Archive for the ‘Insurance Regulatory’ Category:

Acronyms, Initialisms and Abreviations: Oh My!

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.

The Interns and Sister Mary

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 ( discusses this program and its value not just to the interns, but to the industry as wellClick 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 

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.

When is a Release Not a Release?

The Insurance Division of the New York Department of Financial Services has proposed a regulation severely limiting the use of releases in the settlement of both first party and third party claims.  The consequences of this proposal, in particular how the regulation places the interests of third party claimants above those of policyholders, are the subject of my Insight column in the October 15th issue of Insurance Advocate entitled “When is a Release Not a Release?”  Here is a link.

While we’re on the subject, how about we agree that it is OK to refer to the Insurance Division of the New York Department of Financial Services as simply the NY Insurance Department, NYID or NYDOI as in the old days?  Like those of us that still refer to the Met Life Building in Midtown Manhattan as the Pan Am building although it has not borne that names since 1981.  Unfortunately, the NY Insurance Division of the DFS does not lend itself easily to an acronym, although Superintendent Lawsky has acknowledged that the DFS is lovingly referred to as Doofus in some quarters.  So how about I-Doofus for the insurance division? Like the classic I Claudius?  Just a thought.

Domestic Excess Line Carrier — An Oxymoron?

Excess and surplus line insurers have historically been defined as “non-admitted” foreign or alien companies that can only write risks through licensed excess line brokers, and only on risks that have either been rejected by “admitted” carriers or meet other specific statutory requirements.  Legislation proposed in New York would allow the creation of domestic excess line insurers, joining two other states, Illinois and New Jersey, which allow such entities.  My Insight column in the September 10, 2012 issue of Insurance Advocate magazine entitled “Domestic Excess Line Carrier – an Oxymoron?” explores the pros and cons of the proposed legislation and why this apparent contradiction may actually be beneficial to the industry, its customers, investors and regulators.  A copy of the column is available from my website at

Remembering Fred Perrotta

Fioravante “Fred” Perrotta died this past July. His NY Times obituary (July 28, 2012) focused on his public service as a key aide to Governor Rockefeller in the 1960s and later as part of Mayor Lindsay’s administration, including an unsuccessful run for city comptroller. In between those two lives, however, Fred played a significant role in the insurance business – and in my career.

In the mid-1960s, Fred was appointed as a senior deputy in the Insurance Department. At the same time, I was a fledgling staff lawyer at The United States Life Insurance Company of New York, the oldest stock life insurance company in the US. In 1967, New York adopted the predecessor to current Article 15, the Holding Company Act. Shortly after the law was in effect, my employer became the first company in New York to create its own parent under the new law – USLIFE Corporation. One of its first acts was to hire Fred away from the Insurance Department as vice president and secretary to help set up the new company. To provide Fred needed assistance, I was transferred from the life company to the holding company.

Fred was instrumental in organizing the company and establishing its working relationship with regulators, forming the basis for future dealings under the holding company law. He also helped USLIFE start the pursuit of an aggressive capital raising and acquisition program that simply could not have been accomplished directly through the life company with all the investment and management restrictions under the Insurance Law. In other words, he helped USLIFE take advantage of the freedom provided by setting up a parent company. Today most company executives grouse about the restrictions of the holding company act, particularly the registration and disclosure aspects of the law. However, historically the holding company law was designed as much to help insurance companies address capital and expansion needs that could not be adequately addressed under capital and ownership restrictions of the insurance law, as it was to provide disclosure and control over insurance company ownership and management.

Fred’s stay at USLIFE was not long – about a year as I recall – but it was certainly an exciting and important time, not just for USLIFE as a new entity, but also for setting the practical ground rules for operating under the holding company law. It was exceptionally thrilling for me to have been a part of this new venture, and when Fred left to join the Lindsay administration, I was fortunate enough to assume his position as corporate secretary. Even though Fred was the person most responsible for USLIFE to eventually be in position to have its stock listed on the NYIE, it was my good fortune as corporate secretary to be on the floor of the exchange the day of the first trade in 1969 (My gosh! Was it really that long ago?)

Fred was well known to many in the insurance industry during his many years prior to retirement as a senior partner at the Rogers & Wells law firm. But the significance of his short stint at USLIFE, and his involvement with the holding company law, are not as well known or recognized. Fred, thank you for all you did for our business, and for all you taught us about the importance of communication and cooperation among regulators, management and investors to help the industry thrive.

New Column

I was asked recently by Steve Acunto, the publisher and editor of Insurance Advocate magazine to write a regular column on developing issues, particularly on the legislative and regulatory fronts.  The first installment of my column, Insight, appears in the May 21, 2012 issue of IA.  The column, which will be a regular feature of IA, can be viewed at  In his introduction, Steve stated:

In this issue of the Insurance Advocate Peter Bickford’s column premieres on page 12. Peter is a longtime, rather astute observer of the business, whose work we have featured with great pride over the years. We believe that, in keeping with the Insurance Advocate’s mission to observe regulation and legislation that affect the progress of insurance, as well as to look out for the livelihood of independent insurance agents and brokers, always seeking to improve the system as it now exists, we are advocates for good insuring practice on all sides. Peter Bickford has earned many stripes in this very same advocacy sphere and we welcome him to our pages.

Now all I have to do is deliver the goods . . .  regularly. . .  No pressure!

I look forward to your comments and suggestions for items of interest that you believe should be explored.

The Need for a US Syndicated Capital Facility for Insurance Risks

Last week AON announced it is moving its headquarters to London “to be closer to Lloyd’s” among other considerations.  Today Bermuda announced a 50% increase in new insurer registrations, with the largest jump in special purpose insurers. These recent headlines underscore the value to insurance risk bearers, investors and consumers of the flexibility that a strong, well-conceived syndicated capital facility can bring to the marketplace. How sad that the US has no domestic answer to these continued defections of market makers and investors. How sad that we do not have a single existing market for syndicated insurance capital that could compete to keep our domestic business home.

A plan exists to create such a market, of course (See New York Insurance Risk Exchange Plan) but it needs the spotlight of savvy and forward-thinking regulators and industry leadership to make it a reality.  The current market tightening and the widening search for intelligent capacity should signal that the time is now as never before for such a facility. 

Strike One!

In one of its first opportunities to demonstrate that it “means what it says” by its stated objective “[t]o encourage, promote and assist banking, insurance and other financial services institutions to effectively and productively locate, operate, employ, grow, remain, and expand in New York state; . . .” the new Department of Financial Services has taken a called Strike One!

In November 2011, the Superintendent of Financial Services, Benjamin Lawsky, issued a press release touting his newly issued regulation “to implement a law that deregulates most insurance business with large, sophisticated companies or public entities.” In the release, Mr. Lawsky states that “[t]he new law and regulation enhance the ability of insurers to underwrite large commercial insureds in New York, increase speed to market for certain insurance products not currently exempted and eliminate barriers to economic development in New York.”  Unfortunately, the effect of the new law and regulation on the marketplace are unlikely to match the rhetoric.

I have written an article on the new law and regulations that adds a new class of risks — for large commercial insureds with significant risk management capabilities — that can be written by domestic New York companies in the “Free Zone.”  This article points out the reasons why, in my opinion, the new law and regulations will not deliver on the promised benefits to the market.  If you are interested in reading the full article click here for a link to the Publications page of my website to access a pdf copy of the article titled “Strike One!”

A New Beginning

As of today, October 3, 2011, the New York Insurance Department, believed to be the oldest state regulatory agency in the United States, no longer exists! Today the former insurance and banking departments are merged into the new Department of Financial Services, and the new Superintendent of Financial Services, Benjamin Lawsky, becomes the chief regulator of both the banking and insurance businesses. The picture gallery of past insurance superintendents on the 3rdfloor of 25 Beaver Street, which begins with William Barnes in 1860, will end with James Wrynn 151 years later.

The new agency has the opportunity to demonstrate that this sea change in the regulatory framework in New York is a new beginning, and that it intends to fulfill the stated goals of the merger legislation.  This starts with the first stated goal: “[T]o encourage, promote and assist banking, insurance and other financial services institutions to effectively and productively locate, operate, employ, grow, remain, and expand in New York state; . . .”  Nothing could be more in line with this goal than the revival of the insurance exchange!

As many of you are aware, over a year ago the industry working group established by Superintendent Wrynn issued its preliminary recommendations for the reestablishment of an insurance exchange.  After several fits and starts, a draft plan to implement these recommendations was drafted.  However, even though a draft, and with little if any downside to the regulators, release of the draft plan release was repeatedly postponed at the request of the administration.

Today is a new day, and in honor of the old insurance department, and in support of the principal goal of its successor agency, I have posted the draft plan for the implementation of the industry working group preliminary recommendations on the “NY Insurance Risk Exchange (NY-REX)” page of my web site.  Here is the link to that page.  It is my hope that the new agency will embrace the exchange concept under its stated goals, and that it is not too late for its successful reincarnation.

Farewell Insurance Department! Hello Insurance Bureau of the Department of Financial Services!