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Albany Update 01.24.24

DFS Proposes Circular Letter on Artificial Intelligence and External Consumer Data

On January 17 DFS issued a proposed circular letter, to all insurers authorized to write insurance, all licensed fraternal benefit societies, and the New York State Insurance Fund, on the use of “Artificial Intelligence Systems and External Consumer Data and Information Sources in Insurance Underwriting and Pricing.”

By its terms, this letter defines Artificial Intelligence Systems (AIS) and external consumer data and information sources (ECDIS), and provided that all insurers should not use ECDIS or AIS for underwriting or pricing purposes, unless they can establish that the data source or model, as applicable, does not use and is not based in any way on any class protected pursuant to Insurance Law Article 26, and that they should further not use ECDIS or AIS for underwriting or pricing purposes, if such use would result in, or permit, any unfair discrimination or otherwise violate the Insurance Law, or regulations promulgated thereunder.

There is a corresponding 60-day comment period, which means comments are due by March 17 to DFS at innovation@dfs.ny.gov. If you would like NYIA to submit feedback on this proposed circular letter on your behalf, contact Bob Farley at bfarley@nyia.org by Wednesday, March 6. NYIA will also be scheduling a meeting to discuss the proposed circular over the coming weeks and encourage companies to include your subject matter experts. We will be sending a notice with the meeting details in the near future.

DFS Testifies at Budget Hearing

New York State Department of Financial Services (DFS) Superintendent Adrienne Harris presented testimony to the Senate and Assembly at the budget hearing yesterday, January 23. In her testimony, the superintendent highlighted the transformation of the department over her two year tenure, including her championing of initiatives to make DFS more data driven, and the development of a strategic plan of “policy, process and people.” You can view DFS’s written testimony as well as a recording of the hearing.

When it comes to personnel resources, Superintendent Harris touted the fact, that since her initial appointment, DFS has hired 336 new team members, promoted 309 existing personnel, and has significantly expanded their network of collaborative partners, including advocates, industry leaders, legislators and regulators. During the question period the superintendent indicated that if DFS could hire more staff the agency would be able to better address the backlog that exists.

The superintendent also focused on the several DFS led policy initiative contained last week in Governor Hochul’s proposed budget and Article VII legislation., including Part FF of the Transportation, Economic Development and Environmental Conservation Bill (A8806/S8306). This measure would prohibit insurance companies from inquiring on an application, canceling, refusing to issue, refusing to renew or increasing the premium of a policy based on the level or source of income of tenants, on any affordable housing property.

Senate Insurance Committee Advances Two Bills

On Monday, January 22, the Senate Insurance Committee advanced two bills related to property and casualty insurance. These bills included S8167 by Senator Breslin, which would direct DFS to conduct a study on the factors impacting the cost and availability of flood coverage as well as analyze the possibility of supporting a private flood insurance market. NYIA is neutral on the legislation as it is a study bill.

The second bill, S8320A by Senator Mayer, would expand the properties required to be contained in the coastal market assistance program (C-MAP) to include all properties in New York that are located within one mile of the shore.  These “shore” properties would be defined as properties located along a salt-water ocean, sound, bay, inlet, or Lake Erie, Lake Ontario, the Saint Lawrence River or the Niagara River. The one-mile distance would be measured from mean high-water mark of such waterways. If your company has feedback on this legislation, please contact Bob Farley at bfarley@nyia.org.

Both of these bills were reported from the Insurance Committee to the Senate Calendar.

DMV Proposes Regulatory Amendment Related to RRGs

As was announced on the last bi-weekly call, the New York State Department of Motor Vehicles (DMV)  issued a proposed regulatory amendment (refer to page 3 of the document) to expand the definition of insurance company, to include certain risk retention groups (RRGs), with respect to automobile insurance. This proposed regulation is in response to a bill signed at the end of 2023, and a corresponding chapter amendment that has now passed both houses, S8053 (Webb)/A8505 (Kelles) which authorizes RRGs to write auto insurance for certain nonprofit organizations.

There is a corresponding 60-day comment period with this proposed regulation, which means comments are due by March 17 to DMV at dmv.sm.legal@dmv.ny.gov. If you would like NYIA to submit feedback on this proposed regulation on your behalf, please contact Bob Farley at bfarley@nyia.org by Wednesday, March 13.

WCB Releases 2024 Regulatory Agenda

On January 24 the New York State Workers Compensation Board (WCB) released its 2024 Regulatory Agenda. WCB is considering proposing regulations to amend section 442.2 to update the DME Fee Schedules, amend section 329-1.3 to update the Medical Fee Schedule(s), amend section 441.2 to update the NY Workers’ Compensation Formulary, implement the performance standard referenced in Workers’ Compensation Law section 13-a(6)(b)(i), add a new section 329-1.4 regarding when Intraoperative Neurophysiological Monitoring (IOM) as appropriate, and proposals in support of OnBoard. NYIA will of course keep our members informed on any developments with these proposals.

WCB Launches Online Injured Worker’s Toolkit

WCB has posted on its website, a new suite of tools and information for injured workers known as the Injured Worker’s Toolkit. This web-based resource posts information about the role of WCB, workers compensation benefits, including medical care, lost wages, and survivor benefits. This tool kit also offers suggestions to injured employees on what they should do following a work-related accident or illness including information about legal representation, how the claims process works and workers compensation board support services. It lastly offers information, resources and sections for injured employees seeking to return to work, frequently asked questions, a definition of terms, and forms.

Senate Releases Analysis of Executive Budget

The New York State Senate has released its annual Blue Book, which is its analysis of Governor Hochul’s proposed Executive Budget. This 2024-2025 Blue Book offers the Senate Majority’s perspective on the proposals advanced by the Executive.

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Albany Update 01.17.24

Governor’s Proposed 2024–25 Budget

Governor Hochul released the executive budget on January 16. This year’s budget totals $233 billion, which has been touted as being accomplished without raising income taxes. State spending from the current fiscal year is up nearly $6 billion, which amounts to a 4.5 percent increase.

There were a number of items in the budget that relate to the property and casualty industry. Two NYIA priority agenda items were included. The first would enact online insurance verification for auto insurance. The second would change the interest rate on judgments from nine percent to the prevailing market rate for both public and private entities.

There are also a number of concerning measures, including expansion of what is considered an unfair, deceptive or abusive act that would greatly increase litigation, dramatic changes to the excess medical malpractice insurance program, prohibitions on insurance companies in relation to the underwriting and rating of affordable housing and a change to the supplemental spousal liability insurance law to narrow its applicability. NYIA will be weighing in on these measures on behalf of our members.

Additional information about individual budget proposals applicable to property and casualty insurers is included in NYIA’s summary. NYIA will continue to dissect the thousands of pages of budget bills to ensure that provisions with an impact on our industry are analyzed.

Please keep in mind that this is only the beginning of the budget process. The array of proposals will be scrutinized by the Legislature, and NYIA will be weighing in with legislators and the Executive branch on those aspects impacting our industry. The Governor has an opportunity to submit both 21-day and 30-day amendments to her Executive Budget. The Legislature has released the budget hearing schedule. The hearings will begin on Tuesday, January 23 on the topic of health, which is when DFS typically testifies. The deadline for the budget to be passed is technically Sunday, March 31 but it is unclear if an on-time budget will be a priority this year.

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Albany Update 01.16.24

Governor Delivers Budget Address

Governor Kathy Hochul delivered her 2024 Budget Address at 10:30 a.m. today in the Red Room of the New York State Capitol (her ceremonial office).

A recording of the speech and summary of the 2024 Governor’s Budget Address are now available.

For those seeking additional information, the State Division of the Budget annually produces a State Budget Book, which contains a general overview of the Governor’s budget agenda for the upcoming year.

Some of the highlights that of possible interest to the insurance industry include:

• A proposal to enact an online verification of insurance system with the Department of Motor Vehicles
• A proposal to provide a market rate of interest on court judgments
• Legislation to prohibit insurance companies from refusing to cover affordable housing and ensure safeguarding against deed theft and other real property fraud
• A new Blue Buffers program to improve waterfront resiliency and allow for voluntary buy outs of at risk coastal properties
• Programs to dramatically expand housing in New York State, for 100,000 new homes, including new construction on state owned lands and $25 billion in bonding for new, affordable housing projects

The Governor’s Article VII Legislation should appear here when it becomes available.

NYIA will provide additional summaries of the proposals contained in the address as more details become available in the days and weeks ahead.

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Albany Update 01.10.24

Governor Delivers State of the State Address

In her one hour State of the State annual message to the legislature, delivered on Tuesday, January 9, 2024, Governor Kathy Hochul outlined several public policy initiatives for the upcoming 2024 legislative session. From addressing unfair and deceptive business practices, to promoting the development, construction and access to affordable housing, to the advancement of several “resiliency” initiatives, to a new proposal on lithium batteries, the governor’s agenda was both comprehensive and ambitious. A recording and summary of the Governor’s Address, and the 2024 State of the State Book, are now available.

Consumer Protection

One issue the Governor addressed, that may have significant impact on the insurance industry, was a new unfair trade practices initiative. Although short on details, the Governor vowed to work with Attorney General Letisha James to “propose legislation to expand New York’s consumer protection law for the first time in more than 40 years, by making so called unfair and abusive business practices illegal and giving the Office of the Attorney General a path to punish predatory operators.”

This initiative is most likely signaling support for last year’s purported Unfair and Deceptive Trade Practices bill, sought to be advanced last year by the Attorney General. This very hurtful and misinformed bill, S795 (Comrie)/A7138 (Weinstein), was shockingly named the “Consumer and Small Business Protection Act”, despite the fact that nearly every small business group was vocally opposed to its enactment.

This bill, which was vigorously opposed by NYIA last session, was referred to in the insurance industry as the “Litigation Bomb”, and would not only weaponize consumer based actions by the Attorney General under the General Business Law, but would further empower a private right of action, whereby both consumers and their representatives (even without privity) could bring lawsuits where a consumer believes they were not treated by the business in the manner they wished.

Affordable Housing

Another issue the Governor addressed, that may have significant impact on the insurance industry, was a new affordable housing initiative. Although, again, short on details, Governor Hochul declared that she would direct the New York State Division of Human Rights, in partnership with her Division of Homes and Community Renewal (HCR), to launch a new enforcement unit dedicated to swift resolution of complaints about housing discrimination related to Section 8 Housing Choice Vouchers. This Early Intervention Unit would help to resolve issues and place qualified impacted individuals and families in available housing.

The Governor also stated that she would further propose legislation to prohibit insurance carriers from inquiring about or considering tenants’ sources of income, the existence of affordable dwelling units, or the receipt of governmental housing assistance in their decision as to whether to issue or continue to provide insurance for residential real property. The Governor also stated that she would further prohibit insurance carriers from increasing premiums on the basis of source of income, the existence of affordable dwelling units, or the receipt of governmental housing assistance.

Although NYIA has yet to see any language on these proposed bills, they do seem as if they may be similar to A7910(Weprin)/S7298 (Kavanagh) which was introduced late last session. This bill, which would prohibit discrimination by insurers due to the affordability of housing, is a poorly drafted piece of legislation, that could severely impair the ability of an insurer to underwrite or rate property insurance based on actual risk factors of the property, and not the residents who live there. Accordingly, NYIA is strongly opposed to this bill, and will continue to advocate against it, in its current form. Additionally, in the event that the Governor’s legislation, when introduced, is similarly harmful to the insurance industry, NYIA will certainly also oppose the same, and take all efforts we can to see that they are either defeated or amended to remove any such harm.

Resiliency

Governor Hochul is also proposing a Resilient and Ready Program to create a flexible fund that will be used to fortify housing stock and other critical infrastructure, particularly in flood-prone communities ahead of future storms.

Under this initiative, she will reportedly direct HCR to assist households that experience flood damage to assist homeowners in making necessary repairs in the aftermath of storms. This program will also promote the installation of fortification improvements, so as to prevent the likelihood of repetitive storm damage. It will also coordinate with the Departments of Environmental Conservation (DEC) and State (DOS), the New York State Energy Research and Development Authority (NYSERDA), and local government and nonprofit organizations, to identify appropriate geographic targets for this program.

This program will focus on homeowners at risk due to future flooding events, and seek to move swiftly following severe weather events to get assistance to homeowners in need.

In addition to this program, the Governor also announced a Blue Buffer Program, that will target a voluntary buyout program, where families that choose to participate can be supported in their move from a coastal area, out of harm’s way, so as to reduce homeowners’ and governmental costs associated with repetitive flooding, and so as to create space for resiliency projects that protect entire communities. Through this initiative, the Blue Buffers Program, along with other state agencies, municipalities, or non-profits, will enter into agreements with property owners to acquire real property, based upon the pre-flood fair market value of the subject property. It would further remove structures and/or infrastructure on the property; and restore natural resources to facilitate beneficial open space, flood mitigation, and/or shoreline stabilization. Real property purchased would be restored and maintained in a manner that aims to increase ecosystem function, provide additional flood damage mitigation for surrounding properties, protect wildlife habitat, and wherever practicable and safe, allow for recreational community use.

Along with her Blue Buffers Program, the Governor promised to update codes and standards for better, safer buildings, by directing the Codes Council to undertake an overhaul of building codes designed to bring New York up to the latest standards on resilient buildings.

Lithium Ion Batteries

The Governor also announced that she will advance several strategies to tackle the increase in fire deaths, so as to promote both residential fire safety and lithium-ion battery safety. This initiative will include providing funding to the Division of Homeland Security and Emergency Services (DHSES) to launch Fire Action Teams, that would be dispatched to fatal fires to evaluate causal factors and develop resources tailored to communities’ specific risk factors. This initiative would also expand the State’s fire investigation capacity and include the advancement of legislation to ban sales of lithium-ion batteries that do not meet minimum standards for safety.

The lithium battery part of this initiative would likely be similar to A4938B (Dinowitz)/S154C (Krueger) which prohibits the sale or distribution of Lithium Batteries that have not been certified by a nationally recognized testing laboratory such as underwriters laboratories. Due to the increase in fires cause by such batteries, especially in the City of New York, and its related increase in fire claims experience, this is an initiative that NYIA would most likely support.

NYIA will of course provide more information on these important initiatives when it becomes available.

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Albany Update 01.03.24

In this issue …

Governor Proposes Unfair Business Practices Expansion

Governor Hochul announced on January 2 that a measure will be included in the State of the State that will expand consumer laws in relation to what have been labeled as unfair business practices. The Governor stated in a media release, “While current law protects New Yorkers against deceptive business practices, New York is one of only eight states in the nation whose law fails to protect against unfair and abusive business practices. Amendments to expand consumer protection laws will transform how New York protects consumers, enhance the Attorney General’s ability to enforce consumer protections, and give the State additional tools to pursue bad actors.”

Language for the proposal has not yet been released. NYIA will provide members with the information as soon as it is available. It is important to note that there is current legislation, A7138 (Weinstein)/S795 (Comrie), NYIA has strongly opposed and named “Litigation Bomb” in relation to this issue. The bill would greatly expand prohibited business practices in an ambiguous and idiosyncratic manner and includes a private right of action, including for entities without any connection to the alleged harm. In addition, the Attorney General has been strongly vocal in support of advancing this type of measure.

Chapter Amendment on Claim Settlement After a Disaster Bill

NYIA has been informed that the Governor’s office and Legislature have reached agreement on a chapter amendment to A2078 (Stern)/S5201 (Skoufis). The bill has been delivered to the Governor but has not been acted upon yet. We have been told the likely scenario will be that the original legislation is signed in conjunction with the passage of the chapter amendment language during the 30-day period the Governor has to act on the bill.

While the amendments contain some improvements to the legislation, including more narrowly defining a natural disaster, a more flexible time period for commercial claims and a more flexible time period for non-commercial claims when the property cannot be accessed, NYIA continued to voice our grave concerns given the overall unreasonable limitations the bill will impose on insurance companies.

WCB Proposes Revised DME Fee Schedule

As NYIA reported on the last bi-weekly member conference call, the New York State Workers’ Compensation Board published their proposed amendment to the DME fee schedule in the December 20 New York State Register. WCB proposes changing the description in relation to a handful of codes, adding 14 new codes and deleting what appears to be over 200 codes and 35 pricing and PAR changes. The board has said they are proposing these changes to reduce confusion as much as possible and make the process more cost and time efficient, stating that the proposal provides greater clarity and guidance.

There is a 60-day corresponding comment period for this proposed amendment. The comment period expires on Sunday, February 18, so comments can be submitted by close of business on Monday, February 19. You can submit comments to WCB by email to regulations@wcb.ny.gov. If you have comments you would like NYIA to submit please email Bob Farley at bfarley@nyia.org by Friday, February 9. We are interested in comments regarding the impact in workers compensation as well as in no-fault. The WCB is unlikely to acknowledge any information related to no-fault, but we want to be sure to point out any substantial impacts on auto insurance, particularly with DFS.

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Albany Update 2023.13

December 20, 2023

In this issue …

Bills of Interest

Bills on the Governor’s Desk:

Presently, there are 89 bills on the Governor’s Desk, awaiting her signature or veto.

All of these 89 bills were delivered on December 12, 2023, meaning that the Governor has 10 days, exclusive of Sundays to consider them (and they must therefore be signed or vetoed by Saturday, December 23, 2023 at 11:59 p.m.).

Of these 89 bills, NYIA is tracking six, which present an interest for our insurance industry.  These six bills include:

A5646A (Cook)/S5591A (Comrie) – Severely Restricts the Use of Collateral Estoppel for Arbitrations
NYIA opposes this bill, has recommended a veto, and issued a memo in opposition and put forward chapter amendments to improve the bill in consultation with the Auto Writers Working Group.

A4668B (Weprin)/S5764B (Breslin) – Requires Verification of Driving History When Used as a Rating or Underwriting Factor – (MVR).
NYIA opposes this bill, has recommended a veto, issued a memo in opposition, and has engaged in chapter amendment discussions to improve the legislation given the Governor’s indication they were going to sign the legislation.

A7351 (Weinstein)/S7476 (Hoylman-Sigal) – Provides that a foreign corporation’s application for authority to do business in this state constitutes consent to jurisdiction of the courts of this state.
NYIA opposes this bill, has recommended a veto, and issued a memo in opposition.

A1178 (Jacobson)/S439 (Skoufis) – Requires Bodily Injuries be Covered under Supplementary Uninsured/Underinsured Motorist Coverage for Police Vehicles
NYIA has not taken a position on this legislation this session.

A1278B (Joyner)/S3100A (Ryan) – Prohibits the use of non-compete clauses in most employment contracts
NYIA has been working through the business community on this legislation, and understand negotiations continue to be underway.

A5294 (Anderson)/S4862 (Comrie) – Establishes a Captive Insurance Program for Commuter Vans under the Insurance Law, and establishes a Commuter Van Trust Fund in the State Finance Law
NYIA has been tracking this legislation and has not taken a position.

Bills Awaiting Delivery to the Governor:

There are presently six bills that have yet to have been delivered to the Governor. NYIA is tracking two of these six. If these bills are not delivered to the Governor’s desk prior to December 21, 2023, then she will have 30 days to consider whether to sign or veto the same. These two bills include:

A2078 (Stern)/S5201 (Skoufis) – Establishes Standards for the Prompt Investigation and Settlement of Claims Arising During States of Emergencies
NYIA opposes this bill, has recommended a veto but the Governor’s office made clear from the outset that they were looking to do chapter amendments, issued a memo in opposition, and has engaged in discussions on chapter amendments to improve this legislation.

A6698 (Weinstein) / S6636 (Hoylman-Sigal) – The Wrongful Death Expansion Act.
NYIA strongly opposes this bill, has recommended a veto, and issued a memo in opposition.

Additionally, after serious verbal discussions, NYIA produced and provided to the Governor’s Counsel’s office, a Memo of Law expressing serious potential constitutional concerns regarding this legislation and have urged the Governor to veto the current legislation.

DFS Circular Letter on Supplemental Spousal Liability Insurance

On December 18, the New York State Department of Financial Services (DFS) issued a Circular Letter on the issue of Supplemental Spousal Liability Insurance.

The stated purpose of the circular letter was to advise all insurers authorized to write motor vehicle insurance in New York State, the New York Automobile Insurance Plan, rate service organizations, and licensed insurance producers, of the amendments to made to section 3420 of the Insurance Law under Chapter 735 of the Laws of 2022 and Chapter 108 of the Laws of 2023 regarding supplemental spousal liability (SSL) insurance. The circular letter largely reiterates the position DFS previously provided the industry verbally.

This circular letter replaced a previous Insurance Circular Letter No. 23 (issued in 2002), which has been withdrawn.

According to this circular letter, Section 3420 of the Insurance Law defines SSL insurance as: “coverage for the liability of an insured because of death of, or injury to, the insured’s spouse up to the liability insurance limits provided under the policy even where the injured spouse, to be entitled to recover, must prove the culpable conduct of the insured spouse.” 

This circular letter provided a range of guidance, including stating that SSL insurance, which applies to all motor vehicles covered under the policy, only covers a spouse, and not a person with whom the insured has a domestic partnership or civil union. This is because a domestic partner or a person in a civil union would be covered under the liability section of the motor vehicle policy.

DFS amended 11 NYCRR 60-1 (Insurance Regulation 35-A) to conform to the amendments made by the legislation mandating for SSL coverage. These statutes and the amended regulation apply to all policies issued, renewed, or modified on or after August 1, 2023, and to all insureds, regardless of marital status or whether the insured is a business entity or natural person. The statutes and regulation do not apply to umbrella liability insurance policies or for-hire motor vehicle liability policies.

The circular letter further asserted that it has come to the DFS’s attention that some insurers are not specifying a premium for SSL insurance or permitting a named insured to decline the insurance with an appropriate premium reduction. According to DFS, an insurer must specify the premium for SSL insurance, and must provide an appropriate premium reduction when a named insured declines the SSL insurance.

If you have questions on the circular letter you would like to direct to DFS you can email autounit@dfs.ny.gov.

Senate Hearing on Affordable Housing

The New York State Senate has informed NYIA that they will conduct a public hearing on the issue of affordable housing, which will most likely also draw a focus on concerns of the rising cost of property insurance, and how such affects the cost of housing in New York.

The hearing, which is presently scheduled for January 24, 2024, but has yet to be publicly announced, would be a joint hearing between the Senate Standing Committee on Insurance and the Senate Standing Committee on Housing.

The hearing’s purpose will be reportedly to examine the costs of insurance premiums and availability of insurance coverage for developing and operating affordable housing, with a focus on three bills:

S7298 (Kavanagh)/A7910 (Weprin) – Prohibits insurance underwriting and rating practices that would have the effect of discriminating against affordable residential buildings and construction projects
This bill seriously mischaracterizes the practice of underwriting for identifiable harmful risk factors on dilapidated, dangerous properties, as discriminating against affordable housing.  Sadly, this seriously flawed and misplaced bill, has been the legislation upon which most of the media and housing advocates have focused, in this discussion of insurance and affordable housing. The result could be serious insurance availability issues.

S7473 (Bailey) – Prohibits Property Casualty Insurers from Discrimination
This bill also seriously mischaracterizes the practice of underwriting for identifiable harmful risk factors on dilapidated, dangerous properties, as discrimination. The bill prohibits a wide range of underwriting and rating factors and is not specific to affordable housing and instead applies broadly to property and casualty insurance. As drafted the bill would prohibit the following list of factors: “age, marital status, sex, sexual  orientation,  education  background  or  educational level attained, employment status or occupation, income level, consumer credit  information or score, ownership or interest in real property, location, type of residence, including but not limited to single-family home, multi-family home, apartment, housing subsidized by state and/or federal programs, or any  other residence type, or any indication of a consumer’s price elasticity of demand.” There are incredibly serious concerns about the profound impact of the legislation, including insurers immense insurance availability issues.

S7631 (Sanders)/A7944 (Rosenthal) – This bill would provide that the cancellation, refusal to issue or renew, increase in premium or restriction of coverage, based on the acceptance of rental subsidies, would be an unlawful discriminatory practice under the executive law.
This bill has similar language as what was used in the legislation that would ban the use of dog breed in underwriting and rating, “cancel, refuse to issue, refuse to renew, or increase the premium of a policy or exclude, limit, restrict or reduce coverage of a publicly-assisted housing accommodation due to lawful source of income.” It is a seriously flawed concept which would target insurers to enormous litigation exposures, and like the above bill, possibly result in serious insurance availability issues.

NYIA will keep members informed about any further developments with this planned hearing.