Albany Update 04.20.24

KNOW BETTER NEW YORK CONNECTIONS

Albany Update 04.20.24

In this issue …

New York State Budget Finalized

After nearly a month of stalemate, and the passage of multiple budget extender bills, on Monday, April 15 Governor Hochul held a press conference to announce a three-way (Governor, Assembly Speaker and Senate Majority Leader) conceptual agreement for the awaited passage of the budget.

On Thursday, April 18, the legislature began to introduce and enact bills for a new state budget. The budget was finalized today, April 20, when both houses finished voting on all the budget bills.

The originally proposed Executive Budget offered a state fiscal plan with $233 billion in state spending, which ended up being $237 billion in the final enacted version. Issues hitting the headlines include several affordable housing initiatives, increased funding for health care, hospitals and nursing homes, and creating a major new AI initiative for SUNY Buffalo.

The public policy provisions within the state budget are contained within the Article VII bills, which are PPGG, ELFA, HMH, TED and REV. These bills contain thousands of pages and several dozen statutory policy initiatives.

The Quick Scorecard

WIN: No Major Tax Increases on the Property Casualty Insurance Industry
WIN: Proposal on Unfair, Abusive, and Deceptive Trade Practices – Not Included
WIN: Excess Medical Malpractice Insurance Program – Modified to a Straight Extender
WIN: Proposal on Workers Compensation Fine Increase – Not Included
WIN: Proposal on Wrongful Death Expansion – Not Included
WIN: Proposal on Workplace Traumatic Stress for Workers Compensation – Not Included
WIN: Proposal on NY Privacy Act – Not Included

The legislature began to vote on these bills, after receiving messages of necessity from the governor, which allow the bypassing of the three-day aging rule, that would ordinarily require the legislature to have bills in public print for three days, prior to their passage. Due to the messages of necessity, most of these bills were passed within hours of their release to the legislators and the public.

Despite these seriously compressed timelines, please know, that with respect to the policy initiatives that impact the property and casualty insurance industry, NYIA has been tracking such within the budget, from their original proposal to enactment. The following is a summary of the outcome based on our initial review.

Items Included in the Final Budget

Taxes, Assessments and Fees:
In relation to DFS’s budget and the Financial Services Law section 206 assessments, the total DFS budget proposed in the Executive Budget for fiscal year 2025 totals $534 million which represents a 2.3 percent increase from the last fiscal year. This figure includes an increase to the insurance program portion of DFS’s budget, including an increase of more than 3 percent to DFS’s insurance operations and what appears to be a more than 5 percent increase to the sub-allocations. NYIA strenuously advocated for the insurance portion of the budget to remain at these proposed figures or decreased.

The Department of Motor Vehicles proposed assessment to writers of motor vehicle liability insurance for administration of the state’s compulsory insurance program, which includes the insurance information enforcement system (IIES), for the 2025 fiscal year is $11,577,000, which is also flat from the previous fiscal year.

Part F of TED (Transportation, Economic Development and Environmental Conservation A8808C/S8308C) – Extension of Internet Point Insurance Reduction Program – This provision will extend the Internet Point Insurance Reduction Program (IPIRP) until April 1, 2026. Such program, overseen by the State Department of Motor Vehicles, allows drivers to reduce points on their driving record by taking an approved online accident prevention course. Without this legislation this program would have expired on April 1, 2024.

Part J of TED – Autonomous Vehicle Technology Extender – This provision will extend the authority of the Department of Motor Vehicles to continue demonstrations and tests of motor vehicles equipped with autonomous vehicle technology until April 1, 2026. This program would have otherwise expired on April 1, 2024 without this legislation.

Part K of TED – Stretch Limousine Passenger Safety Act – This provision will amend the Transportation Law and Vehicle and Traffic Law, to establish a comprehensive limousine safety package based upon recommendations from the Stretch Limousine Passenger Safety Task Force.

Part K of HMH (Health and Mental Hygiene A8807C/S8307C) – Excess Medical Malpractice Insurance Straight Extender – This part will enact a straight extender of this program until June 30, 2025. The governor’s original proposal to change this program to require a physician or dentist to pay for 50 percent of the cost of the coverage, was omitted.

Part BB of ELFA (Education, Labor and Family Assistance A8806B/S8806B) – Affordable Housing Underwriting and Rating – This part would prohibit insurance companies from inquiring on an application, cancelling, refusing to issue, refusing to renew, or increasing the premium of a policy, or excluding, limiting, restricting, or reducing coverage under a policy based on, the following:

The residential building contains dwelling units that shall be affordable to residents at a specific income level pursuant to a statute, regulation, restrictive declaration, or regulatory agreement with a local, state, or federal government entity;
The real property owner or tenants of such residential building or the shareholders of a cooperative housing corporation receive rental assistance provided by a local, state, or federal government entity, including, but not limited to, the receipt of federal vouchers issued under section eight of the United States Housing Act of 1937 (42 U.S.C. §1437f);
The level or source of income of the tenants of the residential building or the shareholders of a cooperative housing corporation; or
Whether such residential building is owned by a limited-equity cooperative; owned by a public housing authority; or owned by a cooperative housing corporation subject to the provisions of article two, article four, article five or article eleven of the private housing finance law.

The language of this budget bill is identical to Assemblyman Weprin’s Bill A7910A, which was reported from the Assembly Insurance Committee on March 30, 2024.

Part MM of ELFA – Outdoor Dining Permit Requirements – This Part will require any entity that provides for outside dinning, to provide, in its permitting application with the State Liquor Authority, proof that such licensee has obtained workers’ compensation insurance for all employees, as required by the workers’ compensation law, and has obtained general liability insurance to provide coverage against liability for injury sustained by persons on the contiguous municipal public space or non-contiguous municipal public space used by the licensee and, if applicable, persons and cyclists using or crossing a bike thoroughfare that connects the licensed premises to the non-contiguous municipal public space used by the licensee.

This Part will further require that the licensee must also maintain such general liability coverage during the term of its municipal permit or written authorization to use the contiguous municipal public space or non-contiguous municipal public space.

Part OO of ELFA – Authorizes NYC to Lower Speed Limits – This Part will authorize the City of New York to set speed limits, by local law, that provides an explanation of the reasons for setting lower speed limits, how such lower speed limits comply with engineering standards, and how such lower speed limits will ensure that motor vehicles can operate at safe speeds in a manner that optimizes all road users’ safety and convenience.

Part XX of ELFA – Fiscal Transfers – This Part would authorize, in section 19 on page 170, a transfer of $8.4 million from the insurance department special revenue fund, which is funded by the assessment to defray operating expenses authorized by section 206 of the financial services law, to the IT Modernization Capital Fund.

It would further authorize, in section 5 on page 172, a transfer of $115,420,000 from the state police motor vehicle law enforcement and motor vehicle theft and insurance fraud prevention fund, state police motor vehicle enforcement account, to the general fund for state operation expenses of the division of state police. It would additionally authorize in section 12 on page 172, $1,100,000 from the state police motor vehicle law enforcement and motor vehicle theft and insurance fraud prevention fund, motor vehicle theft and insurance fraud account, to the general fund.

Capital Projects Budget Bill (A8804-D/S8304-D) – This Provision on page 403 will establish a $60 million dollar Financial Services IT Modernization Fund, within the Capital Appropriations of the State of New York. Such fund would be for services and expenses, and costs associated with an information technology modernization project, including the payment of liabilities incurred prior to April 1, 2024. It should be noted that funds from the assessments to defray operating expenses authorized by Section 206 of Financial Services Law, may be transferred into this Financial Services IT Modernization Fund.

Items NOT Included in the Final Budget

Our final review has not revealed any major increased taxes or fees on the property and casualty insurance industry, which means no increase in the premium tax nor an extension of the two percent premium tax to cooperatives.

Part H of PPGG (Public Protection and General Government A8805C/S8305C) – Online Verification System (NYIA initiative) – This Part would have enacted a transition of New York’s motor vehicle liability insurance reporting from the present Insurance Information Enforcement System (IIES), to a modernized, real time, Online Verification System (OLV). This Part was unfortunately deleted from the final budget language, but NYIA has been repeatedly told that there is still interest by both the Governor and the Legislature, to pass a separate, stand alone, bill to accomplish this initiative this year.

Part N of PPGG – Increasing Benefits and Fines under Workers Compensation – This Part would have amended Article 9 of the Workers’ Compensation Law, and Articles 42 and 26 of Insurance Law, to provide substantial increases to the maximum benefit for short-term disability and to increase penalties for violating the workers compensation law to from a current cap of $2,500, to an amount of $2500 per violation. This Part, which would have significantly increased costs under workers compensation, and which was strongly opposed by NYIA, was thankfully deleted from the final budget.

Part R of PPGG – Lowering Interest Rate on Legal Judgments (NYIA initiative) – This provision would have changed the interest rate on court judgments paid by both public and private entities to the present legal rate of interest (9 percent), to a market rate of interest (the weekly average one-year constant maturity Treasury yield). This Part was deleted from the final budget language, due to lack of interest in both houses of the state legislature.

Part BB of PPGG – New York Privacy Act – This provision, advanced by the Senate, which NYIA worked aggressively and hard against, would have amended the general business law to severely restrict and penalize the use of data, and to provide serious disclosure requirements and prohibitions with respect to how personal data is used and stored. This Part, which was stricken from the budget, was based on S365B by Senator Thomas. Part FFF of PPGG – Wrongful Death – This provision, advanced by the Senate, which NYIA worked aggressively and hard against, would have amended the estates, powers and trust law, to enact the so called “Grieving Families Act,” which would dramatically expand damages and classes of plaintiffs under New York State’s Wrongful Death Law. This Part, which was stricken from the budget, was based on S8485 by Senator Hoylman-Sigal.

Part III of PPGG – Workplace Post-Traumatic Stress – This provision, advanced by the Senate, which NYIA worked aggressively and hard against, would have amended the labor law to expand workers’ compensation coverage for work-related post-traumatic stress disorder. This proposed provision, which was stricken from the budget, was based on S6635 by Senator Ramos, which passed the Senate on April 4, 2024.

Part DD of TED (Transportation, Economic Development and Environmental Conservation A8808C/S8308C) – Supplemental Spousal Liability Insurance – This provision, according to the Governor and the Legislature, sought to correct the problems of last year’s chapter on this subject. While not part of the budget, the final supplemental spousal bill language was agreed to by the Legislature and Governor in connection with the budget.

The bill being advanced separately is S9021A (Breslin)/A9407A (Weprin), which is presently on the third reading calendar in both houses. The most significant change in the amended version of the legislation from the Senate bill that was first introduced is that a notification would now need to be provided at renewal and amendment, under certain circumstances, in addition to the notification at issuance and at least once a year under other specified circumstances.

Part GG of TED – Lithium-Ion Batteries National Laboratory Certification – This provision would have amended the general business law to prohibit the sale of lithium-ion batteries or refurbished lithium-ion batteries for use in micromobility devices to only batteries that have been certified by a nationally recognized testing and certification laboratory (such as Underwriters Laboratories). This Part, which has the purpose to promote fire safety, was omitted from the amended budget bill, but there remains discussion with the legislature that it could appear later as a separate standalone bill.

Part JJ of TED – Expanding Penalties and Litigation Against Business and Insurers – This provision, which NYIA worked aggressively and hard against, would have amended section 349 of the general business law to recharacterize and make unlawful, certain “Prohibited Acts and Practices,” in the conduct of any business, trade or commerce. Known as UDAP (for unfair, abusive and deceptive practices) this provision would have captured insurers and many other businesses, into a cyclone of what has been referred to as a “litigation bomb,” with extremely amorphous, and in some cases of non-existent standards and definitions, where plaintiff lawyers would be able to develop a cottage industry to bring private right of action lawsuits, where in some cases, no actual harm need even be proven. Thankfully, at least for the present, this part has been stricken from the budget. There has been talk, however, that this proposal may be seen again this session, as a separate bill, so we will all have to remain vigilant on this issue.

Part YY of TED – Captive Insurance Program for Commuter Vans – This provision advanced by the Senate would have amended insurance law to direct the Department of Financial Services to create a captive insurance program for commuter vans, black cars, ambulettes, para-transits, and small school buses. This proposed provision, which NYIA opposed, was stricken from the budget. The proposal was based on S8432 by Senator Comrie.

Final Thoughts

With the budget process concluded, the legislature will now proceed with its five-week sprint to the end of session. During that time, NYIA will continue to track the thousands of bills under consideration in both the Assembly and the Senate, and strongly advocate for the interests of the property and casualty insurance industry. In the days and weeks ahead, please know we will continue to keep you informed, and remain laser focused on the need and desires of our members.