View this article online: https://www.insurancejournal.com/news/east/2003/06/24/30150.htm
The New York Assembly followed their colleagues in the State’s Senate by passing legislation, S.5700, which extends the New York Property Insurance Underwriting Association’s authority for another year and restores the “2 percent” rule for automobile insurance renewals. (See IJ Website June 23)
An announcement from the Professional Insurance Agents of New York indicated that the Governor was expected to sign the bill promptly. The PIANY noted that it had “worked to achieve a compromise between the Senate and the Assembly that would re-open NYPIUA, a process that was complicated by the addition of auto insurance and rating law extender negotiations to the mix.” It also lamented the fact that no permanent authorization was given, meaning that in less than a year a new authorization will be necessary.
The PIANY commented on the effect the legislation would have. It “removes most lines of insurance from prior approval requirements until June 30, 2006,” restoring provisions that were allowed to lapse last August. It noted, however, that personal auto coverage “will remain subject to prior approval, rather than reverting to the former “flex-rating” provisions.” Personal auto now joins “the list of insurance lines that are always subject to prior approval rating, such as workers’ compensation and medical malpractice.” The bill does, however, restore flex rating for commercial lines, at least until June 30, 2006.
It also restores ” New York’s motor vehicle insurance excess profit rules (Section 2329), the law underlying the motor vehicle rating surcharge regulations (Section 2335), and various other sections,” said the PIANY.
It added that “Another provision in the bill, strongly supported by PIANY, is the reinstatement of flexibility in personal auto insurance nonrenewal rules.” Called the “two percent” rule, these regulations allow insurers to “nonrenew up to two percent of their business annually, by territory. They also provide for additional renewals if an insurer is actively writing new business; for every two new policies written, one policy can be nonrenewed.” It added that “S.5700 is designed to gradually bring policies newly written between August 2, 2001 and the day the bill is signed back under the ‘two percent’ and ‘two for one’ rules.” The bill takes effect immediately, but states that the section restoring the “two percent rule” (among other provisions) will “apply to insurance contracts issued or renewed on or after [the effective] date, and shall apply at the next required policy period, commencing on or after such date, to any insurance contract written prior to the effective date.” The PIANY said it would continue to work on clarifying the legislation and the regulations needed to implement it.
The association’s announcement also noted that S.5700 “restores, but only until April 30, 2004, some important provisions safeguarding the state’s homeowners insurance market. Several sections of Section 3425, designed to promote stability in this market, had been allowed to sunset on April 30, 2003. Also extended until April 30, 2004 is Section 2351 of the insurance law, which allows an insurer to make available a multi-tier rating program for homeowners insurance.”
It also noted that “S.5700 will require the insurance department to issue a report to the legislature by March 15, 2006 on the personal lines market. The report must include a statistical analysis of data that insurers are required to submit to the NYSID on business they write or nonrenew, by territory and class. The last such report was required in 2001.”