New York: The Change Has (Started to) Come
September 26, 2011 by Elizabeth Festa
Department will open its doors Oct. 3 as a part of a new New York State
Department of Financial Services. Insurers shouldn’t expect to see too much
disruption – yet.The change is the culmination of a directive from Gov. Andrew Cuomo, D,
issued early in the year. Cuomo told the banking and insurance departments to
merge to save money.
An early attempt by the governor to strengthen the new department by adding a
consumer protection board, and by injecting prosecutorial or quasi-attorney
general powers, was roundly defeated by the state insurance lobby when the
matter came up for a budget vote in the state legislature.
However, it’s clear that there’s a new sheriff in town.
DFS (it technically doesn’t exist yet) Superintendent Benjamin Lawsky, who
was confirmed in late May, is getting out ahead of the curve and becoming the
public face of the future agency by issuing statements on insurance consumer
protection matters like coverage in the wake of Hurricane Irene, and banking
issues like mortgage insurance
Insurance groups are happy that some continuity is provided by James Wrynn,
who is still listed as New York insurance superintendent and now will be the DFS
deputy overseeing insurance. Agents and industry have a relatively good
relationship with Wrynn.
Wrynn joined Lawsky in issuing a recent statement dealing with the
liquidation of Executive Life Insurance Company of New York, Jericho, N.Y., a
company that has been winding down for a generation.
“We are excited to see what sort of efficiencies in procedures the new
department might implement,” says Tim Dodge, a spokesman for the Independent
Insurance Agents & Brokers of New York (IIAB), De Witt, N.Y..
However, the IIAB is still concerned about how DFS will draw the line between
banking and insurance. Banking regulators are not going to be as knowledgable
about insurance products as insurance regulators are, Dodge says.
Because the merger is supposed to help save money, layoffs or attrition could
leave already overworked insurance regulators with even more of a workload — a
concern to agents because of the already lengthy time it takes, they say, to get
the standard bread and butter stuff (the rate and form filing; licensing) done.
Howard Mills who is now the insurance industry director at Deloitte L.L.P.,
New York, and has been the New York insurance superintendent, says he believes
the old New York insurance agency “although consolidated, will remain a silo.”
Mills tamped down fears of banks seizing the day. “I don’t see a lot of
crossover.” He wouldn’t expect to see bank examiners going into insurance
companies to examine them. “Nor would it wise,” he says.
“We’ll get a better idea in 6 months or so” about how things have shaken out,
Dodge says. The merger to streamline was aimed at saving money, so elimination
of duplicative services is not out of the question.
A spokesman for the insurance department says there will be a big press
kickoff event Oct. 3 to announce the DFS merger, but about any possible future
layoffs or attrition he says only, “When there is something to announce, we will