Gov. Kathy Hochul has vetoed S.4963/A.1572, legislation that would have required the New York State Department of Financial Services to establish standardized definitions for commonly used terms in personal- and commercial-lines insurance policies.
While the bill would have simplified insurance language and would have improved consumer understanding, PIANY opposed the measure, warning that it would destabilize long-standing legal interpretations and impose costly regulatory burdens across the industry.
A threat to legal clarity
PIANY acknowledged the bill’s intent to promote transparency but the association emphasized that insurance contracts are not built on arbitrary language. Definitions within policies are shaped by decades of litigation and judicial interpretation. Mandating uniform terminology across all policies would disrupt this legal foundation—introducing ambiguity, invalidating prior rulings, and likely triggering a wave of litigation.
Rather than clarifying coverage, the bill risked undermining consumer protections and judicial efficiency.
Impact on multistate insurers
New York state’s insurance marketplace is dominated by carriers that operate across multiple states. These insurers rely on consistent policy language to meet regulatory requirements and maintain clear communication with consumers. PIANY cautioned that state-specific definitions would force insurers to rewrite and refile policies solely for New York—driving up compliance costs, complicating agent training, and ultimately, increasing premiums for policyholders.
Even more concerning, some insurers might opt to exit the New York state market altogether if the regulatory burden became too great, which would reduce consumer choice and access to coverage.
A smarter path forward
Rather than sweeping mandates, PIANY has long advocated for targeted reforms where specific definitions have demonstrably harmed consumers. PIANY’s successful legislative effort to clarify the term “windstorm” in homeowners policies is a recent example of a more effective and balanced approach.
PIANY also continues to champion enhanced consumer education and better tools for independent agents, who play a critical role in helping policyholders understand their coverage. Empowering agents with clearer disclosures and resources is a smarter path forward than imposing broad regulatory changes.
A thoughtful veto
The governor’s decision reflects a nuanced understanding of the complexities surrounding insurance contracts and the risks of oversimplification. Hochul’s veto preserves legal clarity, protects consumers from unintended consequences and supports a stable, competitive insurance marketplace.
PIANY remains committed to working with lawmakers to advance reforms that promote transparency without compromising legal integrity or market stability. As the conversation around insurance language continues, the association will advocate for clarity through education, targeted legislation and strong support for the independent agency system.
Bradford J. Lachut, Esq.
Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.
