The Glossy View of the Insurance Insolvency Process in New York
July 19, 2013In 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.
What do you think?