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N.Y. bill roundup: Requirements for excess-line brokers, prevention of fraudulent procurement of auto policies and more

Recently, a number of bills have been introduced to the state Legislature that may affect you, your agency and your clients, including the following:

Excess-lines declination requirements. S.1603, which would repeal the requirement that excess-line brokers must obtain a declination from the Medical Malpractice Insurance Pool before the broker can place primary malpractice insurance in the excess-line market, passed the state Senate on May 22, 2019. This current law can be problematic since the MMIP will not decline such risks except in the rarest of circumstances; which bars producers from having access to the excess-line market from this line of business in New York. The bill, sponsored by Sen. Neil Breslin, D-44, would treat this residual market in a manner consistent with the New York Property Insurance Association and the Assigned Risk Plan. This legislation has been delivered to the Assembly and referred to the Assembly Insurance Committee for consideration.

For-hire vehicle coverage. A.7789, which would clarify the insurance coverage required for injury to or destruction of property for for-hire vehicles, was introduced in the state Assembly on May 21, 2019. The current law (Section 370 of the Vehicle and Traffic Law), requires minimum liability coverages for for-hire vehicles based on carrying capacity. Part III of Chapter 59 of the Laws of 2019 required for-hire vehicles with a capacity of eight or more persons to carry a minimum of $1.5 million of liability coverage in a “single combined limit.” This limit included coverage for bodily injury or death. This bill would clarify that minimum liability coverage of $10,000 per accident for injury to, or destruction of, property shall be included within the $1.5 million single combined limit, rather than an additional coverage. This legislation has been referred to the Assembly Transportation Committee for consideration.

Prevention of fraudulent procurement of auto policies. S.643, which would permit an insurer to rescind, or retroactively cancel, a policy under certain circumstances when the policy was fraudulently procured. According to the bill, if the premium is not paid because of fraudulent use of a bank account or denied by a credit card company due to unauthorized use of such card, the carrier would be allowed to retroactively cancel the policy for fraud. This would bring New York in line with the other large no-fault states. Only seven states (i.e., Arizona, Colorado, Kansas, Maine, Maryland, North Carolina and South Dakota) do not allow for retroactive cancellation. The goal of this bill would be to prevent insurance companies from paying for a claim on a policy that was fraudulently purchased with the intent to commit fraud, such as staging an accident. The bill is sponsored by Sen. Neil Breslin, D-44.

Civil remedy for unfair claims settlement practices. A.5623A, which would give policyholders a private right of action against any insurers for the unjustified or unreasonable delay in settling a claim payment, has been amended in the state Assembly. Amendments to the bill structure make it more clear what actions would specifically qualify as not reasonably justified denials of claims or unreasonable delays when paying a claim. No equivalent legislation has been introduced in the Senate as of now.

Compensation for delay in claims settlement. A.5629A, which would give a person who has obtained a judgment against the insured under the conditions specified in N.Y. Ins. Law Section 3420(b) the ability to claim damages and interest when an insurer delays a fair offer and reasonable settlement for the claim, has been amended in the state Assembly. Amendments included a specification that a preponderance of the evidence is required to prove a person should receive compensation for the delay. The Senate version of the bill, S.3634, was introduced by Sen. Neil Breslin, D-44, and assigned to the Insurance Committee.

Fleeing from an accident. A.3570A, which would increase the fine to $750 from the current $500 for drivers who cause injury or damage with their vehicle and then leave the scene of the occurrence without reporting the accident, has been amended in the state Assembly. As amended, a second violation of the statute would result in a class E felony, a potential fine of $1,000 to $3,000 and other penalties provided by law. The original bill attempted to make it a class E felony for leaving the scene of an accident. If the injured person suffers a serious injury or death, the driver can be charged with a class E or class D felony, respectively, under the statute as currently written. The bill does not propose changes for the serious injury or death sections. A Senate version of the original bill, S.4443, was introduced by Sen. Kevin Parker, D-21, and referred to the Transportation Committee.

PIANY will continue to monitor these bills. Be sure to follow these bills using the PIAdvocacy bill tracker.