" title="Peter H. Bickford Legal & Dispute Resolution Services"> Peter H. Bickford Legal & Dispute Resolution Services

I have been writing my regular bi-monthly column Insight for Insurance Advocate magazine for two years now.  My focus has been on the regulatory scene, particularly aimed at New York but also at National and International issues.  I also post pdf copies of these column’s on the Publications page of my website.  I have noted, however, that in my penchant for clever titles, it is not all that easy to know the topic of a particular column.  After two years, even I cannot always remember what a particular column is about without re-reading it, which is not a very user friendly approach.  So I am now adding a brief description of the topic covered following the title for each column.  Even if these descriptions do not help or interest you in the enjoyment of my musings, I find them very helpful to me, so that counts for something.  You can check out all my columns and all my other articles and publications here.  I hope you can find a topic of interest!

With all the attention on health exchanges, I am inevitably asked from time to time: “Whatever happened to the attempt to revive the old insurance exchange?”  In response to these frequent inquiries, I wrote an article, “Speaking of Exchanges . . . Will the Phoenix Rise Again?”, which was published in the Spring 2014 issue of AIRROC Matters, the excellent quarterly magazine of the Association of Insurance and Reinsurance Runoff Companies.  So if you want to know if the exchange idea is still alive and kicking, here is a link to the article.

If you are interested in more information about the history of the exchanges or the plans for a future exchange, please check out the NY Insurance Risk Exchange page of my website, where I have accumulated historical and operating documents and articles on the subject.

On August 8, 2013 the Restructuring Plan for Executive Life Insurance Company of New York (ELNY) closed.  Under the Plan all remaining assets of ELNY were transfered to a new District of Columbia captive, GABC, owned by participating state life insurance guaranty funds and run by the National Organization of Life and Health Guaranty Associations (NOLHGA).  GABC has now assumed responsibility for all the remaining ELNY annuity contracts, but on a restructured basis that reduces the value of the contracts by close to $1 billion.  Almost all of the reduced value falls on one category of contracts — structured settlement annuitants.  Now that ELNY is formally gone, it is time for regulators, legislators, guaranty associations, insurers and consumer groups to look back at what went wrong with ELNY and the lessons it can teach us about a flawed insurance insolvency process.  To do this, however, it is necessary to remove from the conversation certain postures taken in the court proceedings leading to the approval of ELNY’s liquidation and the Restructuring Plan.

My Insight column, “Gone But Not Forgotten,”  in the September 9, 2013 issue of Insurance Advocate magazine, discusses a number of myths about ELNY that need to be understood for there to be any meaningful discussion about changes to the insolvency process.  The myths discussed are:

• The Plan is not discriminatory.  It is discriminatory in two major ways.
• Guaranty Associations will pay out their full limits in many cases.  They will not pay out full limits on any contract.
• ELNY was in financial decline when placed in rehab. It wasn’t.

A copy of the column, which explains these myths in more detail, can be accessed here.

The caption does not roll off the tongue as well as Dorothy’s fearful “lions and tigers and bears” in the Wizard of Oz, but it expresses a similar fear of the unknown.  With all the new developments in Federal and International regulations affecting the business of Insurance, there is a whole new language that needs to be mastered to keep abreast of the changing regulatory landscape.  My Insight column in the August 19 issue of Insurance Advocate magazine, “Late Summer Delight: Fishing for Acronyms,” is a semi-serious, semi-cynical look at the language of the new world order.  Enjoy!

When the insurance and banking departments were merged into the new Department of Financial Services in New York in 2011, more than 150 years of history and tradition were seemingly lost.  Some would argue that this loss was not significant, and that the merger was necessary to bring the regulation of insurance into the modern world and to recognize its essential financial nature.  Others would argue that the merger has unnecessarily destroyed one of the best and most respected insurance regulatory departments in the US.  While the “truth” is probably somewhere in between, one thing is certain: the current administration has little use for the past when it comes to reporting on the insurance business in the state.

Take, for instance, the required annual report of the superintendent on the business of insurance.  Under the old insurance department, the annual report was a treasure trove of information — statistical and narrative — about the business of insurance.  In the decade before the merger, the insurance department report generally ran close to or more than 250 pages on practically every element of the business — life, health, property/casualty, surplus lines, free zone, brokerage, licensing, examinations, etc., etc.  Last year, the new department of financial services (DFS) issued its first report following the merger.  As I discussed in my Insight column (“DFS Report: Size and Content May Send Message”) in the June 18, 2012 issue of Insurance Advocate magazine, the first DFS annual report was a about half the length of the last insurance department report, with only about one third of it — roughly 40 pages — dealing with insurance, and much of it dealing with the merger and the accomplishments of the DFS rather than discussing the industry.  I suggested at the time that because of the merger it was perhaps not fair to prematurely judge the report.

We now have the second DFS annual report in hand and, as discussed in my Insight column in the July issue of IA (“Less is Not More”), incredibly the report is a mere shadow OF LAST YEAR’S REPORT!  “While last year’s DFS report could be viewed as the Readers’ Digest version, the newly filed report is barely the Cliffs Notes version!”  As discussed in my column, the report continues to be more about the DFS rather than the industries it regulates, thus turning the statutory requirement for the report on its head.  By so doing, the DFS does a disservice to the insurance industry, the consumer, and the standing of the DFS in the regulatory community.

In May the superintendent of financial services, Ben Lawsky, announced the issuance of the New York Liquidation Bureau’s 2012 annual report, which is posted on the Bureau’s website at www.nylb.org.  The report is a 146 page thing of beauty, describing all the progress and improvements made by the current administration in closing estates, resolving claims, paying dividends, improving efficiencies and reducing staff.  However, as discussed in my recent Insight Column, “Beauty is Skin Deep” in the June 17, 2013 issue of Insurance Advocate magazine, as laudable as they may be, these efforts to improve the performance and perception of the Bureau do not address the underlying flaws with the structure, accountability and oversight (or lack thereof) of New York’s insurance insolvency process.  For instance, the report does nothing to:

– Establish a properly constituted and accountable rehabilitation and liquidation office and/or a pool of authorized independent receivership professionals;
– Provide each receivership court with the tools necessary for effective oversight of insolvent estates, including regular, periodic, meaningful report, plans and conferences;
– Provide for effective and timely participation by all interested parties in the process;
– Address the financial condition of and inequities inherent in the life guaranty fund system;
– Address the issue of separating control of the property casualty security funds from direct control of the receiver as in all other states; or
– Provide for appropriate oversight and accountability – not blanket immunity — for the receiver’s agents in the performance of their services.

No matter how much effort is made by the current administration to improve the perception of the NYLB’s current performance, without addressing these core issues, the can is simply being polished and once again kicked down the road to future administrations.

When government talks about transparency it can be a double entendre: transparent as in nothing to hide versus we can see right through you!  One of the best tests to determine the true openness of an administration is how it responds to Freedom of Information Law (FOIL) requests.  My Insight column in the June 3, 2013 issue of Insurance Advocate, titled “FOIL Redux,” continues my examination of the mixed-bag responses of New York’s Department of Financial Services to my FOIL requests, particularly where the DFS responses come up short in providing information it has accumulated on the business of insurance it regulates.  Here is a link to the column.

Last Summer the Insurance Federation of New York (IFNY), an organization whose members represent a diverse group of insurance professionals in the Metropolitan New York City area, implemented an extraordinary internship program in partnership with the charitable organization Yes!Solutions.  Under the program, six motivated high school students from extremely difficult backgrounds and circumstances, were exposed to the working environment and people at participating insurance companies and professional firms over an eight-week period.  My Insight Column in the April 22, 2013 issue of Insurance Advocate magazine (www.insurance-advocate.com) discusses this program and its value not just to the interns, but to the industry as well.  Click here for a pdf copy of the column.  For more information on the IFNY Intern Program including information on how you can help, I urge you to go to the IFNY website at www.ifny.org. 

While IFNY’s sponsorship was invaluable to making the program possible, the other half of the story is Yes!Solutions, one of the alter egos of a very extraordinary woman, Mary Lanning.  It was Mary, an insurance industry lifer as well as a nun in the service-oriented Sisters for Christian Community,  who developed, promoted, implemented, sold, cajoled, monitored, prodded, corralled and shepherded the program, the interns and the industry participants.  It is impossible to fully explain or comprehend the magnitude of all that Mary does for our industry and for those in need.  Back in 2002, one of Mary’s innumerable friends, Meg Fletcher, wrote a wonderful bio of Mary for Business Insurance magazine.   Anyone interested in reading this bio to get more of an inkling of this incredible woman and her work, click here.

My February 18 Insight column for Insurance Advocate magazine called for the elimination of the New York Liquidation Bureau  — a seemingly drastic but, in my view, necessary remedy for the gross mismanagement and lack of accountability under the existing system.  In that column I stated that I would offer alternatives to the existing system.  Hence in my March 4 Insight column, I discuss a truer course for the effective and open management of insolvent insurers through the designation of special agents retained on an estate-by-estate basis rather than through a full-time staff over-invested in an archaic, unaccountable, covert system.

My March 4 column, accessible here, focuses on the appointment by Superintendent Muhl in 1995 of such an independent agent in the liquidation of United Community Insurance Company (UCIC), and compares the success and effectiveness of the independent agent versus the management of UCIC by the liquidation bureau after it took back control from the independent agent in 2009.  As explained in my column, the most interesting aspect of the use of an independent agent in the UCIC estate was that it fit clearly within the existing statue.  In fact, it is a better fit than the Liquidation bureau, which has no direct foundation in the statute!

My Insight column for the February 18, 2013 issue of Insurance Advocate magazine, which I had titled “The Final Straw,” calls for the drastic remedy of dismantling of the NY Liquidation Bureau.  My column, which the editor of Insurance Advocate decided to turn into the cover story for the issue, describes how the Executive Life Insurance Company of New York (ELNY) fiasco has shown a bright light on the covert mismanagement of insolvent insurers by the Bureau, and discusses why the institution is beyond simple fixes and requires a full re-examination of the process.  A copy of my article can be accessed here.

In future columns, I will explore some dos and don’ts and some specific recommendations for a more efficient, effective and open process for handling insolvent insurers — not just for NY but for any US jurisdiction.  This is particularly important considering the concerns for Federal oversight of insurer solvency regulation, and the holes and inconsistencies that ELNY has exposed in the state guaranty fund structure.