Mar 7, 2014

Workers' compensation reform bill introduced

At the request of PIANY, legislation was introduced this week to reform the State Insurance Fund. The bill (S.6755 - LaValle) would require that the State Insurance Fund be licensed by the Department of Financial Services and subject to the same requirements as other insurance companies providing workers' compensation insurance.

The bill would also require that the superintendent of DFS approve the rules adopted by SIF for the conduct of its business. It would also delete the requirement for SIF policy holders to provide 30-days notice to withdraw from the Fund. PIANY has, for years, advocated for this type of reform for those who procure workers compensation coverage from the NYSIF for their clients.

New Yorks commercial insurance market faces unique problems stemming from NYSIFs structural advantages and operating methods. Moreover, NYSIF maintains an active marketing operation adverse to independent agents and actively takes steps to ensure that it gets and keeps direct business. PIANY has countered that NYSIF should truly be a "residual" market, and should play the part of a "last resort" market instead of an avid competitor against the private sector.

This bill attempts to even the playing field by removing these licensing exceptions and deleting the requirement of policyholders of SIF to provide 30-days notice of their intent to withdraw from the Fund. The bill represents a substantial first step, but PIANY believes that reform must go further to dramatically enhance policyholder protections. All other types of business insurance coverage are governed by provisions of state Insurance Law that confer far greater policyholder protections than apply to workers compensation.

Better protection against cancellation and nonrenewal and longer notice prior to coverage termination would be conferred on policyholders simply by adding workers compensation to the types of insurance protected under Section 3426 of the state Insurance Law. Workers compensation policyholders should be afforded all the protections offered to other policyholders.