Following a request from Big I New York, the New York State Department of Financial Services today said that insurance producers are not required to use U.S. Mail to send policyholder notices about a current moratorium on policy terminations.
On March 30, the department published a new insurance regulation 216 and a new section to the state banking regulations, in response to an executive order issued by Gov. Andrew Cuomo the day before. Those regulations:
- Implemented a 60-day moratorium on policy cancellations, non-renewals, and conditional renewals
- Required insurers and premium finance companies to offer alternative premium payment arrangements to policyholders suffering from the COVID-19 pandemic
- Prohibited insurers and premium finance companies from taking punitive actions against those who pay their premiums late during the next 60 days
They also required producers to "mail or deliver" notices to their policyholders of the new temporary rule changes. This requirement represented a potential large expense (both in terms of money and time) for insurance agencies, as well as a risk to employees' health.
Last week, Big I New York President and CEO asked the department to permit producers to send the notices by email even where they did not have policyholders' prior permission. The department granted that request in an update posted to its website on April 5.
Earlier today, Lounsbury followed that request with an email addressed to Superintendent of Financial Services Linda Lacewell, asking her to repeal the producer notice requirement entirely. "If it cannot be," she added, "then we request that the DFS issue additional guidance quickly that formally acknowledges that it will accept a producer’s best and reasonable efforts to comply with (the notice requirement), acknowledging that physical mailings do not need to be done for those policyholders who the agency is not able to electronically communicate with."
At 3:27 p.m. today, Lounsbury received the following response from a department official:
"The new guidance relieves insurance producers of the requirement to send out notices to policyholders via physical mail. Producers are required only to email the notices to the consumers for whom they have email addresses, post the notices to their websites (if they have websites), and disseminate the notices via other means, such as social media, if feasible."
While the department's message did not repeal the requirement as we requested, it did ease compliance. Big I New York thanks the department for working with us to lighten the burden on agencies and brokerages during this unique and challenging time.
We have a sample letter, approved by the attorneys at Keidel, Weldon & Cunningham, LLP, available for members to use in their notices.
As developments seem to occur almost hourly, we encourage members to frequently check www.biginy.org/coronavirus and watch email for our future announcements.