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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.

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Albany Update 2023.12

December 4, 2023

In this issue …

NYIA Testifies at Assembly Hearing

NYIA recently testified at a hearing held by the New York State Assembly on Wednesday, November 29. The Assembly Insurance and Environmental Conservation committees jointly hosted a hearing on the topic of “The Resiliency of the New York Property and Casualty Insurance Market to Climate-Change Driven by Extreme Weather Events.” You can view NYIA President Ellen Melchionni’s testimony, which begins at 51:20 of the video. Each individual’s testimony can also be viewed by clicking on their name in the agenda available at the same link.

Melchionni indicated that rate adequacy is paramount. She urged lawmakers not to overreact to the current market conditions and instead take actions to support the market, including improving the challenging litigation environment and removing the immense regulatory burdens that exist. She offered insights about the states of Florida, Louisianna and California, and indicated that extreme weather alone did not cause the negative market conditions—the distress of the markets in those states has been exponentially intensified by a difficult litigation environment and regulatory restrictions.

Melchionni offered specific solutions to help with litigation costs and curbing lawsuit abuse, including creating lawsuit lending transparency, lowering the interest rate on judgments, and repealing the antiquated Scaffold Law and instead adopting a comparative negligence standard. She also indicated that appropriate fraud deterrents need to be in place and enforced.

She urged legislators to carefully evaluate any proposed laws that would have a negative impact on the market, and said it was imperative that no new mandates or restrictions be advanced. Melchionni also said that changes in the law were needed to expedite and modernize processes, including adopting online verification for auto insurance, repealing the antiquated anti-arson application and modernizing the free trade zone.

NYIA will continue to stress the importance of rate adequacy with regulators and legislators and strongly discourage any actions that will only result in a further deterioration of the market.

Governor Hochul Announces State of the State Address

Governor Kathy Hochul announced that the State of the State address will take place on Tuesday, January 9, 2024 starting at 1:00 p.m. Her address will be delivered in the Assembly Chamber. NYIA will be closely monitoring for any initiatives related to property and casualty insurance.

Another important release by the Governor in January will be the Executive Budget. We anticipate that the Governor will present her Executive Budget on or about Tuesday, January 16.

DFS Changes Requirements for Background Checks of Officers and Directors

Effective December 1, 2023, the New York State Department of Financial Services (DFS) withdrew Insurance Circular Letter No. 6 (2001). As a result, domestic and foreign property and casualty, life, and health insurance companies will no longer be required to submit fingerprints for the following:

• Officers, directors, and any controlling persons as part of a domestic primary licensure, redomestication, or corporate amendment application or a non-domestic licensure (expansion) application.
• Newly appointed officers and directors of an insurance company.
• Any person acquiring control of a domestic insurance company and any officers and directors thereof.

DFS has indicated that background checks required for any of the above must now include the following:

1. NAIC Biographical Affidavit
   The NAIC biographical affidavit (Form 11) must be completed for each officer and director and any controlling persons. The affiant must sign the affidavit within the six-month period before the application date.
2. Independent Third-Party Verification
   Biographical affidavits must be verified by an independent third-party that has been approved by the NAIC. See list of NAIC Independent Third-Party Vendors. Third-party verification reports must be sent directly from the approved vendor to the Department via the DFS Portal.

DFS has stated, as a reminder, that all insurance companies must use the NAIC Uniform Certificate of Authority Applications (UCAA) to submit their licensing applications. Questions related to licensing applications should be directed to the appropriate bureau:

• Property and Casualty: PropertyInsuranceCompanyLicensingUnit@dfs.ny.gov
• Health: HealthBureauRegulatory@dfs.ny.gov
• Life: electrofile@dfs.ny.gov

DFS Expands Use of the National Insurance Producer Registry

DFS has announced that they will be broadening their use of the National Insurance Producer Registry (NIPR), specifically to include the ability to process licenses for New York to include resident individual original and renewal license applications for life, accident & health, and property/casualty agents and brokers. Previously, NIPR processed non-resident broker and agent licenses for New York, with all resident broker and agent licensing applications being processed directly through the DFS licensing portal. DFS will also be keeping their licensing portal, so the industry will now have two options for licensing brokers and agents. This modification was expected as DFS asked NYIA for feedback about the potential change earlier this year.

In early 2024, DFS will implement NIPR for the remaining license classes, which includes resident and nonresident business entity and adjuster licensing. Please contact Rawle Lewis, director of licensing, at rawle.lewis@dfs.ny.gov with any questions.

Updates on DFS Amended Cybersecurity Regulation

Since its initial adoption, the cybersecurity regulation has required covered entities to report certain cybersecurity events to DFS within 72 hours of determining an event has occurred. Reportable events are those that impact the covered entity and require notification to another government body, self-regulatory agency, or other supervisory body, or those that have a reasonable likelihood of materially harming any material part of the normal operations of the covered entity. Beginning December 1, 2023, covered entities also are required to notify DFS if (1) ransomware has been deployed on a material part of its information systems, or (2) a ransom or extortion payment has been made. The notification process for reporting such an event through the DFS portal remains the same and there are detailed instructions on reporting a cybersecurity incident or extortion payment.

Also, as a result of updates to eligibility parameters, DFS believes more businesses should now qualify for full and limited exemptions from the regulation’s requirements. Covered entities that qualify for an exemption should submit a notice of exemption within 30 days of making that determination through the DFS portal. Instructions on applying for or amending a notice of exemption and additional exemption qualification information are available on DFS’s Cybersecurity Resource Center under the heading of Part 500 Exemptions.

In addition, NYIA is hosting a complimentary virtual education program with the New York State Department of Financial Services (DFS) about the amended cybersecurity regulation. This program, which is specifically geared to property and casualty insurance companies, will take place on Monday, December 18, 2023 from 2:00–3:00 p.m. (ET). Featured speakers from DFS will provide property and casualty insurers with insights about the new cybersecurity requirements in the Second Amendment to 23 NYCRR 500. Be sure to register to hear directly from DFS and gain a greater understanding of the key changes as companies begin their work to be in compliance with the new provisions. The program will provide a comprehensive overview of the amended regulation as well as help companies prepare for the first major compliance deadline of April 15, 2024.