Following repeated requests from Big I New York, the New York State Department of Financial Services has
announced that insurance producers will be allowed to send the required COVID-19 premium payment rule notices to clients by email, regardless of whether the clients have given prior consent. This will relieve them of the requirement to mail or deliver such notices. Guidance is available on DFS's website.
The notices are required by
emergency regulations the DFS issued on March 30. Those regulations implemented the
governor's executive order declaring a moratorium on insurance policy cancellations, non-renewals and conditional renewals for 60 days. They also prohibited insurers from taking certain punitive actions against policyholders who make premium payments late, and to make alternative premium payment arrangements for those suffering financial hardship because of the pandemic.
In addition to requiring insurers to advise their policyholders of these rules in premium bills, the regulations require producers to send notices of the rule changes to individual and small business policyholders by April 13. The regulation requires producers to "mail or deliver" the notices.
Big I New York President and CEO Lisa Lounsbury contacted a DFS official multiple times last week, asking the department to relax its rules on electronic communications with clients. In the past, the department has consistently interpreted New York's Electronic Signatures and Records Act as requiring the client's prior consent before insurers and producers may send records to them electronically. Lounsbury repeatedly asked the DFS to relax this stance due to the short deadline and the abnormal working conditions created by the pandemic.
The department responded to our requests today and posted on its website:
"Second, the Department is accommodating Producers by reducing their burden to fulfill the Notice Obligations during the current state of emergency. Specifically, for the duration of the current state of emergency, Producers may comply with the Notice Obligations by emailing the notices to the consumers for which the Producers have email addresses, regardless of whether the consumers have consented to receiving this notice via email. ..."
The department also instructed producers who have websites to post the information there as soon as possible. Further, the department encouraged "supplemental dissemination of the content of the Notice Obligations by other means, including social media."
The notice told producers to maintain records of their communications with consumers, "electronic or otherwise," to satisfy the notice obligation for at least the duration of the statute of limitations (six years, according to court decisions,) or longer if the policy or a claim is in dispute.
The department included model wording for the life and annuity and property/casualty notices in its announcement, but warned that only the relevant version be sent to consumers to avoid confusion. Big I New York also provided model wording for members last week. Our notice was crafted with our legal experts at Keidel, Weldon & Cunningham, LLP.
Big I New York encourages members to prepare and deliver the notices to their personal lines customers and their commercial lines customers who have 100 or fewer employees as soon as possible. The notices must be delivered by Monday, April 13.
*IMPORTANT REMINDER: The notices to property/casualty policyholders only apply to certain kinds of policies and therefore may only be sent to holders of those specific kinds of policies to avoid consumer confusion. The types of policies are explained in general terms in the property/casualty notice. The precise categories of policies are set forth in detail in the emergency regulation, which is posted here
: Specifically, see 11 NYCRR § 229.2(m) in the emergency regulation for the definition of “Property/casualty insurance policy.”
We thank the department for working with us to lessen the burden on producers in this challenging time.
Visit the Coronavirus Resource Page on this website for more information.