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Albany Update 05.03.24

In this issue …

DFS Proposes Departmental Legislation

This past week, the New York State Department of Financial Services (DFS) released four proposed departmental bills pertaining to property and casualty insurance for potential introduction in the legislature. They are listed in order as numbered, but if you write non-commercial property, we draw your particular attention to departmental bill number three, which would prohibit anti-concurrent causation clauses in certain circumstances, which NYIA has already indicated that we oppose.

Departmental Bill Number One, would authorize the offering of parametric insurance. In accordance with this bill, “parametric insurance” would be defined as “insurance against the occurrence of a weather-related event, such as windstorm, flood, snow, wildfire, tornado, cyclone, or earthquake, where the indemnification is based on the proximity and magnitude of the event as measured and reported by a state or federal government agency.”

Departmental Bill Number Two, would authorize the offering of business interruption insurance as a standalone insurance product. In accordance with this bill, “business interruption insurance” is defined as: insurance against loss of use and occupancy, rents, and profits resulting from a business closure due to:

• Loss of or damage to insured or neighboring property;
• An act or threatened act of violence while the perpetrator is on the business premises; or
• A government order.

Departmental Bill Number Three, would prohibit anti-concurrent causation clauses in certain property insurance policies. In accordance with this bill, such a prohibited clause would apply when “an insurance policy provides coverage for loss of or damage to  property resulting from water or water-borne material that backs up  through sewers or drains, or overflows or is discharged from a sump, sump pump, or related equipment,” and in accordance with such definition, “the policy shall not exclude coverage for any loss of or damage to property resulting from the foregoing on the ground that the loss or damage also may have been caused directly or indirectly by an excluded peril contributing concurrently or in any sequence to cause the loss.”

This bill further defines “insurance policy” as a policy issued or issued for delivery in this state that provides coverage for:

• Loss of or damage to real property used predominately for residential purposes and that consists of not more than four dwelling units, other than hotels and motels; or
• Loss of or damage to personal property in which natural persons have an insurable interest, except personal property used in the conduct of business.

Departmental Bill Number Five (the bill numbered as four does not pertain to property and casualty insurance), would add a new section 1125 to the insurance law, to authorize DFS to conduct administrative supervision over an insurance company if the superintendent determines that:

• The insurer’s condition renders the continuance of its business hazardous to the public or to its insureds;
• The insurer has or appears to have exceeded its powers, granted under its charter and applicable law;
• The insurer has failed to comply with the applicable provisions of the insurance law;
• The business of the insurer is being conducted fraudulently; or
• The insurer gives its consent.

Such an order of administrative supervision issued by the superintendent would be for 60 days, and may be appealed by the insurer, but such can also be renewed by the superintendent if she finds that any of the above conditions for the administrative supervision still exist after the end of the sixty days. Although this bill would provide new powers to the superintendent, for the instituting and renewing of administrative supervision, this proposed bill in our initial review does have significant similarities to the NAIC Model Act.

Please contact Bob Farley at bfarley@nyia.org with questions or comments on any of these proposals. NYIA has been provided the opportunity to weigh in, in advance of the formal introduction, which could be as early

Resiliency Legislative Package Proposal

NYIA with the able assistance of outside counsel, Campbell Wallace of Pastel Rosen & Wallace, LLP, has embarked on an effort to craft legislation to advance the issue of resiliency in insurance. This proposed legislation, would add a new article within the private housing finance law, to develop a system of grants and low interest loans so as to assist homeowners with improving the resiliency of their homes, so as to resist damage from increasingly severe and frequent storms.

This legislation was drafted in response to an inquiry from the Assembly. Next week NYIA will seek to discuss this proposed legislation with legislators, in an effort to secure sponsorship and advocacy for this important new program. It would be accomplished within presently appropriated state resources, and would help the state and insurers to save monies that would otherwise be required to be expended to rebuild properties after destructive weather events.

Anyone having any questions on this legislation, please contact Bob Farley at bfarley@nyia.org.

NYIA Meets with Assembly Program and Counsel on Mutual Holding Companies

On Wednesday May 1, 2024, NYIA met with Assembly Program and Counsel to promote the enactment of A8164 (Weprin)/S3538 (Breslin), which would authorize the establishment of Mutual Holding Companies for New York State.

This important bill would significantly assist mutual insurance companies in New York to allow them to affiliate with a mutual holding company, to improve access to better capitalization, remove competitive financial disadvantages, and improve opportunities for growth and cooperation with other mutual insurers. Of equal importance this bill would remove the need for mutual insurers to be forced to pursue demutalization to remain competitive in the insurance marketplace. The bill, which is being sponsored by both insurance chairs, was the subject of good and insightful questions by Assembly Program and Counsel, and now, for the first time, appears to be seriously being considered. 

Anyone having any questions or concerns on this legislation, or who would like to make comments on the same, are invited to contact Bob Farley at bfarley@nyia.org.

DFS Proposes Amendment to Credit for Reinsurance Regulation

On April 24, 2024, the Department of Financial Services announced a proposed amendment to 11 NYCRR 125, regarding credits for reinsurance, involving risks other than life, annuity and accident and health from unauthorized insurers. More specifically, this amendment, as it applies to property and casualty insurance (11 NYCRR 125.4), relates to reciprocal jurisdiction insurers, and provides:

That in order to determine whether the domiciliary jurisdiction of an alien assuming insurer is eligible to be recognized as a qualified jurisdiction, the superintendent must evaluate the reinsurance supervisory system of the non-U.S. jurisdiction, both initially, and on an ongoing basis, and consider the rights, benefits and the extent of reciprocal recognition afforded by the non-U.S. jurisdiction, to reinsurers licensed and domiciled in the U.S.

DFS will be accepting public comment on this proposed regulation until June 24, 2024.

If your company has comments you would like to NYIA submit on this proposed regulation on your behalf, please contact Bob Farley at bfarley@nyia.org by Wednesday, June 12.

PUBLICATIONS ▸ Overview | Albany Alert (m)  |  Albany Update (m)  |  Annual Conference Review  |  e|minute (m) | Enacted Law Bulletins (m) | Guiding Principles |  Legislative Introductions (m)  |  Your NY Connection Magazine (m)

Albany Update 03.28.24

In this issue …

New York State Budget Update

While the deadline for adopting a budget is April 1, the Governor and Legislature have instead agreed to a short-term extender. Yesterday Governor Hochul issued a statement indicating that she will be delivering a bill to the Legislature to temporarily extend the budget deadline until Thursday, April 4. The Governor said that while she believes a final agreement is within reach the reason for the extension is so New Yorkers can enjoy the holiday weekend. Senate Majority Leader Andrea Stewart-Cousins stated in a news conference that “we’re in the middle of the middle.” The Senate and Assembly both passed the budget extender legislation today. We will keep NYIA members informed of any further updates on the budget.

Cyber Compliance Filing Deadline – April 15, 2024

As a reminder, the April 15 cyber compliance deadline is fast approaching. Covered entities need to file either a certification of material compliance or acknowledgement of noncompliance by this date. As we mentioned during the Information Security Advisory Group meeting held this week, delegates may go into the portal and sign on behalf of the highest ranking executive and the CISO with a “submitter” field being added. The highest ranking executive and the CISO themselves are required to have based their decision on documentation and data, and all related records and information must be retained regarding the submission for five years. Additional information is available in DFS’s Cybersecurity Resource Center by clicking on Submit a Compliance Filing on the left-hand menu.

Bills on the Move

The following bills have recently seen movement in at least one house of the Legislature.

• A6680 (Paulin) – Clarifies when telemarketing is prohibited during a state of emergency. Passed Assembly on 3/21/24. NYIA supports.
• A8831 (Berger) – Repeals section 3403 of the insurance law relating to anti-arson applications. Passed Assembly on 3/25/24. NYIA strongly supports as a priority initiative.
• A9407 (Weprin) – Amends current supplemental spousal liability opt-out requirements to only apply for personal auto insureds that indicate on an application that they have a spouse. Passed Assembly on 3/25/24. NYIA has not taken a position.
• S1471 (Breslin) – Permits an insurer to rescind or retroactively cancel an auto policy when it is purchased fraudulently. Passed Senate on 3/25/24. NYIA strongly supports.
• S1974A (Ramos) – Limits the ability for contracted pharmacy use in workers compensation. Passed the Senate on 3/20/24. NYIA opposes.
• S2796 (Breslin) – Repeals the requirement to obtain a declination from the MMIP before primary medical malpractice insurance can be placed in the excess line market. Passed Senate on 3/21/24. NYIA is neutral.
• S5916 (Hoylman-Sigal) – Removes the requirement of the filing of a notice of claim in an action under the adult survivors’ act. Reported from Judiciary Committee on 3/26/24. NYIA is seeking feedback from members.

PUBLICATIONS ▸ Overview | Albany Alert (m)  |  Albany Update (m)  |  Annual Conference Review  |  e|minute (m) | Enacted Law Bulletins (m) | Guiding Principles |  Legislative Introductions (m)  |  Your NY Connection Magazine (m)

Albany Update 03.20.24

In this issue …

NYIA Submits Comments on DFS Proposed AI & ECDIS Circular Letter

The association submitted comments on DFS’s proposed circular letter on artificial intelligence and external consumer data information sources. NYIA raised a wide range of issues with the proposal, based on member feedback, with focus on the fact that circular letters are advisory only and need to refer to existing statute, corresponding regulations or case law. We received a tremendous amount of input and appreciate the robust comments shared by member companies. We will continue to monitor this issue closely and provide members with any updates regarding DFS’s intended next steps.

Analysis of Senate and Assembly Budget Proposals

As a follow up to our Albany Alert and report provided on the bi-weekly call last week, NYIA has put together an analysis of the Senate and Assembly budget proposals. This analysis provides the Senate and Assembly action on Executive Budget proposals as well as a list of new proposals from the Senate. We are weighing in with public policymakers on these proposals as budget negotiations heat up. It is uncertain whether there will be an on-time budget by the deadline of April 1. We will keep members informed.

Electronic Delivery Legislation Amended

The bill to allow for electronic delivery policy notices (including cancellations and nonrenewals) has been amended. The legislation, A8219A (Berger)/S2731A (Sanders) now applies to auto insurance. NYIA is working to have legislation introduced to allow for electronic delivery with workers compensation. The law was changed a couple years ago to allow for electronic delivery but chapter amendments were passed so it only applied to insurance law. The current efforts are to fully allow for electronic delivery with auto insurance and workers compensation insurance by including references in their corresponding laws.

Bills on the Move

Three bills were advanced from the Assembly Insurance Committee this week:

• A8831 (Berger) – Repeals the insurance law relating to anti-arson applications. The bill is currently in the Senate Insurance Committee. NYIA strongly supports as a priority initiative.
• A7910A (Weprin) – Limits insurance rating and underwriting pertaining to affordable housing. NYIA remains concerned with erosion of risk-based pricing. This legislation is similar to the language included in the Executive Budget. A major difference is the Assembly version is more expansive as far as what an insurance company would not be able to inquire about or use, including ownership of the building. There is currently no Senate companion but the language may be negotiated as part of the budget. NYIA is seeking feedback. Please contact Bob Farley at bfarley@nyia.org with any comments.
• A9407 (Weprin) – Modifies the supplemental spousal liability insurance law. The legislation is similar to the Executive Budget proposal. A major difference is that the Assembly’s version would have the opt out still apply at renewal and amendment. There is currently no Senate companion but the language may be negotiated as part of the budget. NYIA is seeking feedback. Please contact Cassandra Anderson at canderson@nyia.org with any comments.

One bill advanced from the Assembly Labor Committee:

• A1219A (Bronson) – Limits the ability for contracted pharmacy use in workers compensation. The bill is currently on the Senate Active List. NYIA opposes.

Four bills have recently passed in the Assembly, as has been the case in previous years:

• A4011 (Weprin) – Requires standardized definitions in insurance policies. The bill is currently in the Senate Insurance Committee. NYIA opposes.
• A2741 (Paulin) – Requires summaries of insurance policies including the limits, terms, amount of premium as well as deductibles. The bill is currently in the Senate Insurance Committee. NYIA opposes.
• A2866 (Pheffer Amato) – Establishes standards for windstorm deductible triggers. The bill is currently in the Senate Insurance Committee. NYIA opposes.
• A1731A (Dinowitz) – Restricts insurers from requesting personal, financial and tax information from insureds as a standard practice in processing ordinary theft claims. The bill is currently in the Senate Insurance Committee. NYIA opposes.