PIANY Notes Passage of Policyholder Protection Bill

June 24, 2003

The Professional Insurance Agents of New York noted that both houses of the State Legislature have passed a bill, initiated by the PIANY, to help agents help their clients by strengthening policyholder protection.

The bill, S.4633-b, sponsored by Senator Charles Fuscillo, “responds to two separate situations,” said the announcement – “agents who were not getting notice when their clients’ auto policies were being terminated; and nonpayment cancellation notices that can be valid even if they fail to display the amount due.”

The PIANY detailed the bill’s provisions as follows:
Agent/broker notice. The bill would add provisions to the Section 3425 policyholder protections requiring the insurer to inform the agent or broker when the insurer intends to cancel, nonrenew, conditionally renew or materially alter a customer’s personal lines policy midterm. The provisions originally paralleled the language of the Section 3426 commercial lines protections, which require that copies of notices go to the agent or broker. In dialogue with insurers, PIANY and the sponsors worked out options for insurers to continue providing notices in various formats, including summaries of recent notice actions.

Most insurers do notify agents and brokers in these situations. However, when New York’s auto insurance market began to deteriorate, PIANY tried to help member agents where an insurer had consciously decided no longer to provide notices or offer any alternative means to the agent of finding out when a notice had been issued. Clearly, such action puts both agents and their policyholders at a disadvantage. PIANY’s efforts to dissuade this insurer went unheeded, and the NYSID was powerless to intervene because Section 3425 currently contains no requirement that agents be notified.

Display of amount due. Again, it was a PIANY member who brought attention to nonpayment cancellation notices that do not tell the policyholder what is owed. Since an insured has only 15 days to pay, following the mailing of the notice, lack of this crucial information can cost precious time in preventing the cancellation from taking effect. Again, the NYSID was unable to help, since a court had ruled that the lack of this information does not invalidate a notice. PIANY showed that other states, such as New Jersey, require nonpayment cancellation notices to contain the amount due. S.4633-b applies to both personal and commercial lines regarding display the amount due.

The PIANY said it would work to see the measure signed into law.

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