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Insurance producers are required to provide notice to N.Y. policyholders by April 13, 2020

Recently, the New York State Department of Financial Services issued several emergency amendments to the Insurance Law to provide premium payment relief to policyholders.

Included in the amendments was a requirement that insurance producers—both resident and nonresident—notify their New York clients of new rules related to nonpayment of premiums by Monday, April 13, 2020. Producers may notify their clients either by mail or electronically, including email.

The requirement applies to all insurance producers, who provide services for in-force life insurance policies, annuity contracts, or fraternal benefit society certificates or who procured the property/casualty insurance policies for property policyholders (i.e., the individuals or small businesses to whom p/c insurance policies are issued, including certificate holders under group insurance policies).

Additionally, PIA has interpreted that the amendments require the retail producers to send notices to the policyholders with excess-and-surplus lines policies.

To help our members comply with this new requirement, PIANY has created a sample letter that can be sent to clients.

In addition, PIA Design & Print can assist members in creating and sending these notifications to clients. For more information, contact PIA Design & Print at aplaza@pia.org.

Changes in nonpayment rules

The relevant amendments make the following changes regarding nonpayment:

Insurers must permit policyholders who already have missed or do miss a payment due to financial hardship as a result of the COVID-19 pandemic, and who still can demonstrate financial hardship as a result of the COVID-19 pandemic, to be allowed to pay the missed payment over a 12-month period. Policyholders, who received a nonpayment cancellation notice prior to the March 29, 2020, effective date of the executive order, will be given a similar extension provided they can demonstrate financial hardship due to COVID-19.

Policies financed by premium-finance agencies

A separate amendment applies to policies financed by premium-finance agencies. In the case of insureds who have policies financed by premium-finance agencies, who miss a payment due to financial hardship as a result of the COVID-19 pandemic and who still can demonstrate financial hardship as a result of the pandemic, they will be given at least 60 days for a property/casualty insurance policy or at least 90 days for a life insurance policy to pay the missed payment. The premium-finance agency cannot impose any late fees related to the missed payment, nor can it report the insured to a credit-reporting agency, or refer the insured to a debt-collection agency with respect to the missed payment. Note that the 60/90-day extension does not apply to policyholders who received nonpayment cancellation notices prior to the March 29, 2020, effective date of the executive order.

Premium-finance companies also must permit policyholders who missed or may miss an installment due to financial hardship as a result of the COVID-19 pandemic, and who still can demonstrate financial hardship as a result of the COVID-19 pandemic to pay the missed payment over a 12-month period. This requirement does apply to policyholders who were issued nonpayment cancellation notices prior to the March 29, 2020, effective date of the executive order.

Insurers and premium-finance agencies are permitted to request a written attestation from the insured as proof of financial hardship as a result of the COVID-19 pandemic.

The text of all the amendments can be found here.

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