Albany Update 2023.10

KNOW BETTER NEW YORK CONNECTIONS

Albany Update 2023.10

August 14, 2023

In this issue …

Governor Announces Appointment of Deputy Secretary of Finance and Technology

Governor Kathy Hochul officially named Albert Pulido, a former citywide operations director for the New York City mayor’s office, where he was responsible for overseeing the City’s technology programs, as the state’s new deputy secretary of finance and technology.

While at the city, in addition to his work on their technology portfolio, Pulido also was responsible for citywide payroll, records management, procurement, and real estate operations. Among his accomplishments in that role, included the modernization of the City’s technical infrastructure and the expansion of access to high speed internet.

In his new role in state government, Deputy Secretary Pulido will be charged with overseeing government operations and policy management for several departments, including the Department of Taxation and Finance, the Department of Financial Services, the Office of Information Technology Services, and the New York State Insurance Fund. He will also be coordinating technology across the state government, including with the office of Governor’s counsel, the state’s chief cyber officer and various executive agency boards.

A critical new player in the area of the state’s financial services regulatory team, Deputy Secretary Pulido is now charged with creating, updating, modernizing, drafting and reviewing, programs and initiatives, related to all aspects of financial services, tax and technology. He will also be responsible for consulting with non-government organizations as well.

It has been said, that to carry out his new mission, Deputy Secretary Pulido, will now also have a key role in the development and administration of executive agency regulatory action, in all areas of financial services, tax and technology. In the chain of command, he will report to the state’s director of operations and infrastructure, Kathryn Garcia.

Pulido is a graduate of Cornell University, where he holds a bachelor’s degree, and of the University of Iowa, where he earned his master’s degree. A first generation Peruvian-American, he is the proud father of two young boys.

DFS Adopts Excess Line Placement Governing Standards

The Department of Financial Services (DFS) announced on July 12, 2023 the final adoption of Regulation 41 (11 NYCRR 27) concerning excess line placement governing standards.

The final regulation adds donor medical expense insurance and excess business disability insurance to the types of insurance that are authorized for excess coverage, and provide, that when such excess coverage is issued, that the excess line broker must identify each authorized insurer declining to issue or renew the coverage and the date of each declination.

The Department of Financial Services originally proposed this regulation back on April 19, 2023, when they published it in the State Register, as a proposed, consensus rule for the 17th amendment to Regulation 41 concerning Excess Line Placements.

DFS Proposes Consensus Amendment to Financial Statement Filings and Accounting Practices and Procedures

On August 2, 2023, the Department of Financial Services (DFS), proposed a new, consensus amendment regulation, regarding financial statement filings and accounting practices and procedures.

The new proposed, amended regulation, would amend Regulation 172 (11 NYCRR 83), to update the Accounting Practices and Procedures Manual reference, which is cited in this regulation. Presently, such regulation refers to the 2021 edition of the manual, and this new, proposed regulation, would now reference the 2023 edition of the manual. No other changes are made in this new, proposed regulation that would impact property-casualty insurers (there is a small change for health insurers).

The public comment period for this new, proposed, consensus regulation will expire on October 2, 2023. If you have comments you would like NYIA to submit on your behalf, please contact Bob Farley at bfarley@nyia.org by September 27, 2023.

Gothamist News Stories Spur Legislative Activity on Affordable Housing

The Gothamist, a New York City based online only publication, recently ran two articles on the alleged interaction between the lack of affordable housing and the cost of insurance. The first story focused on the topic itself and then there was a follow up article regarding legislative activity in relation to the issue. Both stories are factually challenged, and clearly advocacy motivated, but have nonetheless caused a vocal and visceral reaction among certain affiliated legislators and advocacy groups.

As affordable housing is indeed a serious issue facing our state, albeit not for the reasons claimed in these articles, nor because of the insurance industry, it is not likely to disappear as a major issue any time soon. As we have reported previously, we believe this is an issue we will be confronting this upcoming year to an even greater extent than during this year’s session.

NYIA is currently working to develop a comprehensive strategy in relation to this issue in an effort to strongly seek to present the correct facts and circumstances surrounding it, so as to do all we can, to prevent a mischaracterization of both the actual facts and necessary solutions, regarding this problem. The lack of affordable housing is NOT caused by insurers nor insurance.

Indeed, many of the proposals suggested in these Gothamist stories, could actually make the problems that do exist worse. For if the Gothamist advocated responses were ever actually implemented, it could dramatically impact the availability of insurance. A limited, artificially restricted insurance market helps no one, and would compound the current issues of safe, affordable housing even more than it is now, making a seriously bad problem in our state, worse than it is now, on many levels.

NYIA will continue to advocate toward positive, thoughtful, and effective solutions to this problem, and will continue to keep you, our members, informed.

Buffalo News Highlights Change in Supplemental Spousal Liability Law

An August 10 Buffalo News article highlighted the serious issues with the recent change in New York’s supplemental spousal liability law. The amended subdivision (g) of section 3420 of the New York State Insurance Law, which was strongly opposed by NYIA, took effect on August 1, 2023, was criticized by the Buffalo News for its arduous ineffectiveness and lack of public benefit.

The Buffalo News suggested that this new law, which will sunset on July 31, 2027, requires half the state’s driving population to be automatically enrolled in coverage from which it would not benefit (unless the driver opts out of the coverage). The article indicated that this new law would impose an estimated annual $84 million cost on New York drivers.

The article further specifies that the bill, that created this new law, was a priority of the state’s trial bar lobby, and that they are the ones, who principally pushed for its enactment. This new law, which took effect just last week, as aforementioned, is yet another example, of the pile of destructive and hurtful bills that NYIA must annually face from the trial lawyers.

The reporter is indicated a continued interest in this topic and would like to know if the industry is receiving complaints from customers. Please contact Cassandra Anderson at canderson@nyia.org if you have feedback you would like to share.

Governor Hochul Announces Special Election 27th Assembly District

Governor Kathy Hochul has announced that a special election will be held to fill the vacancy in the 27th Assembly District, created by the resignation of Assemblyman Daniel Rosenthal, on Tuesday, September 12, 2023.

Rosenthal, who was a member of the Democrat Majority, and a member of the Assembly Insurance Committee, announced his resignation from office in June, to begin a new role as vice president for Government Relations for the UJA-Federation of NY, the largest philanthropy organization in the world.

The 27th Assembly district is located in Central Queens. A heavily-Jewish based community, it includes the neighborhoods of Pomonok, Electchester, Kew Gardens Hills, College Point and Whitestone.

While on the Insurance Committee, Assemblyman Rosenthal distinguished himself with a thorough understanding and appreciation of insurance and financial issues and was a champion of several modernization initiatives.

WCB Releases New Inpatient Hospital Rates

On August 7, 2023, the New York State Workers Compensation Board announced new and revised inpatient hospital rates for Acute Per Case Inpatient Rates, Exempt Hospitals, Exempt Units, and Detoxification Rates. WCB provided updated rates for April 1, 2022 through December 31, 2022 as well as rates for the period of January 1, 2023 through December 31, 2023. These rates of course impact auto personal injury protection in addition to workers compensation.

NYSIF Launches Mental Wellness in the Workplace

The New York State Insurance Fund (NYSIF), the state’s largest workers’ compensation insurer, and one of the 10 largest nationwide, announced a new campaign to raise awareness of mental wellness, as an essential component of workplace health.

NYIA took note of the NYSIF’s reported goal with the campaign is to help all employers, including those who are not NYSIF policyholders, create an employee mental wellness action plan, by marshalling information from multiple sources. According to NYSIF executive director and CEO Gaurav Vasisht, it is the intention of the NYSIF campaign to empower employers with strategies to reduce mental health stigmas, encourage open dialogue between supervisors and employees, and offer guidance on self-care and resiliency. Under this new campaign, interested companies can access, customize, and download their action plan on the NYSIF website.

In their launch of this campaign, NYSIF cited recent workplace surveys that reinforce the importance of mental wellness for employers, including one such survey, which found that 81 percent of U.S. workers, believe that how employers support their employees’ mental health will be an important consideration when they seek future job opportunities.

Non-Compete Bill Raises Workforce Issues

During the last month of the legislative session in Albany, both the New York State Assembly and the New York State Senate, passed a sweeping bill (A1278B Joyner/S3100A Ryan) that, if signed into law by Governor Hochul, will effectively ban all future, non-compete agreements.

This bill, which has yet to be delivered to the Governor for her signature, if signed, would have New York join California, North Dakota, Oklahoma, and Minnesota, in implementing a complete prohibition on all non-compete agreements.

Specifically, the bill, would add a new Section 191-d to the Labor Law, to prohibit employers, related persons and entities, from seeking, requiring, demanding, or accepting a non-compete agreement from any covered individual.

This section would further render void, every contract to the extent “anyone is restrained from engaging in a lawful profession, trade, or business of any kind.”

The bill would become effective 30 days after the Governor signs it, but due to constitutional limitations regarding the sanctity of contract, would apply only to prospect agreements entered into, or modified on or after, it this bill becomes law.

More specifically, this bill defines a non-compete agreement as “any agreement, or clause contained in any agreement, between an employer and a covered individual that prohibits or restricts such covered individual from obtaining employment, after the conclusion of employment with the employer included as a party to the agreement.”

A covered individual would further be defined as any “person who, whether or not employed under a contract of employment, performs work or services for another person on such terms and conditions that they are, in relation to that other person, in a position of economic dependence on, and under an obligation to perform duties for, that other person.”

Notably, this definition includes not only employees, but also independent contractors.

The bill does provide a carveout for “fixed term of service,” non-disclosure, and/or client non-solicitation agreements, provided that such agreement does not otherwise restrict competition in violation of Section 191-d.

Perhaps worst of all, this bill also contains a private right of action, with mandatory liquidated damages of up to $10,000. A covered individual may bring a civil action within two years of the later of the date when:

the non-compete was signed;
the covered individual learned of the non-compete;
the employment or contractual relationship is terminated, or
the employer takes any step to enforce the non-compete.

As seen in other states, this bill will present serious impediments with respect to the employee/ employer, as well as the contractor/independent contractor relationship. It also raises significant concerns with respect to business investment, good will protection, and intellectual property issues. Moreover, because of its interference with traditional abilities of parties to freely enter into contracts, it also raises constitutional questions.

It is presently unknown what the Governor thinks of this bill, or whether she intends to sign it. Passing both houses by wide margins (95-52 in the Assembly and 40-21 in the Senate), it does enjoy the vocal, political support of progressive legislators. Many business, employer and commercial groups on the other hand, have weighed in their opposition.

Although this bill does not directly impact insurance, it does certainly affect business operations, including in the insurance industry. Accordingly, it is important that insurance companies, as well as agents and brokers, have this issue on their radar screen, and be prepared for what impact it might have upon them.

If you have feedback you would like to share with NYIA about this legislation, please contact Bob Farley at bfarley@nyia.org.