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PIANY legislative wrap-upó2011

Resource kit 31059

By Matthew F. Guilbault, Esq.

The New York State Legislature completed its regular 2011 session, considering a number of issues affecting the property/casualty insurance industry right up until the conclusion of the session.

As lawmakers and Gov. Andrew Cuomo work toward agreement on headline-making legislation to cap property taxes, renew New York City’s rent-control regulations and address same-sex marriage issues, a number of insurance-related proposals were considered (and passed) during the increased activity associated with the end of the legislative session.

PIANY top-priority bills
Staging motor vehicle accidents. The state Senate passed legislation (S.1685/A.6177) to establish a new crime of staging a motor vehicle accident. A person who operates a motor vehicle and intentionally causes a collision with intent to commit insurance fraud, or arranges to have another person do so, would be guilty of staging a motor vehicle accident in the third degree, punishable as a Class D felony. The bill was created in response to a New York Times report of criminals deliberately ramming their vehicles into one another on a Bronx street last summer. PIANY supports measures designed to address the growing problem of automobile no-fault fraud and its effect on rising automobile insurance premiums and commends Sen. James Seward, R-51, for his advocacy. The bill was referred to the Assembly Codes Committee for further consideration.

Windstorm deductible triggers. In its continuing effort to end the confusion over windstorm triggers for the state’s coastal property owners (and the agents that represent them), PIANY priority legislation (A.3283), which establishes reasonable, industry-wide standards for hurricane windstorm deductible triggers passed the Assembly and was referred to the Senate Insurance Committee for further consideration.

Ads in state mailings. A top-priority bill (A.3320) for PIANY, sponsored by Assemblyman Sam Hoyt, D-144, would require state agencies that contract to disseminate advertising material to exclude material that relates to the agency’s mission. The bill is in response to state agencies contracting to permit the inclusion of advertising materials in mailings from the agency to the public, without restriction. For example, the Department of Motor Vehicles has permitted the inclusion of advertisements for auto insurance companies in mailings relating to motor vehicle registration renewals. By allowing contracts to be negotiated with providers of such products or services, the agency unavoidably creates the perception of favoritism toward one competitor, to the disadvantage of other providers. This effect is compounded when the product or service is required in order to comply with state law or regulation enforced by the agency, such as proof of insurance requirements enforced by the DMV. The bill passed both houses but was later vetoed by the governor on Sept. 23, 2011 (Veto memo 56).

PIANY later met on Aug. 11, 2011, with the governor’s staff to discuss this issue in more detail.

Health Insurance Exchange. Legislation to establish a blueprint to develop and implement the Health Insurance Exchange in New York state, as mandated by the federal Affordable Care Act was introduced as Governor Program Bill #12, (S.5849/A.8514).

The governor’s bill specifically requires the exchange board (established within the legislation) to consult with individuals and entities with experience in facilitating enrollment in health plans; allows for licensed insurance producers to serve on regional advisory committees and directs the board to study procedures under which licensed health insurance producers, chambers of commerce and business associations may enroll individuals and employers in any qualified health plan in the individual or small group market as soon as the plan is offered through the exchange; and to assist individuals in applying for premium tax credits and cost-sharing reductions for plans sold through the exchange.

The federal Affordable Care Act requires each state exchange to be “self-sustaining” by Jan. 1, 2015, which led many to predict that legislation must be enacted in New York by the end of 2011. Federal funds are available to support the planning, implementation and operation of the exchange through December 2014 and New York has been selected to receive funding under an Early Innovator Grant ($27 million) and an Exchange Planning Grant ($1 million). The bill passed the Assembly but later died in the Senate and was returned to the Assembly for further consideration.

PIANY supports provisions that expressly permit agents and brokers to enroll qualified individuals and qualified employers in any qualified health plans offered in the exchange, and assist qualified individuals and qualified employers in applying for premium tax credits and cost-sharing reductions for plans offered in the exchange.

The bill was referred to the Senate Corporations, Authorities and Commissions Committee.

Deregulation of coverage forms. Finally, despite lone opposition by PIANY, legislation was passed in both houses to allow insurance companies to sell insurance contracts with language that has not been reviewed or approved by the department (S.5811/A.8464). The bill would deregulate commercial insurance policy rates and forms for policies if the risk pays more than $25,000 in annual aggregate commercial property/casualty premium (coupled with additional constraints that PIANY believes remain insufficient). In a nutshell, PIANY members believe that deregulation of forms should be confined to sophisticated policyholders that can evaluate all the potential consequences of accepting these policy terms. As we have maintained consistently since this issue was discussed back in 2000-01, the $25,000 threshold for a sophisticated policyholder is simply too low. The bill was signed by the governor on Aug. 5, 2011, as Chapter 490.

Governor signs insurance-related legislation
Gov. Cuomo signed into law a number of other insurance-related proposals. They include:

  • a bill (S.2705A/A.6881A), permitting insurers to make available multiple-rating programs for private-passenger motor vehicle insurance within the same company was signed by the governor on Aug. 5, 2011, as Chapter 457;
  • exemption for large commercial insureds from certain rate and policy form approval requirements (S.5811 /A.8464, Departmental Bill No. 65 New York State Insurance Department (Internal No. 15–2011), was signed by the governor on Aug. 5, 2011, as Chapter 490;
  • requiring the State Insurance Fund to file annual audited financial statements with the Office of the State Comptroller (A.7908/S.5540), was signed by the governor on Aug. 5, 2011, as Chapter 445;
  • prohibiting insurance companies from refusing to issue or renew an automobile insurance policy when the motor vehicle to be insured is used for firefighting (S.928/A.1007). The bill was signed by the governor on Aug. 17, 2011, as Chapter 408; and
  • including the activities that currently constitute a “fraudulent health-care insurance act” within the definition of “fraudulent insurance act.” (S.5562/A.8365), was signed by the governor on on July 20, 2011, as Chapter 211.

Other legislative actions
A number of other important proposals also were considered during the legislative session. They include proposals to:

  • establish the Surplus-Lines Insurance Multi-State Compliance Compact (S.4869/A.7786) with respect to surplus-lines insurance and premium tax allocation. The bill passed the Senate; however, later died in the Assembly.
  • establish the Interstate Insurance Product Regulation Compact (S.3057/A.4432) to regulate certain insurance products among member states.  The bill passed the Senate and was referred to the Assembly Insurance Committee for further consideration.
  • increase penalties for leaving the scene of an incident without reporting (S.2918/A.3350), passed the Senate and was referred to the Assembly Transportation Committee for further consideration.
  • permit an insurer to rescind or retroactively cancel a policy in certain circumstances (S.4507/A.6346). The bill passed the Senate and was referred to the Assembly Insurance Committee for further action.
  • require liability policies state that motor vehicle no-fault insurance does not apply to motorcycles (S.3316). The bill passed the Senate but later died in the Assembly and was referred back to the Senate Insurance Committee and then later the Senate Rules Committee. 8/11

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