Capitol Report Index Page

CAPITOL REPORT
Provided by Barrett Associates, Legislative Representative for
Independent Insurance Agents & Brokers of New York
5784 Widewaters Parkway, 1st Floor, DeWitt, New York, 13214

April 15, 2010

Lawmakers Leave Town with No Budget Deal in Sight
State legislators left Albany on Wednesday no closer to enacting a budget than they were before they departed for their spring recess. The budget is now officially 15 days late. Senate Democrats and Republican continue to point fingers, accusing one another of holding up the budget negotiation process. Legislative leaders are still billons of dollars apart on a budget agreement, and even the one area where there was at lease some agreement—education cuts—seems to be at risk with the teachers union lobbying hard to nix the proposed cuts. Lawmakers also left town without finalizing a bailout deal to save New York City’s bankrupt Off-Track Betting Corporation. The OTB will cease operating on Sunday, leaving 1,300 employees without a job. 

Insurance Department Proposes Regulatory Changes 
The New York State Insurance Department recently posted two proposals on its Web site for industry comment, one dealing with releases used in claims settlements and the other one with discretionary clauses. The proposal dealing with releases amends the unfair claims practices regulation by making a number of changes about information a claims settlement release must include and language not to be included. It also provides a new form for motor vehicle property damage claims releases. 

The other proposal would prohibit insurers that write accident and health insurance, life insurance, annuities and Health Maintenance Organizations from using discretionary clauses. Discretionary clauses are defined as policy provisions that grant an insurer, plan administrator or claims administrator the authority to determine eligibility for benefits, resolve disputes or interpret terms and provisions. Such clauses also give an insurer, plan administrator or claims administrator the right to develop standards of interpretation or review. The department will accept comments on both these proposals until May 5. 

Legislation of Interest 
While the legislature could not pass a budget, it did act this week on some noteworthy insurance bills. Here’s a quick look: 

• Commercial Lines Deregulation. Legislation that would permit policies insuring large commercial risks to be exempt from policy form and rate filing requirements was recently introduced by both Assembly and Senate (A.10636/S.7220) Insurance Committee chairs. To be considered a large commercial insured whose policy is exempt, the risk must produce a minimum annual premium in excess of $10,000 and meet two of eight listed criteria. They include net worth requirements of $7.5 million and gross revenue requirements of $15 million annually.

This type of legislation has been introduced in the not-so recent past, and IIABNY has long been involved in the discussions to ensure both consumer and producer protections are in place. While it is questionable whether the bills will advance in the current economic and political climate, IIABNY will continue to be at the forefront of discussions on these bills. 

• Auto/rental. A.4916 unanimously passed the Assembly. The bill would prohibit insurers providing rental vehicle reimbursement coverage from requiring an insured to use a particular rental vehicle company or rental location. It would also require insurers to disclose to insureds making a claim under the policy that they have the right to utilize any particular rental company or location. Insurers writing automobile insurance that includes rental vehicle reimbursement coverage would also have to provide on new and renewal policies a separate notice to inform the consumer of the rental rights provided by the bill. The Senate companion bill awaits action by the Senate Insurance Committee.
• Health insurance cancellation notices. A.217 passed the Senate. The bill would require health insurers and HMOs to permit their older insureds (65 and older) to designate a third party to whom the insurer must transmit nonpayment and cancellation notices for health insurance or Medicare supplemental insurance policies. The bill has already cleared the Assembly.
• Reciprocals. S.6948 passed the Senate. The bill enacts provisions relating to reciprocal insurers having a corporate attorney-in-fact wholly owned by subscribers at the reciprocal insurer. The bill awaits action by the Assembly Insurance Committee.

Recent Legislation