The fabled New York State Insurance 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 announce it.”