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Jun 12
Legislative Update: Session Adjourns with Significant Wins for IAs; Other Insurance-Related Bills Pass Legislature

The New York State Senate and Assembly adjourned for the year on Saturday after a flurry of last-minute activity. Throughout the session, Big I NY's government relations team engaged on dozens of bills, and when the dust settled, the value of our efforts was clear.

Supplemental Spousal Liability Changes Passed:

Both houses of the legislature passed Big I NY-backed changes to supplemental spousal liability insurance, exempting unmarried drivers and commercial coverage from automatic enrollment. These common-sense changes will end the frustration experienced by many customers when the automatic enrollment law went into effect last year. Governor Hochul is expected to sign this legislation into law.

Harmful Anti-Business Bills Blocked:

Big I NY was also instrumental in blocking a disastrous bill which would have substantially increased the liability exposure of all businesses. The bill would have expanded the scope of prohibited business practices to allow private lawsuits for even the most minor of perceived violations and created generous incentives for consumers to file lawsuits. This would result in a wave of abusive litigation against businesses and make it more difficult and costly to obtain coverage. Big I NY was the only producer group to forcefully oppose this legislation, joining with dozens of employer associations throughout the session to voice our concerns. Big I NY agents sent over 500 emails to their lawmakers and made nearly a hundred phone calls to Assembly leadership in the closing days of session. These efforts paid off, with the Senate amending the bill to exclude DFS-licensed entities and individuals, and the Assembly declining to bring the bill to a vote by the full house.

The legislature also failed to act on sweeping legislation to ban the use of non-compete agreements, which Big I NY opposed. This would have significantly disrupted our industry and created a significant barrier to mergers and acquisitions.

We also strongly opposed a bill which would throw the rental habitational coverage market into turmoil by banning the use of lead paint exclusions. While well-intentioned, this enormous potential claim costs of this bill would drive carriers from the market and make rates unaffordable. The Assembly passed the bill, but it was successfully blocked in the Senate.

Wrongful Death Expansion Bill Passed, But Future Uncertain:

Both houses of the legislature passed legislation significantly expanding the scope and potential damages for wrongful death lawsuits. Big I NY, along with a broad coalition of groups representing insurance, business, healthcare, and local governments, strongly opposed this bill, as it would substantially increase insurance costs. The bill's future remains uncertain – it has been vetoed twice by Governor Hochul, and the version passed this session does little to address the concerns she identified. We will again urge the Governor to veto this harmful proposal.

Other Legislation of Interest Passed by the Legislature:

Uniform Windstorm Deductible Trigger

Position: Support

Status: Passed both houses

Summary: This bill directs the NYSDFS to establish regulations to create uniformity in the operation of windstorm deductibles. Currently, insurers utilize a wide range of windstorm deductible definitions and deductibles, resulting in confusion among consumers over what is covered and their potential exposure. This bill benefit consumers and independent agents by reducing confusion through uniform industry standards.


Mental Injury Claims for Work-Related Stress

Position: Oppose

Status: Passed Senate and Assembly

Summary: This bill expands to all workers the ability to receive PTSD coverage under NYS

Workers' Compensation Coverage identified work-related stress. This bill will increase workers' compensation coverage costs and is likely to result in a rise in fraudulent claims.


Authorizing Stand-Alone Business Interruption Insurance

Position: Neutral

Status: Passed Senate and Assembly

Summary: As demonstrated with the COVID-19 pandemic, a business may be forced to close without the insured property or neighboring property suffering physical damage. Also, insurers, particularly in the excess line market, wish to write business interruption insurance that is not tied physical damage as part of active shooter policies. This bill would amend Insurance Law § 1113(a) to make business interruption insurance an authorized kind of insurance that does not need to be tied to physical damage and would amend Insurance Law § 2105 to permit this insurance to be written in the excess line market if it is unavailable from authorized insurers.


Limitations on Anti-Concurrent Causation Clauses

Position: Neutral

Status: Passed Senate and Assembly

Summary: This legislation will prohibit an insurance policy from excluding coverage for any loss of or damage to property resulting from water or water-borne material that backs up through sewers or drains, or overflows or is discharged from a sump, sump pump, or related equipment, on the ground that the loss or damage also may have been caused directly or indirectly by an excluded peril contributing concurrently or in any sequence to cause the loss. The bill applies only to non-commercial policies.


Owner Controlled Insurance Programs

Position: Neutral

Status: Passed Senate and Assembly

Summary: The purpose of this bill is to allow the Department of Transportation, The State University of New York at Buffalo, and the Niagara Frontier Transportation Authority to utilize owner-controlled and contractor-controlled insurance programs in connection with certain construction projects.

 

Legislation of Interest Not Passed by the Legislature:

Elimination of the “Diligent Effort" Requirement for Commercial Excess Lines Transactions

Position: Support

Status: Passed Senate, did not advance in Assembly

Summary:  This bill eliminates the requirement to obtain three declinations from admitted insurance carriers before placing commercial coverage in the excess market, in situations where coverage is placed by a licensed excess lines broker. The excess market offers greater flexibility on rate and coverage than admitted coverage. It is of vital importance to effectively serve consumer needs. The current process of requiring three declinations creates unnecessary time and paperwork burdens for agents and their insureds and can result in a delay getting the proper coverage.


Elimination of the NYC Anti-Arson Application

Position: Support

Status: Passed Assembly, did not advance in Senate

Summary: This bill eliminates the anti-arson application required for fire insurance coverage on properties within New York City. In 1981 when New York first enacted its anti-arson application law, arson for profit was a significant economic and societal problem. New York's anti-arson

application law was enacted to give insurers ownership and property valuation information to assist in the investigation of arson for profit and to require property owners to sign a fraud statement. However, present-day arson investigation techniques no longer rely on the anti-arson application form to determine ownership and property valuation and fraud statements are collected through other means when adjusting a loss. Insurers have access to a multitude of third-party sources to determine ownership and property values. Since the information collected on the form is no longer used, completing and collecting the form (which is required for both new and renewed insurance policies) creates a significant burden for both consumers and insurers.


Stricter Penalties for Staged Construction Accidents

Position: Support

Status: Did not pass Senate or Assembly

​Summary: This bill establishes the crime of staging a construction accident, which is a class E felony. Staged construction accidents harm all New Yorkers. The workers involved in these schemes, sometimes unwittingly, may be harmed or coerced to undergo risky and even dangerous medical procedures. Fraudulent claims drive up costs to all insureds and taxpayers, delay the completion of important projects, and exacerbate the state's already strained insurance market. They drain resources from fraud investigators and law enforcement. Recent reporting has revealed that staged accident fraud is on the rise, orchestrated by sophisticated criminal enterprises. Our current law is inadequate, and serious criminal penalties are needed to deter this costly and dangerous crime.

 

Increased Penalties for Orchestrating Staged Auto Accidents

Position: Support

Status: Did not pass Senate or Assembly

Summary: This bill imposes criminal penalties on those who recruit, hire, or otherwise direct others to engage in staged auto accidents. On March 22, 2003, Alice Ross, a 71-year-old grandmother, was killed as the result of a staged auto accident. These "accidents" are often arranged and intentionally committed by criminals who then file fraudulent insurance claims for fake crash injuries and rob insurance companies and their policyholders. While the economic cost of such activity is staggering with no-fault insurance fraud estimated to cost insurance companies and their policyholders $1 billion per year, staged accidents also pose a serious public safety risk, as is demonstrated by the untimely death of Alice Ross. In 2019, New York state signed “Alice's Law," which criminalizes directly participating in a staged motor vehicle accident. This legislation builds on that important law by extending its provisions to individuals who “mastermind" fraud by directing or coercing others to participate in a staged accident scheme.

 

Online Insurance Verification

Position: Support

Status: Did not pass Senate or Assembly

Summary: This legislation would improve fairness and reduce frustration for New York drivers. The current system for verifying insurance coverage, the Insurance Information and Enforcement System (IIES), is now a quarter of a century old. It relies heavily on manual entry and manual submission of coverage information, which results in delays and errors in the reporting of a driver's insurance status.


Questions? Contact Scott Hobson, AVP of Government Relations​

 


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