N.Y. Court Blocks Pawtucket’s Mid-term Cancellations

August 18, 2004

New York Superintendent of Insurance Gregory V. Serio applauded a decision by the New York Supreme Court to issue a temporary restraining order preventing Pawtucket Mutual Insurance Company from canceling approximately 1,000 homeowners policies it has in New York state.

The department submitted the court motion in response to the insurer’s decision in June to issue mid-term cancellation notices to its policyholders.

The court also granted the department’s request that Pawtucket send notices to its policyholders stating that the cancellations have been stayed. Under court order, the notices must be sent via overnight mail.

“The department sought, and the court granted, these actions against Pawtucket to protect New York customers because canceling these insurance policies were a clear violation of New York law,” Serio said. “The law clearly states that insurers cannot cancel policies mid-term without just reasons or without submitting a plan to the department, neither of which were done by Pawtucket.”

Pawtucket is a Rhode Island-based company authorized to sell property and casualty insurance business in New York. The insurer is currently in rehabilitation in the courts of Rhode Island and in June sent cancellation notices to its New York policyholders. New York Insurance Law limits an insurer’s ability to cancel or non-renew insurance policies it has issued. The department said it contacted Pawtucket and requested that it withdraw the cancellation notices. Upon the insurer’s refusal to do so, the department commenced action in New York Supreme Court.

Pawtucket customers can call the Department’s toll-free hotline — 800-342-3736 — to get further information.

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