- Background - On July 1, 2009, Commercial Mutual Insurance Company (Commercial) converted from an Advanced Premium Cooperative Insurance Company to a Stock Property and Casualty Insurance Company. At the same time, it changed its name to Kingstone Insurance Company (Kingstone). Commercial has a long history of writing property and casualty business in New York having commenced operations in 1886. It wrote homeowner and general liability business primarily in Upstate New York until the early 1990s when it started to write business Downstate. Throughout its long history, Commercial never wrote more than $10 million in annual premiums through dedicated independent producers until 1998 when Eagle Insurance Company made a major surplus note investment in the Company to increase its capital in return for getting control of its operations.
In 2001, John Reiersen was elected President and CEO of Commercial with the goal of rebuilding the Company as an independent insurer writing multiple lines for a select group of independent producers. John Reiersen , after a long and productive career as a regulator and industry executive, accepted this challenge as he wanted to prove that a very small insurer writing through the independent agent and broker distribution system could compete profitably with the larger insurers that continue to gain more of the market share of the business. Adding to this challenge was the need to obtain a substantial amount of reinsurance right after 9/11/01, since this catastrophic event really tightened up the reinsurance market for all primary companies. John Reiersen's career began in the New York Insurance Department in 1964. After 10 years of performing financial examinations on property and casualty insurers, John was asked to administer New York's new No-Fault Motor Vehicle Insurance Law and to start up the first dedicated market conduct investigation unit in the Country. For the next fifteen years John was the driving force behind many statutes and regulations enacted to improve the regulation of property and casualty insurance products. John chaired talented Insurance Department teams and industry advisory committees that resulted in the successful implementation of the No-Fault Motor Vehicle Insurance in New York. Over these years the No-Fault law was amended several times and Regulation 68 was amended 23 times in an effort to curb abuses and deal with implementation issues. The verbal threshold definition of serious injury replaced the unworkable, $500 threshold, medical fee schedules were developed and a workable arbitration mechanism for nofault disputes was developed. By 1989, New York's successful No-Fault law was the model for the Country. While abuses by medical providers and attorneys are currently increasing the costs of the no-fault system the law continues to be a significant improvement over the prior tort system. John pioneered in establishing the market conduct examination function, including the development of detailed Fair Claim Practice Regulations 64 and 68. Regulation 64 has been used as the model for many other States' fair claim practice regulations. These regulations coupled with the market conduct examinations has served to provide consistently good service to New York policyholders and claimants and a level playing field for all insurers.
John Reiersen, during his years in the Property and Casualty Insurance Bureau where he ultimately earned the title of Chief Examiner, always sought ways to reduce the cost of automobile insurance in New York. He chaired task forces at the Insurance Department that resulted in the enactment of the seat belt law, anti DWI legislation and other highway safety initiatives. Also under his supervision many anti fraud measures were enacted into law in New York including the Mandatory Automobile Underwriting Inspection Law (Regulation 79), the Insurance Information Enforcement System (IIES), and the development of the National Insurance Crime Bureau's claims database. The IIES program has resulted in reducing New York's uninsured motorist population to less than 5% of all registered vehicles, one of the lowest rates in the Country. The mandatory inspection law and Regulation 79 since enactment in 1978, has prevented several billion dollars in fraudulent theft claims. Mr. Reiersen believes the current cost effectiveness of the inspection law needs to be evaluated as many fraud measures have been enacted subsequent to the Inspection law which accomplish the same purpose.
The liability insurance crisis of 1985- 1986 resulted in a huge challenge to both the Insurance Department and the Industry to maintain the availability and affordability of Property and Casualty Insurance in New York. Mr. Reiersen was asked to chair the Insurance Department Task Force that developed a number of statutes and regulations aimed at avoiding a repetition of this black mark on the industry. Mr. Reiersen spearheaded the development of flex-rating for commercial lines, rating plan regulations, standards for claims made policies and Section 3426 rules governing the cancellation and nonrenewal of commercial insurance policies. Mr. Reiersen was instrumental in forming several successful market conduct assistance programs to deal with serious availability problems including the Municipal Market Assistance Program. During the period 1974-1989, the New York Automobile Insurance Plan (NYAIP) annually insured over 1.4 million cars in New York resulting in very large residual market expenses for New York automobile insurers. Mr. Reiersen regulated the NYAIP from 1980 to 1989 and in that period he and his staff developed a number of programs that resulted in a significant reduction in residual market expenses. These programs included the Limited Assignment Distribution (LAD), Commercial LAD (CLAD), the Public Automobile Insurance Pool (PAP) and the Special Risk Distribution Procedure (SRDP). Other Plan rule revisions enacted included the Producer Certification Program and the increase of public member representation on the Governing Committee to seven members.
In 1987, Mr. Reiersen was one of six founding members of the Insurance Regulatory Examiners Society (IRES) a national professional and educational organization for insurance examiners that is currently very active with over 1000 members. In 1990, Mr. Reiersen was one of two founding members of the Insurance Regulatory Examiners Foundation, an industry group dedicated to the creation of an endowment fund for the education of insurance regulators. Mr. Reiersen holds the professional designations of Certified Financial Examiner (CFE) granted by the Society of Financial Examiners and Certified Insurance Examiner (CIE) granted by IRES. Mr. Reiersen earned his CPCU designation in 1984 and has served as President of the Long Island Chapter of CPCU and a term of three years on the Board of Governors of the CPCU Society. Mr. Reiersen left the Insurance Department in 1989 to join the Robert Plan Corporation as a Senior Executive. He served as President of the Eagle Insurance Group from 1990 to 2000. Mr. Reiersen continued to work with Industry Committees in New York and Other States to obtain cost containment and antifraud statues and regulations. He was General Manager of Robert Plan's New Jersey operations for several years where he developed the New Jersey Voluntary Automobile Insurance Pool, resulting in over 200,000 policies being removed from the Market Transition Facility (formerly the JUA). Mr. Reiersen had responsibility for Robert Plan's 70 member Special Investigation Unit (SIU), considered by many in the industry to be the best SIU in the Country. Robert Plans SIU was responsible for investigations that broke some of the largest no-fault fraud rings in New York and New Jersey.
Mr. Reiersen has served on many industry committees including service as Chairman of the NYAIP Governing Committee, The Motor Vehicle Accident Indemnification Corporation, The Industry Optional No-Fault Arbitration Committee and the New York Insurance Association. John chaired the NYAIP's Territorial and Takeout Credit Task Force which resulted in the development of Takeout rules that have played a large role in the depopulation of the NYAIP.
John could have retired in 2001, but he had one remaining challenge left which was the development of Commercial Mutual Insurance Company (now Kingstone Insurance Company) into a medium size multi line property and casualty insurer. After eight years at this task, so far so good. The surplus of the company has increased eight fold and the premium volume has increased over 300% since 2001. The Company has been profitable in every year of operation since 2002. Along the way the Company has developed several innovative products for the marketplace including forhire vehicle physical damage insurance, private passenger automobile physical damage insurance and in 2009, a standalone policy providing canine legal liability insurance. The Company seeks to take advantage of niche markets and opportunities. It writes 95% of its business in Downstate New York and has been an active writer of homeowners and dwelling fire business in New York City and Long Island. It also writes commercial automobile insurance for light weight commercial vehicles as well as the innovative physical damage and canine legal liability products mentioned above. In 2009, the company commenced writing business owners policies and artisan's liability business. The Company will be introducing a commercial multi peril program in the first quarter of 2010.
The success of the Company has been the result of its close relationship with its select independent agents and brokers, its reinsurers, its system vendors and its reinsurance intermediary. Kingstone' s niche in the marketplace is simple since it is based on providing superior service to its policyholders, producers and claimants. In the most recent Professional Insurance Association (PIA) producer surveys, Kingstone scored significantly above average in producer relations, underwriting and claim handling. Kingstone provides needed markets to small to medium size producers in the Greater New York City region. All producers are assigned an underwriter and all communications between these folks is direct and prompt . Quotes and policies are issued promptly and claims are handled promptly in a proactive manner. It's all about service and living up to promises made. Kingstone's rates and commissions are competitive but individual service is the most important factor driving the company's success. The most important factor in the success of the Company is the very experienced team of Insurance professionals and staff based in Kingston, New York. The Company has experienced virtually zero turnover in its professional staff since 2001 and all are dedicated to the success of the company. All employees are rewarded with a bonus representing 15% of underwriting income which serves as a good incentive to control expenses and produce profitable business.
The decision to convert to a stock company was made in late 2006 since it was determined that the Company could greatly increase its profitability and capital position by obtaining capital contributions from the investment community. Investors, especially in the last two years do not look upon surplus notes as an attractive investment option. The Commercial Mutual surplus notes purchased by Eagle Insurance Company in 1998 were purchased from Eagle by the DCAP Group in January, 2006. John met the Chairman of the DCAP Group, Barry Goldstein in 2003, when both served together on the Governing Committee of the NYAIP. A friendship formed resulting in the formation of the partnership in 2006. Mr. Goldstein brings significant expertise in investing and capital raising and business acumen to the Company which will facilitate Kingstone's growth to the next level. Mr. Goldstein currently serves as Kingstone's Chairman and Chief Investment Officer. Effective with the conversion to Kingstone, DCAP Group, now the parent of Kingstone Insurance Company changed its name to Kingstone Companies, Inc. Kingstone Companies, Inc. has sold all of its brokerage operations and it is dedicated to the growth of Kingstone Insurance Company. Kingstone Companies Inc. is a publicly traded company listed on NASDAQ. Together, John and Barry will continue to carefully grow the Company, always cognizant of the relationships that are so important to success. Commercial is now Kingstone, but other than a name change and a stronger capital structure, nothing has changed. The people, products, and the commitment to service remain unchanged.
All of the above was accomplished by the teamwork of dedicated associates at the Insurance Department, the Robert Plan Corporation, the NYAIP, and of course Kingstone Insurance Company. John Reiersen believes that we all work in a much needed industry where a great deal can be accomplished if one wants to correct problems or break new ground. First, you need a desire for change or innovation, second the dedication to work hard, and most importantly a dedicated team of associates to accomplish the goal. Kingstone is fortunate to have a great team of employees, producers, system vendors, reinsurers and intermediaries to will assist move it forward. Kingstone looks forward to serving its policyholders and producers in the future. The journey is not over.
