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Albany Update Archives
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March 7, 2008 February 28, 2008 February 22, 2008 February 14, 2008 February 8, 2008
NYS
Budget
The Legislature and Governor came to a consensus on the revenue
figure that the State estimates it will receive for its 2008-2009 Budget
on March 1st, which is the statutory deadline for reaching revenue consensus.
The new figure is $250 million less than the projected revenue in the
Governor’s proposed budget, reflecting a newer and bleaker assessment
of the economy for the coming year. This is important in the budget process
because it is the first essential step in achieving a budget. Both houses
are now working on their versions of the budget.
State Senate
Committee Changes
Senate Majority Leader Bruno announced the following committee
chairmanships:
- Sen. Maziarz to chair the Senate Energy & Telecommunications Committee;
- Sen. Robach to chair the Senate Labor Committee; and
- Sen. Lanza to chair the Senate Civil Service & Pensions Committee. It must be noted that Senator Seward is remaining as the Senate Insurance Committee chair and Assemblyman Morelle is still the Assembly Insurance Committee chairman.
New Circular Letter on the Federal Reauthorization of the Terrorism Risk Insurance Act (“TRIA”)
Circular Letter No. 4 of 2008, which can be found at www.ins.state.ny.us/circltr/2008/cl08_04.htm, summarizes the recent changes to TRIA enacted by Congress and that new law’s impact on New York State property/casualty insurers. The circular letter notes that insurers may conclude that their current filings are in compliance but notes that if policy forms make a distinction between acts of a foreign person/interest and a domestic person/interest, then it is likely that a filing is required. In addition, in light of the new law the Superintendent will consider for approval, on an expedited basis, policy provisions that exclude coverage, or limit the amount thereof, for an “insured loss”, provided certain conditions outlined in the circular letter are met.
A Survey of
Insurance Companies Regarding Salary/Benefits
L.R. Webber Associates, Inc., a member of United Benefit Advisors
(described as an alliance of the nation’s premier independent benefit
advisory firms), is sending a flyer to insurance companies in the Middle
Atlantic region of the U.S. regarding the Middle Atlantic Region Property
and Casualty Insurance Company Salary/Benefits survey conducted every
other year. If anyone is interested in participating in this survey and
has not been contacted, the link to receive information concerning the
survey is at www.lrwebber.com/news/?id=38. Please be aware the deadline
for submitting results is March 28th.
Annual notice
of flood insurance legislation
Chapter 21 of this year, A6344B, requires insurers to send an
annual notice to their homeowners’ and dwelling fire personal lines
insureds concerning flood insurance. This law takes effect 180 days after
March 4, 2008, which is September 2, 2008.
Upcoming
The next member bi-weekly conference call will be at 11:00AM
on Friday, March 14th. NYIA will be attending receptions for Assemblyman
Joseph Morelle and Senator Neil Breslin. The NAMIC Congressional Contact
program is scheduled for April 7th and April 8th in Washington, D.C. A
CE Seminar on Enterprise Risk Management will be held in Syracuse on April
8th. For details, please visit the Events page of NYIA’s web site
at www.nyia.org or contact Cassandra Coville at ccoville@nyia.org. NYIA’s
Annual Conference will be from May 28-May 30 in Grand Island, NY. In the
near future, details about the conference will be distributed and posted
to the NYIA web site.
48th
State Senate District Special Election
Assemblyman Aubertine (D-Cape Vincent) defeated Assemblyman Barclay (R-Pulaski)
on Tuesday, February 26th in the Special Election for the 48th NYS Senate
District (Oswego, Jefferson and St. Lawrence Counties) by a margin of
52% - 48% (27,901 votes to 25,345) and will now take office as the 30th
Senate Democrat. This election leaves the Senate Republican Majority at
32-30.
Proposed NYS
Budget Amendments
Among the Governor’s proposed 21-day amendments to his proposed
2008-09 State Budget is a provision, contained in Part Q of A9806-A,
that would severely restrict the right of subrogation for insurers. This
provision would eliminate, for all parties without a statutory right of
subrogation (one example of a non-statutory right of subrogation consisting
of APIP claims), the ability to recoup benefits paid after a verdict has
been rendered or a settlement executed as part of the reform of the collateral
source provisions of law. An identical version of this language was included
in the Governor’s budget last year but was not included in the final
budget enacted. NYIA opposes this measure and will be working to prevent
this provision from inclusion in the final budget.
Report of
Assembly Insurance Committee Bills
The following bills were reported out of the Assembly Insurance committee
on Wednesday, February 27th:
- A9882 to the Assembly floor (this is the Same as S6656, on Senate Calendar) – Renders permanent the authorization for insurers to enter into derivatives transactions (support)
- A10000 to the Assembly Codes committee (this is the Same as S4955, in Senate Insurance) –prohibits insurers from denying no-fault reimbursement to health care providers when insured’s are injured while operating a motor vehicle in an intoxicated condition (oppose); and
- A10001 to the Assembly floor (No Senate companion bill) – Renders NYPIUA and the standby authority of the JUA permanent (neutral).
Circular Letter
on Disaster Planning, Preparedness and Response
Circular Letter No. 1 of 2008 was issued by the Department and can be
found at www.ins.state.ny.us/circltr/2008/cl08_01.htm.
In brief, this circular letter is intended to assist property/casualty
insurers in understanding the information they must provide the Department
as part of an insurer’s disaster preparedness plan. For instance,
the Department is requiring that each property/casualty insurer provide
to the Department a listing (by New York county) of property exposure
information (as of 12/31/07) for personal lines (non-auto) and commercial
lines (non-auto) for each authorized member within an insurance company
group with this information provided for the categories of total building
and contents insurance in force for the lines indicated and total number
of policies (see page 3 of letter). In addition, the letter provides guidance
on creating a disaster response plan (see Appendix A of letter).
Upcoming
The next member bi-weekly conference call will be at 11:00AM tomorrow,
Friday, February 29th. NYIA will be attending a reception for Senator
Seward on Tuesday, March 18th. The NAMIC Congressional Contact program
is scheduled for April 7th and April 8th in Washington, D.C.
NYIA’s Regulatory Modernization Initiative
Mentioned in Insurance Advocate
The cover story in the February 11th issue of the Insurance Advocate
is a question and answer session with Scott Rothstein, Executive Director
of the NYS Commission to Modernize Regulation of Financial Services. In
the course of the story Mr. Rothstein refers to NYIA’s regulatory
modernization initiative when he states “there are proposals out
there, for instance, that would deregulate rate-setting in competitive
markets, and that’s certainly something that we’ll be looking
at. We want to do that in a very intellectually honest way. This is one
of the benefits of the 50-state regulatory system: the states serve as
laboratories for experimentation. There are states – including very
large states, like Illinois – that have gone to such a system. We’re
going to be able to look and see what happened, look at the economics,
and make sure in evaluating it that we’re focused on best serving
those regulatory objectives.” NYIA will be continuing to work with
Mr. Rothstein’s commission to push for both regulatory modernization
and the proposals recommended by NYIA members. For a complete copy of
the material NYIA submitted to the Commission, please visit “Members
Only” section on NYIA’s web site at www.nyia.org.
Consequential Damages Allowed in Bad Faith Claims
Two recent Court of Appeals cases, Bi-Economy Market Economy,
Inc. v. Harleysville Insurance Company of NY, et al. and Panasia Estates
v. Hudson Insurance Company, ruled that an insurance policyholder may
recover consequential damages resulting from its insurer’s breach
of the implied covenant of good faith and fair dealing so long as these
damages were within the contemplation of the parties as a probable result
of a breach at the time the parties entered into the insurance contract.
The decisions were both 5-2 rulings with a vigorous dissent from Judges
Smith and Read. The dissent argued that the majority effectively over-ruled
prior NY Court of Appeals cases holding that a bad faith failure by an
insurer to pay a claim would, without proof of egregious conduct, not
justify an award of punitive damages with the dissent asserting that the
majority did this by changing labels with “consequential”
replacing “punitive” and a “bad faith failure to pay
a claim” now called a “breach of the duty of good faith and
fair dealing”.
We think that the dissent accurately concluded that the result of these decisions will be higher insurance premiums because juries will now have to decide whether claims should have been paid more promptly (or in greater amounts), whether an insurer who failed to pay a claim acted to put pressure on the insured or rather from either legitimate motives or inefficiency, and whether (and to what extent) the insurer’s delay and stinginess had consequences harmful to the insured. NYIA participated as amicus curiae (friend of the court) with NAMIC, AIA and PCI in the Bi-Economy case.
Assembly Insurance Committee Meeting Next Week
The Assembly Insurance committee is scheduled to meet next Wednesday,
February 27th to consider the following bills concerning property/casualty:
- A9882 (Same as S6656, on Senate Calendar) – Renders permanent the authorization for insurers to enter into derivatives transactions (support);
- A10000 (Same as S4955, in Sen. Insurance) – Prohibits insurers from denying no-fault reimbursement when insured’s are injured while operating a motor vehicle in an intoxicated condition (oppose); and
- A10001 (No senate companion bill) – Renders NYPIUA and the standby authority of the JUA permanent (neutral). The Senate Insurance Committee is not meeting next week.
Upcoming
The next member bi-weekly conference call will be at 11:00AM
on Friday, February 29th. NYIA will be attending receptions for Senators
Leibell, Libous, Robach and Young and for Assemblywoman Calhoun in the
next few weeks. The NAMIC Congressional Contact program is scheduled for
April 7th and April 8th in Washington, D.C.
NYIA meets with the Governor’s Office re Late
Notice
Earlier this week NYIA representatives attended a meeting with
the Counsels to the Governor (Gaurav Vasisht & Richard Rifkin) to
discuss possible amendments to last year’s bill regarding late notice.
The meeting was limited to attendees from the Insurance Department, staff
from the Senate, the Assembly, the plaintiffs’ bar and insurance
trade association representatives. In exchange for securing a veto last
session, many industry reps agreed to work with the Governor and the Superintendent
on a compromise bill. NYIA and others have been working diligently over
the last six months to craft language which would align New York with
a late notice standard similar to most other states. We believe we have
made great progress in working with the Insurance Department to draft
a bill which would appease the plaintiff attorneys, yet not compromise
our ability to argue prejudice in the broadest context when investigating
a claim. There are still several outstanding issues yet to be resolved.
First and most crucial to agreement is the issue of imposing a “material”
or “substantial” prejudice standard. NYIA has made it clear
that despite previous commitments to work toward agreement, inclusion
of this significantly more onerous prejudice standard is not something
we are willing to accept and puts New York far out of the main stream.
In addition, we were under the assumption that this late notice provision
applied to personal lines and “bodily” injury. The proponents
are now asking for this to apply beyond “bodily” injury and
be construed to apply to any injury (i.e. financial, wrongful termination,
harassment, etc.). We will keep members informed on the on-going negotiations.
Meanwhile, we have been meeting with individual Senate Majority members
to inform them of the plaintiff bars efforts and their latest exercise
in pure greed on this issue. Their argument is that they got a taste of
success in getting this bill passed in both houses last year (which included
“material” prejudice standard) and they won’t settle
for less. NYIA will be discussing this issue on Friday’s bi-weekly
member conference call.
21-Day Budget Amendments
The Governor announced his amendments to his proposed 2008-2009
NYS Budget. A summary of his changes includes $25 million to finance various
health programs through assessments on the insurance industry. Since the
bills implementing his amendments have not yet been released in their
amended form, NYIA will review those bills as soon as they are released
and provide a further update on the specifics concerning this proposal
to include $25 million from assessments on the insurance industry for
public health programs.
Upcoming
The next member bi-weekly conference call will be at 11:00AM
on Friday, February 15th. NYIA will be attending a meeting with Stacey
Rowland, Assistant Deputy Superintendent for Intergovernmental and Legislative
Affairs, regarding regulatory modernization, on February 19th. NYIA will
be attending receptions for Senators Larkin, Farley, Golden and Griffo
in the next few weeks. The NAMIC Congressional Contact program is scheduled
for April 7th and April 8th in Washington, D.C. If you haven’t attended
this program previously, consider joining us for a “day on the hill”
to discuss federal insurance issues.
Notice of Flood Insurance Legislation
A6344-B/S4097-A,
a bill that would require homeowners’ policyholders to be provided
with an annual notice that their policy does not cover damage caused by
flooding or mudslides, passed both houses of the legislature this week.
NYIA is opposed to this bill and is sending a letter to the Governor urging
a veto of this legislation. In brief, NYIA will point out that although
the vast majority of New York residents are in an area eligible for the
National Flood Insurance Program, not all are and therefore some residents
may be needlessly confused by the notice. Second, current Insurance Law
section 3444 already requires this flood notice be provided upon inception
of a new policy and upon the first renewal. Finally, this bill does not
include banks and mortgage companies with insurers as entities required
to send these notices even though those companies are the ones who require
that homeowners’ policies be in place on the properties they finance
through their mortgages.
Late Notice/Declaratory Judgment Legislation
As you will recall, a bill (A8363/S6306)
passed last year and was vetoed by the Governor (Veto 98 of 07’)
that would have authorized an insurance claimant to bring a direct declaratory
judgment action against the insurer of the person/entity against whom
the claim is being asserted and would have abrogated the long-standing
“no prejudice” rule that required a claimant to provide timely
notice of an occurrence. The Governor’s veto was not a flat rejection
of the bill’s provisions, however, but rather cited the speed in
which the bill was passed and an inability to fully consider certain ramifications.
The veto also called on the Insurance Department to quickly work with
the Legislature to craft new legislation on these issues. As a result,
negotiations have been ongoing and NYIA is carefully monitoring the talks,
providing input and expressing our position.
State Senate News
Long-time Senator Mary Lou Rath (R-Wiliamsville) made news of her retirement
official and the person thought to be the leading contender to run for
her seat on the Republican side, Assemblyman Jim Hayes of Amherst, announced
that he would not seek the seat but rather stay in the Assembly. There
will be no special election for this seat but rather it will be an open
seat in this fall’s general election. In addition, the Special Election
for the 48th State Senate district seat between Assemblymen Barclay and
Aubertine is being heavily contested on both sides with many TV and radio
ads. This election will occur on Tuesday, February 26th.
Workers’ Compensation Carriers
With the passage of the CIRB reauthorization legislation and its switch
from a rate-setting entity to a loss cost collection entity, it is important
to remember that there is a tight implementation time frame. The Insurance
Department has indicated a willingness to assist in the process, especially
given the new rate-setting method, and they stated that they were willing
to meet on an individual basis with the carriers as needed.
Upcoming
The next member bi-weekly conference call will be at 11:00AM
on Friday, February 15th. NYIA’s Education and Planning Committee
meeting will be next week on Wednesday, February 13th at 10:00AM in Albany.
NYIA’s Board of Directors meeting will also be next week on Wednesday,
February 13th at 1:00PM in Albany. NYIA will be attending a reception
hosted by Senate Majority Leader Bruno, on behalf of Assemblyman Barclay
as Senate candidate, on Tuesday, February 12th in Albany. The NAMIC Congressional
Contact program is scheduled for April 7th and April 8th in Washington,
D.C.