Each year, PIANY tackles legislation that its members identify as vital to the insurance industry, their clients and their businesses. They become PIANY’s legislative focus for the legislative session. In the first quarter of 2021, activity centered on these PIANY priority bills.
Introduced in committee
Photo inspection repeal bill. Assemblyman Kenneth Zebrowski, D-96, introduced A.4199 in the state Assembly on Feb. 1, 2021, which would allow carriers to waive the photo inspection of private-passenger automobiles prior to providing physical damage coverage. The bill would allow insurance carriers to give policyholders the option to save time and money by eliminating the state’s photo inspection requirement, otherwise known as Regulation 79. PIANY and insurance carriers have called for reform of Regulation 79 for years, testifying that, when they receive the photos, they store them away, and they don’t use them PIANY has testified that the requirement of taking and storing hard-copy photographs is outdated and unnecessary, and the regulation should be repealed.
The COVID-19 pandemic has exacerbated the problem with photo inspections because often, inspection stations are closed or otherwise not available to take the pictures. This forces policyholders to travel great distances to get an inspection or run the risk of losing coverage.
PIANY thanks Assemblyman Zebrowski, for his continued support for removing this outdated requirement.
“Bait-and-switch” legislation. Sen. Breslin, D-44, introduced S.3578 on Jan. 30, 2021. The bill would require carriers and producers that utilize insureds’ driving records as an underwriting or rating factor for personal automobile policies, to run motor-vehicle reports before binding a policy. Currently, carriers are permitted to run driving history record reports at any time, which can change the cost of a policy without a client knowing. This practice is sometimes referred to as bait and switch. According to Sen. Breslin’s sponsor’s memo, “Consumers should be able to rely on the quotes for insurance policies to be fair and accurate so they can determine whether the coverage is affordable. This practice detracts from that ability and leaves the consumers bound to policies that are much more expensive than originally represented and in some cases, unaffordable. Requiring all carriers to run [motor-vehicle] reports prior to binding coverage would guarantee the consumer will receive a fair and accurate quote prior to committing to the expense.”
PIANY thanks Sen. Breslin for his continued support of the independent agent channel. The association will continue to advocate for the passage of this important legislation.
Term-life bill. Sen. Breslin introduced legislation (S.4559) in February that would exclude certain life insurance policies from the Regulation 187 (11 NYCRR 224) requirement. Regulation 187 imposes a suitability and best-interest standard on life insurance sales. This requires life insurance agents, brokers and insurers to have extensive contact and gather copious information from consumers in order to comply with the regulation’s provisions properly.
The new legislation would exempt term-life insurance from the requirements of Regulation 187 when the policy is worth $1 million or less.
PIANY has received feedback from its members that this regulation has caused insureds to refrain from purchasing life insurance policies—life-term policies in particular—because the insureds are unwilling to provide the level of information necessary to satisfy the regulation. As a result, many consumers have put off or delayed purchasing this insurance, which is critical for family financial protection.
Reported out of committee
Windstorm deductibles. A.950—sponsored by Assemblywoman Stacey Pheffer Amato, D-23—was reported out of the state Assembly Insurance Committee Feb. 24, 2021.
The bill would require the superintendent of financial services to establish uniformity in the triggering and operation of windstorm deductibles. The standardization of these triggering events would promote a clear understanding for policyholders on how their policy will cover them if their houses are damaged by windstorms.
However, while this bill would standardize the deductible trigger, it would not standardize the deductible. Insurance carriers’ would maintain the ability to allocate hurricane risk and would be able to adjust deductibles freely.
Many policyholders are unaware that different insurance companies have different windstorm triggers. Ultimately, it is the triggering event that determines whether a windstorm deductible applies to a policyholder’s loss and therefore, the windstorm trigger can have affect homeowners’ out-of-pocket costs substantially.
PIANY advocates for the standardization of windstorm-deductible triggers.
Passed by either house
Anti-arson legislation. The New York state Assembly passed A.603 on March 23, 2021, 149-0. The bill, sponsored by Assemblyman Daniel Rosenthal, D-27, would repeal the requirement for insureds to file an anti-arson application in order to obtain coverage for fire or explosion damage. Currently, if the insured fails to submit the form to the insurance carrier, the carrier is required to cancel the policy, which can lead to gaps in coverage. Legislation was enacted in the 1990s—which requires insurers to file fraud prevention plans with the New York State Department of Financial Services—and made the application irrelevant. The same-as Senate bill, S.2627—sponsored by Sen. James Sanders Jr., D-10—still is in the Senate Insurance Committee pending review.
PIANY thanks Sen. Sanders and Assemblyman Rosenthal for their support to independent agents and the insurance industry.
Diligent effort requirement in the E&S market. The New York state Senate Feb. 22 passed legislation (S.498) that would improve the process to place commercial policies in the excess-lines market. To make the process more efficient, the bill would eliminate the diligent-effort requirement for commercial risks when a retail broker places the risks through an unaffiliated, licensed wholesaler. Additionally, the bill would remove the unnecessary requirement to report diligent-effort declinations when brokers file with the Excess Line Association of New York. These updates to the statute would streamline the process while retaining checks to protect consumers. Retail brokers still would need to work with an unaffiliated wholesaler to place an excess-lines policy. For other policies, the affidavit would be updated to reflect the information that is readily available, so the focus would be on the policy instead of the state requirement.
At the January Regional Advisory Council meetings, PIANY members identified the complexities of placing policies in the excess-lines market as a growing problem. Legislation to address these issues has been a priority for PIANY and the Professional Insurance Wholesalers Association because New York has one of the most complex processes for placing a policy in the excess-lines market. PIANY members have been advocating for this legislation through virtual office visits, and the association plans to push the state Assembly to pass the Assembly version of this bill (A.5241).
Currently, before placing a risk in the excess-lines market, a retail broker must seek coverage in the admitted market. The admitted market is more regulated with rates and policy terms that state regulators track closely. Regulators put checks in place to ensure policyholders did not forfeit those protections unless it was necessary to obtain coverage. These checks date back to when the excess-lines market had much more volatility than it does today. Any risk not included on the most recent version of the New York State Export List requires a retail producer to meet the diligent-effort requirements per state statute.
Since the declination and affidavit requirements were put into place, the market has changed significantly. Excess-lines insurers have become more stable—many are subsidiaries of broader companies. Additionally, modern technology has changed the process to quote insurance policies in ways that make many of the affidavit’s requirements outdated. This creates unnecessary work for the producer to obtain details solely for the affidavit. These elements are not tracked by the New York State Department of Financial Services or ELANY. In order to comply with the diligent-effort mandate, a total of three declinations and 71 points of data must be submitted. New York is the only state that requires this level of documentation of diligent effort for placing an E&S policy.
PIANY thanks Sen. Breslin for his sponsorship of this legislation and continued support of the independent agent channel.
Follow these and other bills
These bills are part of PIANY’s 2021 legislative priorities. The association will continue to advocate for its members, their businesses and their clients. Track these and other bills with the PIAdvocacy bill tracker.