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Officially the Assistant Vice President of Research, Tim is our self-proclaimed "Insurance Geek."  As one of our most recognizable names and utilized resources, he helps members every day with technical questions.

IIABNY > Ask Tim
December 10
Check Out Cavalcade of Risk #223

It's online today at, it's all in rhyme, and it features my post calling on agents to stop issuing certificates of insurance. 'Tis the season of hope, you know.

December 01
Forget Driverless Cars. Are You Ready For Flying Cars?


This from Bloomberg News, as reprinted in Insurance Journal:


The first time Carl Dietrich brought his flying-car concept to the Experimental Aircraft Association’s annual AirVenture gathering in Oshkosh, Wisconsin, he had only a video to show the aviation geeks who wandered by his modest stall. The following year, he brought the mock-up of a wing. Six years later, in July 2013, he was finally ready to fly the prototype.

As the announcer who introduced the Terrafugia Transition put it: “Ladies and gentlemen, this is one of the most incredible things we’ve seen, ever, here at Oshkosh. Twenty-five minutes ago, this was a street-legal automobile. Now, it’s in the air.”

Pilot Phil Mateer buzzed the crowd while the announcer patched into his cockpit microphone to ask him how it felt up there. “I’m in a car looking down on traffic,” Mateer replied. “And it flies real nice.”


More than a hundred people have paid deposits of $10,000 each for the Transition, which will be capable of 70 miles (110 kilometers) per hour on the road and 100 mph in the sky when it finally comes to market sometime within the next three years. Dietrich is refining details on the third-generation prototype of his $279,000 vehicle before attempting certification by both the FAA, which regulates planes, and the National Highway Traffic Safety Administration, which oversees cars.


Critics say flying cars are unlikely to be both great airplanes and great automobiles. But that misses the point, says Dietrich, who explains the Transition is intended to expand the definition of an airplane, solving a number of persistent problems in the process.

First and foremost is that small planes are virtually useless in inclement weather. If a storm rolls in while you’re flying the Transition, on the other hand, you can simply land at many of the 5,000-plus airports in the U.S. alone, push a button to fold up the wings and hit the road until conditions improve. At home, you can park it on the street or in the typical suburban garage. And it runs on regular unleaded gas, which is cheaper and cleaner than aviation fuel and available at your local service station.

“You’re getting comparable gas mileage to your road car, but you’re going 100 miles per hour over all the traffic,” Dietrich says.

That makes the Transition ideal for weekend jaunts or for salespeople and others whose jobs require regular trips of a few hundred miles — although, at the expected price, even he admits it won’t be within reach of your average salesperson anytime soon.

For insurance purposes, is it an automobile or an aircraft? Which insurance policy is appropriate? Will someone have to create a whole new insurance product? And who will offer it? How will carriers underwrite it?

Say what you want about the times we live in, but boring they are not.

November 13
2 Minutes With Tim: Broker of Record

​What does New York law say about broker of record situations?



November 12
2 Minutes With Tim: Carriers Emailing Policies

​Some insurance carriers are no longer sending print copies of policies. What should their agents do about it?



November 10
Can a Personal Lines Broker Service Commercial Lines?

Question from an IIABNY member: Back in the day when I became a licensed broker, the only P&C option available was a full P&C license to become an agent or broker. Now with GEICO coming to western New York, the option of having a personal lines license is available. My question is, if a staff member opts to only obtain a personal lines brokers license, as an agency does that prohibit us from allowing the staff member to do certain things in commercial lines?  I understand that they shouldn’t be selling commercial lines but what about serving commercial lines?

Answer: I think the best way to answer this question is to look at the definitions in New York insurance law, specifically Section 2101. Here are the relevant parts:

(c) In this article, "insurance broker" means any person, firm, association or corporation who or which for any compensation, commission or other thing of value acts or aids in any manner in soliciting, negotiating or selling, any insurance or annuity contract or in placing risks or taking out insurance, on behalf of an insured other than himself, herself or itself or on behalf of any licensed insurance broker, except that such term shall not include: …

(2) an officer, director or employee of a licensed insurance producer, provided that the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state and:

(A) the officer, director or employee's activities are executive, administrative, managerial, clerical or a combination of these, and are only indirectly related to the sale, solicitation or negotiation of insurance; or
(B) the officer, director or employee's function relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance; or
(C) the officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting licensed insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance; …

(m) In this article, "negotiate" or "negotiation" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from licensed insurers, fraternal benefit societies or health maintenance organizations for purchasers.

(n) In this article, "sell" or "sale" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of a licensed insurer, fraternal benefit society or health maintenance organization.

(o) In this article, "solicit" or "solicitation" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular licensed insurer, fraternal benefit society or health maintenance organization.

You need a license to perform any of the activities described in (m), (n) and (o). You do not need a license if you are not receiving commissions and you perform the activities described in (2)(A), (B) and (C). Therefore, the answer to your question really depends on the types of service activities this person might perform. Forwarding endorsement requests to carriers, issuing certificates of insurance, recording claim reports on forms, and issuing auto I.D. cards are clerical tasks that do not require a license. Giving someone coverage advice, advising them to buy cyber insurance from Zurich, or selling them higher umbrella limits are all producer activities which require a license.


October 24
Do Both Parents Have To Pay For Their Teenager's Insurance?

Photo by State Farm. Used under a Creative Commons Attribution 2.0 license.

I got an email last week from an IIABNY member whose client was battling with an insurance company over her teenage son. This client is a single mother whose son resides with his father. The son is of driving age, and his father has him listed on his auto insurance policy as a driver. However, the mother's insurer insisted on listing him (and charging for him) as well. Their reasoning was that the father carried only the state minimum limits for auto liability insurance, while the mother carried much higher limits. The carrier service rep wrote to the mother, "Since (your son) meets our definition of an insured person, if the coverage were to be exhausted on his policy due to a claim, it is possible that your policy would be secondary.” Is that true?

I don't think so.

The mother's policy had language very similar to that found in ISO's Personal Auto Policy, which states:

"We do not provide Liability Coverage for the ownership, maintenance or use of: … 

3. Any vehicle, other than 'your covered auto'", which is:
a. Owned by any 'family member'; or
b. Furnished or available for the regular use of any 'family member'.
However, this Exclusion (B.3.) does not apply to you while you are maintaining or 'occupying' any vehicle which is:
a. Owned by a 'family member'; or
b. Furnished or available for the regular use of a 'family member'."

Therefore, if the policy is in the mother’s name, it will provide Liability Coverage for her while she is maintaining or occupying a car that her son has regular access to, but it will not provide that coverage for him. Thus, if he injures someone with a vehicle scheduled on his father’s policy, and that vehicle is available for his regular use, then only the father's policy will respond.

It's important to keep in mind, though, that if the son customarily has access to his mother’s vehicles when he is staying with her, the company is within its rights to price for that exposure. 
October 01
Insurance Agents: Stop Issuing Certificates of Insurance


Disclaimer: The following is my opinion only. I do not speak for my employer or its board of directors.

Just before I left work one night last week, I got my ear roasted again by an insurance agent frustrated about certificates of insurance. I don't know how many calls I get each week about certificates, but they come in often enough.

According to a 2011 article by Bill Wilson of Big I Virtual University, it costs an insurance agency $7 to issue an ACORD certificate without any customization; adding custom language or terms may double that cost. An agency insuring one middle market construction account that needs 100 certificates annually will spend between $700 and $1,800 to produce those certificates.

The cost goes beyond paper or data entry. It includes time that staff spends fielding the requests, producing the certificates, forwarding them to a third party, fielding the objections from the third party, working with insurers to get demanded coverage changes, responding to the third party and the insured when the insurer refuses to make the changes, listening to an angry customer threaten to take his business elsewhere, listening to the third party insist that none of the other insurance agencies are being a problem about this, and so on and so on.

On top of that, certificates of insurance are the basis for a large percentage of errors and omissions lawsuits against agents. They are probably responsible for more E&O legal actions than any other single cause.

So, issuing certificates of insurance costs agencies hundreds of dollars (dollars that come out of commission income; in New York, agents cannot charge service fees), and they make it more likely that an agent will end up in court. Knowing this, why on earth do agents continue to issue them?

I think they should stop.

That's right. I think they should notify their clients that it is agency policy not to issue certificates of insurance, other than in situations where state law requires them (New York Workers' Compensation Law requires one form for work with government entities.) The clients should in turn notify their customers or, if they won't do it, the insurance agency should. It's time to stop the madness.

Here's what I think should happen. When an agency lands a new client who may need to give a third party proof of insurance, the agency should ask the client to sign a document. That document would give the agency permission to post the client's policy declarations and forms on a secure web site. It would also give the agency permission to make those records available to third parties who want proof of the client's insurance. This could be done with a password or an encryption key that changes regularly, or some other security mechanism.

The third party would then have the ability to review the client's policies and determine for themselves whether the policies meet contract requirements. They could compare the contract requirements to policy terms and conditions and determine if there is a shortcoming. When there is a coverage deficiency, the third party could notify the client, who would then ask the agent if coverage can be added. Then the agency would go to the insurer, as it would for any other coverage request.

Here's the deal. Right now, clients give agencies fat construction contracts and tell them to figure out what insurance is needed. However, if agents had gone to law school, they would be lawyers, not agents. They don't have the legal education to properly interpret contracts, and they should not have to. Nor should they have to endure threatening statements from third parties who do not contribute a nickel of revenue to the agency. Every day, some certificate holder tells a contractor to get a new insurance agent, one who will be "easier to do business with." It has to stop.

I have a broker's license. You know what? I have absolutely no desire to become an insurance producer because I hear too often about how much time producers waste dealing with certificate demands. Producers go into this field to make money and to help people solve their risk management problems. They don't go into it to argue endlessly about a piece of paper that some people want to transform into a contract. But that's how they spend their time.

No, thank you.

I don't know enough about anti-trust law to know whether it would be permissible for all agents to collectively stop issuing certificates. That is why I'm speaking for myself, not my employer. I do not for one second want to suggest that they favor an action that may be illegal. However, in my ideal world, certificates of insurance would be banished from the risk management world within the next half hour. Issuing them ceased to be a value-added service a long time ago. Now it is just assumed that an agency will issue hundreds of these things and deal with the inevitable arguments for zero additional compensation. It's not right, and agents should not put up with it any longer.

Stop issuing certificates of insurance. Today.

September 09
Where To Find ACORD 855 NY

Photo by J.D. Hancock. Used under a Creative Commons Attribution 2.0 license.

I got a phone call from a member while I was driving to work this morning (disclaimer: I have hands-free access in my car), and it got me thinking that some New York insurance producers need more information. As I've reported in this space before (and discussed in a July webinar,) ACORD introduced a new form specific to New York last May. The form is New York Construction Certificate of Liability Insurance Addendum, form number ACORD 855 NY (2014/05).

Since ACORD launched the form for use, I've received a number of inquiries from members wanting to know how they can get a copy. This morning's caller asked if she should go to the Web site of the New York State Department of Financial Services to get it. This told me two things, one of which I already knew: 1) Agencies are not yet able to download the form from their agency management systems, and 2) some are under the misimpression that the New York State government created and is mandating this form.

To be clear, the NYSDFS had nothing to do with the creation of this form. Zippo. I assume they now know that it exists, but that's the extent of their involvement. ACORD created this form at the behest of several private organizations (IIABNY among them) because of conditions in the New York construction insurance market. True, state law (primarily the scaffold law) is a major influence on those conditions, so one could say that the state government indirectly influenced the form's creation. Members have also reported to me that at least one state government agency is now requiring contractors doing business with it to submit the addendum. However, it is simply incorrect to say or believe that this form came from the DFS. It didn't; it came from ACORD and a bunch of organizations who are trying to get some control for insurance producers over the proprietary certificate forms that different entities have foisted on us over the years.

Compared to many other states, New York taxes more and regulates more. There are many things we have to do in business, especially the insurance business, for which we can truthfully say, "The state is making me do this." The ACORD 855 NY is not one of them.

Any ACORD form user can download forms from ACORD's Web site. For less than $200 a year, agents can join the ACORD Advantage program and gain access to enhanced fillable forms. If your agency has an agency management system, that system may provide you with access. If it's not making available forms you need, such as the ACORD 855 NY, contact the vendor and tell them you need it.

Just don't go looking for it on the DFS Web site. You won't find it there.

September 03
Cavalcade of Risk #216: Workers' Comp, Cat Losses, Kayaks, and Did a Doctor Prescribe That Joint?


I am very happy to host the end-of-summer issue, #216, of Cavalcade of Risk. The CoR is a bi-weekly roundup of blog posts on all things insurance and risk management. There's a lot of interesting stuff in this issue, so read on.


In the first of three posts related to Workers' Compensation in this issue, Julie Ferguson of the Workers' Comp Insider blog relays mixed news: As a percentage of employers' covered payrolls, Workers' Comp costs rose in 2012, but they remain below historical levels.

On the Workers Comp Roundup blog, Michael Stack discusses why employers who fixate on serious injury losses may be overlooking a bigger problem for their experience modifications - frequent, small medical-only losses.

Robert Wilson wonders whether the days are numbered for the basic principle that Workers' Compensation should be the exclusive remedy for injured workers. Writing at the From Bob's Cluttered Desk blog, he also casually throws in a Big Bang Theory reference. In my mind, this automatically making his a blog worth reading.

Claire Wilkinson over at Terms + Conditions reports that weather conditions in the U.S. produced three of the five largest insured catastrophe losses in the first half of the year. And remember, at this point in 2011, Tropical Storm Lee had not yet occurred, and at this point two years ago Superstorm Sandy was more than six weeks away.

If you insure any high-net-worth personal lines clients, then you'll want to check out R.J. Weiss's report on the six mistakes these clients tend to make with their coverage. Read all about it at The Illinois Insurance Protection Blog.

At the Health Business Blog, David Williams warns states that have legalized marijuana for medical use to expect sellers to also market the drug for recreational use. The three bullet points near the end of his post should be the starting point for a lot of discussion on this issue.

Think someone stealing your credit card numbers is the biggest online threat you have to worry about? Hank Stern at InsureBlog reminds us that, "Most identity theft in the United States is medical-related." Ask your health care providers if they are implementing either of the solutions he suggest.

Last and least, on this blog I address an IIABNY member's question about whether a commercial property insurance policy should have covered the loss of three stolen kayaks. Is a kayak a vehicle? The answer to that question determines the coverage.


Thanks for dropping by the Ask Tim blog for this issue of Cavalcade of Risk. I hope you find the posts thought-provoking. Should you feel so inclined, leave some comments on them or share them on Twitter, Google Plus, LinkedIn, or whatever your preferred social network happens to be. Rebecca Shafer of Workers' Comp Roundup will be your host next time with more interesting reading from the risk management world.

August 28
Two Minutes With Tim - the Transporation Industry Workers' Compensation Trust

IIABNY members have been asking about the status of the assessments against members of this trust. Here's the story.

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