, Forbes Advisor focused on companies’ cash value life insurance products, since these have larger consequences than term life insurance if the wrong product or company is chosen.</p> <p class="p1">“Unlike term life insurance, where nothing much can go wrong as long as you pay the premiums, cash life insurance policies require the most monetary investment and long-term commitment from customers,” says Amy Danise, Chief Insurance Analyst at Forbes Advisor. “And cash value policies are often relied upon to pass wealth on to heirs or to fund trusts.” Choosing the wrong product or company can mean a buyer pays more premiums or has their policy’s cash value diminished by high fees or low-performing investments.</p> <p class="p1">Forbes Advisor’s data-driven evaluation encompassed 25 large companies based on market share. Scoring factors typically seen in similar rankings, like consumer survey ratings, were not considered since they are often based on sentiment versus actual performance. Instead, Forbes Advisor reviewed the quality and performance of companies’ cash value products based on data exclusively provided by Veralytic, a life insurance analytics company based in Tampa, Florida.</p> <p class="p1"> Life insurance purchase mistakes can easily cost hundreds of thousands of dollars. One analysis Veralytic did showed that a 45-year-old male in average health could pay $340,000 more than he expected over 20 years for a $1 million universal life insurance policy—the consequences of choosing the wrong company and policy.</p> <p class="p1"> For a full list of the company rankings and Forbes Advisor’s complete methodology, visit https://www.forbes.com/advisor/life-insurance/best-life-insurance-companies/ <span class="s2">[</span><span class="s3"><b><i>I</i></b></span><span class="s4"><b>A</b></span><span class="s2">]</span></p> <!--themify_builder_content--> <div id="themify_builder_content-12492" data-postid="12492" class="themify_builder_content themify_builder_content-12492 themify_builder tf_clear"> </div> <!--/themify_builder_content-->The post <a href="https://www.insurance-advocate.com/2020/10/07/forbes-advisor-unveils-first-ever-best-life-insurance-companies-awards/">Forbes Advisor Unveils First-Ever Best Life Insurance Companies Awards</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></content:encoded> </item> <item> <title>Public Wi-Fi – Panacea or Peril?</title> <link>https://www.insurance-advocate.com/2020/10/07/public-wi-fi-panacea-or-peril/</link> <dc:creator><![CDATA[Guest Author]]></dc:creator> <pubDate>Wed, 07 Oct 2020 04:16:58 +0000</pubDate> <category><![CDATA[October 7]]></category> <category><![CDATA[MSO Inc.]]></category> <guid isPermaLink="false">https://www.insurance-advocate.com/?p=12489</guid> <description><![CDATA[<p>By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE – Assistant Vice President/Media Editor Today’s technology allows for virtually instant 24/7/365 access to information, entertainment, friends and family. Wi-Fi access is everywhere – from the donut shop to the mall to hotels and restaurants. As convenient as it may be to check your e-mail at […]</p> The post <a href="https://www.insurance-advocate.com/2020/10/07/public-wi-fi-panacea-or-peril/">Public Wi-Fi – Panacea or Peril?</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description> <content:encoded><![CDATA[<p class="p1"><strong>By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE – Assistant Vice President/Media Editor</strong></p> <p class="p1">Today’s technology allows for virtually instant 24/7/365 access to information, entertainment, friends and family. Wi-Fi access is everywhere – from the donut shop to the mall to hotels and restaurants.<span class="Apple-converted-space"> </span>As convenient as it may be to check your e-mail at the grocery store, the ability to be connected is not without risks. Helping clients understand the drawbacks and possible danger of public Wi-Fi is another value-added service of the professional insurance agent.</p> <p class="p1">Wi-Fi networks can be “secured” or “unsecured”. “Unsecured” (HTTP) networks do not require a login or password. “Secured” (HTTPS) sites require a WEP, WPA or WPA2 password for access, and use encryption to make transactions safer. WPA2 is the strongest. Some websites only use encryption for the main sign in page.<span class="Apple-converted-space"> </span>Look for the HTTPS on every page you visit. Encryption of data increases the safety of public Wi-Fi, but it is still not ideal, as even secure sites can be hacked.<span class="Apple-converted-space"> </span>Secure networks encrypt all data. Regular users of Wi-Fi hotspots should use a Virtual Private Network (VPN) that encrypts all transactions. Disable the “auto-connect” feature on all devices.</p> <p class="p1">Mobile apps are more susceptible to hacking, as many of them are not encrypted.<span class="Apple-converted-space"> </span>Unlike the HTTPS designation for websites, mobile apps do not have a way for users to see if they are encrypted. When accessing sensitive sites with a mobile device, use a secure network. If a password is not required for access, then the network is most likely not secure.</p> <p class="p1">There are a number of dangers of public Wi-Fi, including Man-in-the-Middle (MitM), snooping and sniffing, rogue Wi-Fi networks, malware distribution, and worm attacks. “Man in the Middle” happens when the hacker gets between the user and the site they are trying to reach. The hacker intercepts everything the user sends – emails, passwords, and credit card information. The hacker may then be able to access the user’s systems at will. For those working remotely, this can expose the employer’s network.</p> <p class="p1">Snooping and sniffing is another form of eavesdropping. Hackers use special software in an attempt to obtain sensitive data, including passwords and login information. Worms and viruses can also be introduced into devices on public Wi-Fi.<span class="Apple-converted-space"> </span>Viruses need a specific program file to attack, but worms are standalone software that can do damage on their own.</p> <p class="p1">There are suggested protocols for use of public Wi-Fi. Never leave your devices – laptops, tablets, phones – unattended in a public place.<span class="Apple-converted-space"> </span>Even if you are on a secure network, someone could access the information on your device, or steal it. Public Wi-Fi should never be used to transact business on<span class="Apple-converted-space"> </span>accounts containing sensitive information, such as banking and investment records. Avoid shopping online on public Wi-Fi.</p> <p class="p1">Bluetooth is another feature to be aware of. <span class="Apple-converted-space"> </span>Bluetooth enables the wireless exchange of data over short distances. Some versions of Bluetooth connect automatically to any nearby Bluetooth device, which opens the user up to all of the hazards of hackers and malicious acts. <span class="Apple-converted-space"> </span>Be sure to turn it off when not in use.</p> <p class="p1">Having internet access everywhere is a huge convenience, but it also comes with huge risks.<span class="Apple-converted-space"> </span>Alerting clients to the possible dangers of connecting to public Wi-Fi is another sign of the true insurance professional.</p> <!--themify_builder_content--> <div id="themify_builder_content-12489" data-postid="12489" class="themify_builder_content themify_builder_content-12489 themify_builder tf_clear"> </div> <!--/themify_builder_content-->The post <a href="https://www.insurance-advocate.com/2020/10/07/public-wi-fi-panacea-or-peril/">Public Wi-Fi – Panacea or Peril?</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></content:encoded> </item> <item> <title>Cuomo Announces $18 Million Initiative for Entrepreneurs in NY State</title> <link>https://www.insurance-advocate.com/2020/10/07/cuomo-announces-18-million-initiative-for-entrepreneurs-in-ny-state/</link> <dc:creator><![CDATA[Insurance Advocate]]></dc:creator> <pubDate>Wed, 07 Oct 2020 03:15:36 +0000</pubDate> <category><![CDATA[October 7]]></category> <category><![CDATA[Covid-19]]></category> <category><![CDATA[In The News]]></category> <guid isPermaLink="false">https://www.insurance-advocate.com/?p=12486</guid> <description><![CDATA[<p>Training for Workers and Support Entrepreneurs During and After the COVID-19 Pandemic Federal Grant Will Be Used to Fund Educational Opportunities that Train New Yorkers for In-Demand Jobs, Support Entrepreneurs, and Help Small Businesses Recover New York Was One of Only Eight States in the Nation to Receive a Grant and Was Awarded the Most […]</p> The post <a href="https://www.insurance-advocate.com/2020/10/07/cuomo-announces-18-million-initiative-for-entrepreneurs-in-ny-state/">Cuomo Announces $18 Million Initiative for Entrepreneurs in NY State</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description> <content:encoded><![CDATA[<h3 class="p1"><span class="s1">Training for Workers and Support Entrepreneurs During and After the COVID-19 Pandemic</span></h3> <p class="p1"><em><span class="s2">Federal Grant Will Be Used to Fund Educational Opportunities that Train New Yorkers for In-Demand Jobs, Support Entrepreneurs, and Help Small Businesses Recover</span></em></p> <p class="p1"><em><span class="s2">New York Was One of Only Eight States in the Nation to Receive a Grant and Was Awarded the Most Funding of All States</span></em></p> <p class="p1"><span class="s2">Governor Andrew M. Cuomo announced that New York State has been awarded an $18 million federal grant to fund educational opportunities that train New Yorkers for in-demand jobs, support entrepreneurs, and help small businesses recover from the coronavirus pandemic. New York was one of just eight states to receive the funding – made available through the CARES Act – and received the most of any state that was awarded a grant.</span></p> <p class="p1"><span class="s2">“The coronavirus pandemic is far from over, and as we continue to fight against this deadly virus, we must also respond to the economic devastation it has caused. With millions of Americans out of work, we must use every resource available to train New Yorkers to compete – and succeed – in this difficult economic situation,” Governor Andrew Cuomo said. “Our workforce is the bedrock of our economy, and I know that this funding will help bridge the gap between education and industry, allowing us to build back better by uplifting both individuals looking for jobs and small businesses across the state.” </span></p> <p class="p1"><span class="s2">“We are making success accessible ensuring New Yorkers have the training and skills they need to seek new jobs and opportunities as we continue to battle this pandemic,” said Lieutenant Governor Kathy Hochul. “Our ongoing workforce development initiative is supporting efforts to improve the economic security of women, youth and other groups that face significant barriers by making job placement more inclusive and leaving no New Yorker behind. We are sending a clear message to New Yorkers that they will have the training and skills they need to succeed as we build back better, smarter and stronger for the future.”</span></p> <p class="p1"><span class="s2">The New York State Department of Labor will partner with the Office of Workforce Development, Empire State Development, New York’s ten Regional Economic Development Councils, the State University of New York, and the City University of New York to allocate the federal grant funding on programs that support New York’s continued economic recovery.</span></p> <p class="p1"><span class="s2"> Educational programs will focus on developing the skills needed to succeed in emerging growth industries like tech, logistics, and advanced manufacturing, and supporting entrepreneurs. New York’s multi-pronged approach will include four elements:</span></p> <p class="p1"><span class="s2"> 1) Education for Hard-Hit NYC: In New York City, which was among the worst-hit COVID-19 communities, the CUNY system will assist in training residents with the digital skills needed for in-demand sectors such as data analytics, cybersecurity, advanced logistics/supply chain, digital marketing and communications, and software development.</span></p> <p class="p1"><span class="s2">2) “Stay Near, Go Far” at SUNY: At 30 community colleges across the State, SUNY will leverage its existing “Stay Near, Go Far” initiative to train New Yorkers in high growth industries, including technology, healthcare, and advanced manufacturing, and provide them with the entrepreneurial skills needed to open their own businesses.</span></p> <p class="p1"><span class="s2">3) Entrepreneurship Boot Camps: Building on its existing resources, Empire State Development will host a series of intensive workshops and boot camps to train entrepreneurs and small business owners on how to run their own business during – and after – the pandemic.</span></p> <p class="p1"><span class="s2">4) Industry Focus, Regional Results: The Department of Labor will issue a competitive Request for Proposals and work with New York State’s ten Regional Economic Development Councils to identify industry-driven programs that either train job seekers to meet current local employment needs or are designed to address future economic and workforce development needs. </span></p> <!--themify_builder_content--> <div id="themify_builder_content-12486" data-postid="12486" class="themify_builder_content themify_builder_content-12486 themify_builder tf_clear"> </div> <!--/themify_builder_content-->The post <a href="https://www.insurance-advocate.com/2020/10/07/cuomo-announces-18-million-initiative-for-entrepreneurs-in-ny-state/">Cuomo Announces $18 Million Initiative for Entrepreneurs in NY State</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></content:encoded> </item> <item> <title>Restrictive Covenants For Insurance Producers: A Primer On Legal Enforceability</title> <link>https://www.insurance-advocate.com/2020/10/07/restrictive-covenants-for-insurance-producers-a-primer-on-legal-enforceability/</link> <dc:creator><![CDATA[Guest Author]]></dc:creator> <pubDate>Wed, 07 Oct 2020 02:15:10 +0000</pubDate> <category><![CDATA[October 7]]></category> <category><![CDATA[Feature]]></category> <guid isPermaLink="false">https://www.insurance-advocate.com/?p=12482</guid> <description><![CDATA[<p>As States continue to diverge in their interpretation and enforcement of restrictive covenant agreements, it is now more important than ever to ensure those agreements are drafted to conform with jurisdiction-specific laws. By Harris S. Freier, Esq MAIN TYPES OF RESTRICTIVE COVENANTS There are generally four main categories of restrictive covenants to consider in employment […]</p> The post <a href="https://www.insurance-advocate.com/2020/10/07/restrictive-covenants-for-insurance-producers-a-primer-on-legal-enforceability/">Restrictive Covenants For Insurance Producers: A Primer On Legal Enforceability</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description> <content:encoded><![CDATA[<h3 class="p1"><span class="s1">As States continue to diverge in their interpretation and enforcement of restrictive covenant agreements, it is now more important than ever to ensure those agreements are drafted to conform with jurisdiction-specific laws.</span></h3> <p><strong><span class="s1"> By Harris S. Freier, Esq</span></strong></p> <p class="p1"><b>MAIN TYPES OF RESTRICTIVE COVENANTS</b></p> <p class="p2"><span class="s2">There are generally four main categories of restrictive covenants to consider in employment agreements: non-compete- meaning a former employee cannot work for a competitor within a specific geographic scope and time period; non-solicitation of customers-often with a time period restriction and sometimes with a specific geographic scope; non-solicitation of employees-normally with a specific time period restriction; and non-disclosure of trade secrets or confidential information-which normally have no time limits.</span></p> <p class="p2"><span class="s2">Oftentimes employers doing business throughout the country enter into form restrictive covenant agreements without acknowledging the nuanced laws of each respective state. Recently, in <i>Nuvasive v. Miles</i>, Civ. No. 2017-0720-SG, 2018 WL 4677607 (Del. Ch. Sept. 28, 2018), a Delaware court struck down a California employer’s noncompete provision under California law, despite a choice of law provision in the agreement declaring that it would be governed under Delaware law. Critically, the court relied on California law that prohibits such choice of law provisions in restrictive covenant agreements unless the employee is represented by counsel, which in this case, Miles was not. As a result, the Delaware court interpreted the noncompete provision under California law, which is significantly more restrictive than in Delaware.</span></p> <p class="p2"><span class="s2">Even regional businesses should consider tailoring their restrictive covenant agreements to conform with each neighboring states’ laws. For example, restrictive covenants for insurance brokers working in New York and New Jersey are subject to different requirements to remain enforceable.</span></p> <p class="p4"><b>NEW JERSEY CASE LAW SPECIFIC TO INSURANCE INDUSTRY</b></p> <p class="p2"><span class="s2">New Jersey does not have robust case law directly addressing restrictive covenants in the context of insurance brokers, but there is some guidance. In Grinspec, Inc. v. Lance, a broker was required to sign an updated restrictive covenant agreement as a condition of continued employment. A-3313-01T1, 2002 WL 32442790 (App. Div. Aug. 13, 2002), certif. denied, 178 N.J. 251 (2003). However, because the broker was terminated only four months later without any evidence of declining performance or misconduct in that timeframe, the court held there was inadequate consideration for the new agreement to be enforceable. To establish consideration in this context, the court held that the continued employment must be for a “substantial period,” which will depend on the facts and circumstances of each case.</span></p> <p class="p2"><span class="s2">Some courts have also considered restrictive covenants in the context of the sale of insurance business. In Peek v. Johl & Co. Inc., the sale of an insurance business included a five-year restrictive covenant limiting the sellers’ ability to compete with the purchaser. A-0499-10T4, 2012 WL 6115678 (App. Div. Dec. 11, 2012). The New Jersey Appellate Division upheld the restrictive covenant and concluded that it may be a material term of an agreement for the sale of an insurance business. In <i>Ascencea, L.L.C. v. Zisook, Civ </i>No. 08-5339, 2011 WL 12017 (D.N.J. Apr. 5, 2011), the District Court for the District of New Jersey held that rights under restrictive covenants can be assigned to a purchasing business entity in connection with the sale of a business.</span></p> <p class="p2"><span class="s2">Recently, the District Court in New Jersey considered a restrictive covenant agreement in <i>Allstate Life Ins. Co. v. Stillwell</i>, Civ. No. 15-8251, 2019 WL 2743697 (D.N.J. May 16, 2019). The court upheld the agreement which contained non-solicitation and non-compete provisions lasting one year from termination of employment, as well as a blanket prohibition for any competition within one mile of the employer. The agreement also contained provisions regarding protection of the employer’s confidential information and trade secrets.</span></p> <p class="p2"><span class="s2">Notwithstanding the lack of case law in New Jersey specific to brokers, Courts in New Jersey tend to enforce restrictive covenant agreements that are reasonable in terms of geographic scope and time restrictions, if they protect a legitimate interest such as trade secrets, confidential business information, or customer relationships. Whitmyer Bros., Inc. v. Doyle, 58 N.J. 25 (1971); ADP, LLC v. Rafferty, 92 F.3d 113 (3d Cir. 2019); ADP LLC v. Kusins, 460 N.J. Super. 368 (App. Div. 2019). An employer’s legitimate interests includes “highly specialized, current information not generally known in the industry . . . which the employee has [obtained] solely due to his employment.” Ingersoll-Rand Co. v. Ciavatta, 110 N.J. 609 (1988).</span></p> <p class="p4"><b>NEW YORK CASE LAW</b></p> <p class="p2"><span class="s2">In New York, restrictive covenants are enforceable where necessary to protect against disclosure or use of trade secrets or confidential information, or where an employee’s services are “special or unique.” Ticor Title Ins. Co. v. Cohen, 173 F.3d 63 (2d Cir. 1999). An employer also has a legitimate interest in “preventing former employees from exploiting or appropriating the goodwill of a client or customer, which had been created and maintained at the employer’s expense, to the employer’s competitive detriment.” BDO Seidman v. Hirshberg, 690 N.Y.S.2d 854 (1999).</span></p> <p class="p2"><span class="s2">Note however that the basis of upholding a restrictive covenant in New York based upon the special or unique services rather than to prevent disclosure of trade secrets or confidential customer information is particularly difficult in the context of brokers because New York courts have not found them to be “special or unique” <i>per se</i>. See <i>Veramark Tech., Inc. v. Bouk</i>, 10 F.Supp.3d 395 (W.D.N.Y. 2014) (evidence was “wholly insufficient to transform Mr. Bouk from an ordinary salesman into a unique employee” despite being the employer’s highest-ranking sales executive); <i>Marsh USA, Inc. v. Alliant Ins. Servs., Inc</i>. 26 N.Y.S.3d 725 (Sup. Ct. 2015) (“Insurance brokers are generally not considered to be unique or extraordinary employees.”).</span></p> <p class="p2"><span class="s2">Indeed, the standard for an employee to be special or unique is so high that an employer must show “his services are of such character as to make his replacement impossible or that the loss of such services would cause the employer irreparable injury.” <i>Reed Elsevier, Inc. v. Transunion Holding Co., Inc.</i>, Civ. No. 13-8739, 2014 WL 97317 (S.D.N.Y. Jan. 9, 2014). Nonetheless, “unique” employees can include brokers whose services are “unique based on their unique relationships with the customers with whom they deal.” Id. In Reed, the court would not enforce a restrictive covenant against a manager of salespersons as a “unique” employee, because it was not established that he had sufficient client relationships.</span></p> <p class="p2"><span class="s2">Once a legitimate interest is established, a restrictive covenant must still be “reasonable” under New York law. Similarly to New Jersey, the geographic scope and time restrictions of a restrictive covenant are important considerations in determining whether a restrictive covenant is reasonable. Distinct from New Jersey, there is a line of case law in New York, which suggests that restrictive covenants should not be enforced against employees terminated without cause. See e.g. <i>SIFCO Industries, Inc. v. Advanced Plating Technologies, Inc.</i>, 867 F. Supp 155, 158 (S.D.N.Y. 1994). However, New York courts are not uniform in this view and the Second Circuit has cautioned against a bright line rule. <i>Hyde v. KLS Prof</i>’l Advisors Group, LLC, 500 F. App’x 24 (2d Cir. 2012).</span></p> <p class="p2"><span class="s2">As the legal landscape for restrictive covenant agreements continues to evolve and become more distinct on a jurisdictional basis, insurance employers should be mindful of crafting restrictive covenant agreements that are narrowly tailored to conform with each jurisdiction’s requirements. </span></p> <!--themify_builder_content--> <div id="themify_builder_content-12482" data-postid="12482" class="themify_builder_content themify_builder_content-12482 themify_builder tf_clear"> </div> <!--/themify_builder_content-->The post <a href="https://www.insurance-advocate.com/2020/10/07/restrictive-covenants-for-insurance-producers-a-primer-on-legal-enforceability/">Restrictive Covenants For Insurance Producers: A Primer On Legal Enforceability</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></content:encoded> </item> <item> <title>New Amendments to Delaware General Corporation Law Will Make It Easier for Companies to Become Public Benefit Corporations</title> <link>https://www.insurance-advocate.com/2020/10/07/new-amendments-to-delaware-general-corporation-law-will-make-it-easier-for-companies-to-become-public-benefit-corporations/</link> <dc:creator><![CDATA[Guest Author]]></dc:creator> <pubDate>Wed, 07 Oct 2020 00:04:13 +0000</pubDate> <category><![CDATA[October 7]]></category> <category><![CDATA[Legal]]></category> <guid isPermaLink="false">https://www.insurance-advocate.com/?p=12474</guid> <description><![CDATA[<p>Elizabeth K. Lange & Elizabeth A. Diffley On July 16, 2020, Delaware adopted new amendments to its public benefit corporation statute, continuing a trend to make this relatively new corporate form more accessible. The amendments, among other things, (i) reduce impediments to use of the public benefit corporation form by eliminating supermajority voting requirements and […]</p> The post <a href="https://www.insurance-advocate.com/2020/10/07/new-amendments-to-delaware-general-corporation-law-will-make-it-easier-for-companies-to-become-public-benefit-corporations/">New Amendments to Delaware General Corporation Law Will Make It Easier for Companies to Become Public Benefit Corporations</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description> <content:encoded><![CDATA[<p class="p1"><strong><span class="s1">Elizabeth K. Lange & Elizabeth A. Diffley</span></strong></p> <p class="p1">On July 16, 2020, Delaware adopted new amendments to its public benefit corporation statute, continuing a trend to make this relatively new corporate form more accessible. The amendments, among other things, (i) reduce impediments to use of the public benefit corporation form by eliminating supermajority voting requirements and appraisal rights in connection with converting to, or merging with, a public benefit corporation, (ii) clarify the conflict of interest rules and provide statutory default protection for directors in connection with their duty to balance interests and (iii) clarify shareholder ownership requirements for bringing a lawsuit to enforce the balancing requirements required of public benefit corporations.</p> <p class="p1">Public benefit corporations (PBCs) are for-profit corporations that are intended to produce one or more public benefits and to operate in a responsible and sustainable manner. A key distinction between a public benefit corporation and a conventional corporation is that a board of directors must manage a PBC in a manner that balances (1) the stockholders’ pecuniary interests, (2) the best interests of those materially affected by the corporation’s conduct (e.g., employees, customers, suppliers, local communities, etc.), and (3) the public benefit or public benefits identified in the public benefit corporation’s certificate of incorporation. The amendments to Sections 363, 365 and 367 of the Delaware General Corporation Law (DGCL) are described in more detail below:</p> <p class="p1">•Elimination of Super-Majority Voting Rights. The amendments to Section 363 of the DGCL reduce from two-thirds to a simple majority the stockholder vote required for (1) amendments to a certificate of incorporation to effect a conversion of a conventional corporation into a public benefit corporation (and vice versa) and (2) mergers that result in the conversion of shares of a conventional corporation into shares of a public benefit corporation (and vice versa).</p> <p class="p1">•Elimination of Appraisal Rights. The amendments to Section 363(b)(2) of the DGCL eliminate appraisal rights for (1) amendments to a certificate of incorporation to effect a conversion of a conventional corporation into a public benefit corporation (and vice versa) and (2) mergers that result in the conversion of shares of a conventional corporation into shares of a public benefit corporation (and vice versa).</p> <p class="p1">•Clarification of Interested Director Provisions. The amendments to Section 365(c) clarify that a director will not be considered “interested” in connection with a balancing decision required by Section 365(a) based solely on his or her ownership of, or interest in, stock of a public benefit corporation, except to the extent such ownership would create a conflict if the company were not a public benefit corporation. The amendments also provide that, absent a conflict of interest, a failure to satisfy the balancing requirement will not constitute an act or omission not in good faith for the purposes of Section 102(b)(7) (the statutory section permitting corporations to include provisions in their certificates of incorporation eliminating monetary damages for a director for a breach of fiduciary duty) or Section 145 (addressing indemnification of officers and directors), unless the certificate of incorporation specifically provides otherwise. The change eliminates the need to include a separate provision in the certificate of incorporation to protect directors for breaches under Section 365(c) by instead making it the statutory default.</p> <p class="p1">•Standing for Enforcement Actions. The amendments to Section 367 clarify that any lawsuit to enforce the balancing requirement must be brought by plaintiffs owning at least 2% of the public benefit corporation’s outstanding shares or, in the case of certain listed companies, shares with a value of at least $2,000,000 if that number is lower.</p> <p class="p1">The amendments (other than to Section 363(b)(2)) became effective upon enactment into law. The amendments to repeal Section 363(b)(2) will be effective with respect to a merger or consolidation consummated pursuant to an agreement entered into (or, with respect to a merger consummated pursuant to Section 253, resolutions of the board of directors adopted) on or after July 16, 2020.</p> <p class="p1">To date, most corporations that have adopted the benefit corporation model are private, closely-held companies. The 2020 amendments, however, significantly reduce the statutory hurdles for public and widely-held companies to become public benefit corporations and may open the door for more companies to consider this option.</p> <p class="p1">The broad economic and social disparities brought increasingly to light by the COVID-19 pandemic and broad-based social and political unrest have highlighted for many the potential benefits of a stakeholder-based model. As investors and other stakeholders increasingly focus on social responsibility and environmental, social and governance (ESG) considerations and impact investing, the benefit corporation model is gaining in popularity and garnering national attention from legal scholars, large institutional investors and the business community. In 2019, The Business Roundtable released a statement on the purpose of a corporation signed by over 180 CEOs — though it didn’t mention benefit corporations explicitly, the statement endorsed a stakeholder-focused approach. In his annual letter to CEOs, Larry Fink, leader of BlackRock, the world’s largest institutional investor, has asked companies to be “deliberate and committed to embracing purpose and serving all stakeholders.” Some companies have already taken the plunge: the innovative insurance company Lemonade, Inc., which some have referred to as an insurtech unicorn, just went public as a benefit corporation this month. It joins Laureate Education as one of a small handful of companies to do so. Legal heavyweight Leo Strine, the former Chief Justice of the Delaware Supreme Court, has praised the benefit corporation model and called for The Business Roundtable and mainstream institutional investors to rally behind it. Although it remains to be seen how broadly the benefit corporation model will be embraced, especially among public companies, with the recent Delaware amendments, it will be much easier for existing companies to take him up on the challenge.</p> <!--themify_builder_content--> <div id="themify_builder_content-12474" data-postid="12474" class="themify_builder_content themify_builder_content-12474 themify_builder tf_clear"> </div> <!--/themify_builder_content-->The post <a href="https://www.insurance-advocate.com/2020/10/07/new-amendments-to-delaware-general-corporation-law-will-make-it-easier-for-companies-to-become-public-benefit-corporations/">New Amendments to Delaware General Corporation Law Will Make It Easier for Companies to Become Public Benefit Corporations</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></content:encoded> </item> </channel> </rss>