Apr 6, 2018

State law provides conditional renewal notices to WC policyholders

Under New York Insurance Law Section 3426(e), commercial policyholders are entitled to receive a conditional renewal notice 60 to 120 days in advance of the expiration date of their policy, if the premium for their renewal policy will increase by more than 10 percent. The law requiring such notices protects the customer by affording the opportunity to look for alternative coverage before their current policy expires. Unfortunately, workers’ compensation policies are not governed by this section of the Insurance Law.

Until the passage of A.8932/S.7283, a workers’ compensation insurer was not required to provide any notice to a policyholder when the renewal premium will increase by more than 10 percent. Instead, policyholders often would receive the bill for their renewal policy just days before the effective date, only to find that the premium has increased substantially. Since they were not given advance notice, policyholders lost the opportunity to look for alternative coverage and were forced to renew their policy at the new, higher rate.

This new Workers’ Compensation Law, which becomes effective April 17, 2018, will provide policyholders 30 days’ advance notice when the premium will increase by more than 10 percent upon renewal and the policy is being renewed by another affiliated insurer that is under common control with the insurer that wrote the expiring policy. This will give policyholders the opportunity to shop for alternative coverage that may be more affordable.

Under the law, the 10-percent premium threshold shall be exclusive of any premium increase generated as a result of increased loss costs filed by the New York Compensation Insurance Rating Board, increased exposure units, or as a result of experience rating; the contractor credit adjustment program; merit rating; retrospective rating,; audit; the removal or reduction of a drug-free credit; a managed-care credit; or a deductible.