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PIANY legislative wrap-up—2008

Resource kit 31059

By Matthew F. Guilbault, Esq.

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Runner bill
A.58 by Assemblyman Lafayette/S.637 by Sen. Skelos would establish the Class E felony of unlawful procurement of clients, patients or customers for knowingly acting as a runner, or using, soliciting, directing, hiring or employing another person to act as a runner. In the proposal, a "runner" is defined as a person, who knowingly, for profit, seeks to procure clients, patients or customers on behalf of an attorney or health care provider for the purpose of falsely or fraudulently obtaining benefits under a contract of insurance or asserting a claim against an insurer or insured for the services provided by such attorney or health care provider. The bill was passed by the Senate but died in the Assembly Codes Committee.

A.9876 by Assemblyman Lafayette/S.7869 by Sen. Skelos would provide criminal penalties for procuring a fraudulent motor vehicle insurance claim. The bill passed the Assembly but died in the Senate Codes Committee.

Property damage threshold
A.2468-B by Assemblyman Morelle/S.1552 by Sen. Skelos would increase from $1,000 to $2,000 the property damage threshold whereby insurers would be allowed to assess a surcharge on policies. The bill would not alter the existing $1,000 threshold after which a motor vehicle accident report must be filed with the commissioner of motor vehicles. The bill was passed by the Assembly and died in the Senate Transportation Committee.

Additional time to investigate fraud
A.3387 by Assemblyman Heastie/S.2638 by Sen. Seward would provide that the payment of interest and attorney fees to claimants when payment of a claim is overdue shall be the exclusive remedy when an insurer fails to make timely payment, and that the failure of an insurer to make timely payment or issue denial within 30 days after proof of claim has been submitted to insurer shall not preclude such insurer from issuing a denial or asserting a defense after the 30-day period has elapsed. Essentially, the bill would clarify that a no-fault insurer can take more than 30 days to pay or deny a claim when the carrier suspects fraud. This bill would clarify the legislative intent of Insurance Law Section 5106(a) as interpreted by the Court of Appeals in Presbyterian Hospital v. Maryland Casualty, which held that an insurer may be precluded from interposing a statutory exclusion defense for failure to deny a claim within 30 days as required by Insurance Law Section 5106(a) and 11 NYCRR 65.15(g)(3). This decision forced carriers to make decisions within 30 days even in cases of suspected fraud. The bill died in committee in both the Senate and Assembly.

Weekend auto purchases
A.9057 by Assemblyman Lafayette/S.6065 by Sen. Seward would provide that proof of insurance on a vehicle currently owned would be sufficient as proof of insurance for registering a newly purchased vehicle for a period of five days. The bill died in committee in both houses.

No-fault benefits for intoxicated drivers
S.8294-A by Sen. Bonacic is a proposal designed to make certain that health care providers are compensated for their services regardless of the fact that the insured was injured as a result of operating a motor vehicle in an intoxicated condition. The bill, supported by a coalition including MADD, medical providers and emergency room physicians, also would allow insurers a right of recovery where the injured person is found guilty of operating a motor vehicle while in an intoxicated condition or while his ability to operate a motor vehicle is impaired by the use of drugs or alcohol. If signed into law, it will take effect in six months and apply to all policies issued or renewed after the effective date. The bill passed both houses and awaits action by the governor.

Flex rating*
S.6304 by Sen. Seward would provide for flexible rating for nonbusiness automobile insurance policies. The bill, which would make the New York Property Insurance Underwriters Association permanent and to re-establish flex-rating authorization on noncommercial auto policies, passed the Senate and died in the Assembly Insurance Committee.

*See also A.11693 by the Assembly Rules Committee at the request of Assemblyman Morelle/S.8624 by Sen. Seward under NYPIUA section.

Coastal homeowners

Nonrenewal limits
A.2678-A by Assemblyman Sweeney/S2069-A by Sen. LaValle would limit the scope of an insurer's reduction of insurance coverage by limiting the volume of notices of intention to not renew or condition renewal to 4 percent of the total number of covered policies of such insurer's rating territory. The bill also would establish standards for definitions contained within the Insurance Law and require insurers that intend to materially reduce the volume of written policies to submit certain information to the superintendent of insurance. Finally, the bill would amend the special temporary panel on homeowners insurance coverage to increase its effectiveness. The bill was passed in the Assembly and died in the Senate Insurance Committee.

New York State Catastrophe Fund
A.4011 by Assemblyman Lafayette/S.1883 by Sen. Larkin would establish the New York State Catastrophe Fund Authority Act for the purpose of facilitating the creation of innovative solutions to property insurance crises and to ensure the viability of insurance carriers in the state. The bill also appropriated $10,000,000 to initiate the fund. The bill died in committee in both houses.

A.5118-C by Assemblyman Sweeney would enact the "New York Consumers Catastrophe Preparedness and Protection Act."  The bill died in committee.

S.2520 by Sen. Kruger would create the Natural Disaster Reinsurance Fund. This legislation would create a fund which insurance companies can tap into in the case of a natural disaster or catastrophic event. The bill died in committee.

S.3187 by Sen. Flanagan would enact the "New York Consumers Catastrophe Preparedness and Protection Act." To ensure the residents of New York that, in the event of a natural or man-made disaster, the recovery and rebuilding processes following a disaster will be unimpeded and strengthened by creating a catastrophic insurance fund. The bill died in committee.

S.3800 by Sen. Leibel would enact the "New York Consumers Catastrophe Preparedness and Protection Act." The bill, which is designed to ensure the residents of New York that, in the unfortunate event of a natural or man-made disaster, the recovery and rebuilding processes following a disaster will be unimpeded and strengthened by creating a Catastrophic Insurance Fund, died in committee.

New York Property Insurance Underwriting Association
A.11693 by the Assembly Rules Committee at the request of Assemblyman Morelle/S.8624 by Sen. Seward extends certain provisions of law relating to the New York Property Insurance Underwriting Association and of certain powers of such association. The bill makes provisions relating to the New York Property Insurance Underwriting Association (NYPIUA) permanent, and extends provisions until June 30, 2011, which allow NYPIUA to write certain coverage upon a determination by the superintendent of insurance that coverage is unavailable in a particular market. Further, the bill extends various consumer protection provisions of the Insurance Law for three years to June 30, 2011. The bill also enacts provisions authorizing limited modification to private passenger auto insurance rates under certain circumstances, by allowing 5 percent annual rate adjustments without approval of the superintendent of insurance. The bill also would require NYPIUA to develop incentives to encourage insurers to write homeowners insurance policies in coastal areas and would authorize NYPIUA to offer more expansive coverage than NYPIUA is currently authorized to offer in coastal areas and in other areas of the state and codify provisions establishing the Coastal Market Assistance Program (C-MAP) to improve the availability of homeowners insurance in coastal areas. Finally, the bill would reinstate the Special Advisory Panel on Homeowners Insurance/Catastrophe Coverage to examine and assess problems affecting the availability and affordability of homeowners insurance coverage in New York state. The bill was signed by Gov. Paterson on June 30, 2008, as Chapter 136.

A.9280 by Assemblyman Sweeney/S.6266 by Sen. LaValle would provide incentives for private market insurance carriers to write more homeowners insurance in New York's coastal areas, while requiring the New York Property Insurance Underwriting Association (NYPIUA) to offer a more consumer-friendly homeowners insurance product. The bill died in committee in both houses.

A.10001 by Assemblyman Morelle would permanently authorize the New York Property Insurance Underwriting Association (NYPIUA) as well as make permanent Insurance Law consumer protection provisions pertaining to multi-tier programs for homeowners insurance policies and withdrawals from the homeowners insurance market which would otherwise expire on June 30, 2008. The bill passed the Assembly but died in the Senate Insurance Committee.

S.3681 by Sen. Seward/A.11254 by Assemblyman Morelle would repeal certain provisions of insurance law to make the New York Property Insurance Underwriting Association permanent and makes other certain provisions of law permanent. The bill also would amend the Insurance Law relating to homeowners insurance and a temporary panel on homeowners insurance coverage. The bill, introduced by the New York State Insurance Department as Departmental Bill #91, died in committee in both houses.

Company

Bad faith/unreasonable delay
A.10307 by Assemblyman Brennan/S.1269 by Sen. DeFrancisco would provide that an insurer doing business in this state would be liable to a policyholder for such insurer's refusal to pay or unreasonable delay of payment to the policyholder if such refusal or delay was not substantially justified. The bill further enumerates instances whereby an insurer's refusal or delay of payment is not substantially justified including intentional negligence, failure to act in good faith, failure to provide written denial of claim and failure to make final determination of claim within six months. The bill died in committee in both houses.

Flood

Flood notices
A.6344-B by Assemblywoman Aileen Gunther and Assemblywoman Donna Lupardo/S.4097-A by Sen. Thomas Libous, and a major initiative of PIANY's, this legislation requires that homeowners receive an annual notice from their insurance company reminding them that their policies don’t cover damage from sources like flooding and mudslides. The bill also makes sure homeowners receive information on how to obtain insurance coverage for these risks, provided by the National Flood Insurance Program. The bill passed both houses and was signed by Gov. Paterson on March 4, 2008, as Chapter 21.

Miscellaneous

State agency advertising
A.5266 by Assemblyman Hoyt/S.2871 by Sen. Volker would require state agencies who contract to disseminate advertising material to exclude material which relates to the agency's mission. The bill passed the Assembly and died in the Senate Finance Committee.

Life settlement brokers
A.10401 by Assemblyman Morelle/S.7356 by Sen. Seward relates to the licensure of life settlement brokers and creates certain crimes relating to life settlement fraud and premium finance agreements. Moreover, the bill would repeal Article 78 of the Insurance Law relating to viatical settlements. The proposal was introduced by the Insurance Department as Departmental Bill #319 and died in committee in both houses.

Arson
S.7502 by Sen. Seward would repeal existing provisions requiring the use of the anti-arson application for all property insurance policies covering fire or explosion. The bill died in committee.

Property/casualty group insurance
S.7561-A by Sen. Seward/A.10403-A by Assemblyman Morelle, expands permissible types of property/casualty group insurance, permits new types of insurance to be written in New York state and makes Section 3442 permanent. This bill would amend the Insurance Law to:

  1. expand the types of insurance that an insurer may write in New York;
  2. expand the ways in which an insurer may write certain types of insurance; and
  3. eliminate the sunset provision in Insurance Law Section 3442, which applies to credit card, debit card and checking account group policies.

The bill was signed by Gov. Paterson on July 21, 2008, as Chapter 318.

Producer issues

Licensing
A.10404-A by Assemblyman Morelle/S.7369 by Sen. Seward would modernize the Insurance Department's licensing process by:

  1. creating three new lines of authority;
  2. requiring entities seeking to provide insurance agent and broker licensing courses to file for approval with the superintendent of insurance (superintendent);
  3. requiring independent adjusters to complete pre-licensing and continuing education courses;
  4. granting the superintendent the authority to require an applicant for an Article 21 license to submit his or her fingerprints; and
  5. permitting the licensing of nonresident adjusters on a reciprocal basis.

The bill was introduced by the Insurance Department as Departmental Bill #320, passed the Senate and died in the Assembly Codes Committee.

ELANY
A.11428-A by the Assembly Rules Committee at the request of Assemblyman Morelle/S.8385 by Sen. Seward would extend the statutory authority of the Excess Line Association of New York (ELANY) to July 1, 2014. The bill was signed by Gov. Paterson on June 30, 2008, as Chapter 130.

Late notice
A.11541 by the Assembly Rules Committee at the request of Assembly-member Weinstein/S.8610 by Sen. DeFrancisco provides for a declaratory judgment action against an insurer directly where a claim is brought for personal injury or wrongful death against another. The bill:

  1. permits a party suing an insured in a personal injury or wrongful death case to commence a simultaneous declaratory judgment action against the defendant's insurer, in limited circumstances, to challenge the insurer's denial of coverage based on the failure to provide timely notice; and
  2. prohibits certain liability insurers from denying coverage for a claim based on the failure to provide timely notice, unless the insurer suffers prejudice as a result of the delayed notice.

The bill was signed by Gov. Paterson on July 21, 2008, as Chapter 388.

Workers' compensation

Workers' compensation notification
A.11700 by the Assembly Rules Committee at the request of Assemblyman Benedetto/S.8400 by Sen. Robach, requires notification of the issuance, amendment or reinstatement of insurance contracts and imposes penalties for failure to notify. This bill requires insurance carriers and the State Insurance Fund to file notification with the chair (the chair) of the Workers' Compensation Board (the Board), within 30 days of their issuance, reinstatement, amendment or endorsement of any contract for workers' compensation or disability insurance, and provides penalties for noncompliance with such requirements and such notification by group self-insured trusts as is provided by regulation of the chair. The bill was introduced at the request of the New York State Workers' Compensation Board as Departmental Bill #326, Workers' Compensation Board (Internal #10—2008). The bill was signed by Gov. Paterson on July 21, 2008, as Chapter 322.

Group self-insurer defaults
A.11756 by the Assembly Rules Committee at the request of Assemblywoman John/S.8708 by the Senate Rules Committee. This bill, introduced as Governor's Program Bill #70, addresses the problems resulting from recent group self-insurer defaults. The bill:

  1. strengthens regulation of group self-insurers;
  2. provides short-term funding to pay the immediate costs resulting from the defaults; and
  3. creates a task force to identify potential changes to the group self-insurance program.
The bill was signed by Gov. Paterson on June 30, 2008, as Chapter 139.

Independent Livery Driver Benefit Fund
A last-minute addition to this year's legislative mix, S.8715 would provide additional protection to certain livery drivers in the form of workers' compensation benefits for certain injuries. It sets up an independent livery drivers' benefit fund, funded by assessments on independent livery bases, to procure workers' compensation coverage for deaths or injuries arising out of a crime against the driver or involving certain serious injuries. The bill passed both houses and was signed by Gov. Paterson on July 25, 2008, as Chapter 392. 8/08

 


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