Requires all motor vehicle insurers to file annual detailed financial and claim data statements with the superintendent of insurance; all such statements shall be made available to the public.
TITLE OF BILL: An act to amend the insurance law, in relation to requiring all motor vehicle insurers to file annual financial statements and detailed claim data with the superintendent of insurance
PURPOSE OF BILL: The bill expands upon current insurance reporting laws by providing for more detailed reporting requirements of automobile insurers' "financial statements" and "closed claims" data. This enhanced data collection will provide lawmakers with a source of reliable and accessible data that will better enable them to evaluate automobile insurance and assist in providing an optimal product to New York citizens.
SUMMARY OF PROVISIONS OF BILL: The proposed language provides for a publicly accessible and neutral method for the systematic collection of automobile insurers' financial and closed claims data. The supplemental financial disclosure requirements stipulate that insurers must provide detailed information concerning all sources of "income" including, but not limited to, data on premiums received, investment income, and profit from the sale of assets. Detailed information regarding expenses must also be provided, including, expenses actually incurred and paid, normal business expenses, salaries, commissions, consulting fees, legal expenses, and advertising costs. A synopsis of the total claims or settlements paid in each financial statement and specific data on claims that have been settled with or without a payment (closed claims) must also be provided.
Additionally, all submitted data must be signed by the insurer's chief executive officer, attesting its' accuracy. Civil penalties will be assessed against companies that fail to comply with any of the provisions of the bill. The proposal also indicates that the insurance department must make all information publicly available to consumers on the department's web site.
JUSTIFICATION: Automobile insurance is a vital part of the New York State economy and is of high importance to the citizens of New York. Personal automobile insurance premiums in 2008 were $9.8 billion. Commercial automobile insurance premiums in 2008 were $2.0 billion. Automobile liability insurance protects against the possible adverse financial consequences of being held liable for damage to another person or another's property. Personal injury protection provides first party medical benefits when an injury arises from an automobile accident, as well as, providing other financial benefits such as partial wage loss reimbursement. Physical damage insurance covers damage to the policyholder's own vehicle; which is often one the largest financial assets of a person; as well as being vital to other aspects of a person's life such as transportation to and from
work. A failure to have fairly priced automobile insurance with adequate benefits from solvent insurance companies could have dire consequences for New York.
Given the significance of automobile insurance to New York State and its citizens, the State has a compelling public interest in ensuring that the parties with a stake in the transactions; policyholders, insurance companies and the general public; are all treated fairly. It is also important to ensure that the benefits to citizens are adequate, that insurance companies have the opportunity to earn a fair profit, that insurance companies will be able to make good on the promises contained in insurance policies, and that insurance companies operate in a fair efficient manner. In order for lawmakers to be able to carefully evaluate various alternatives for achieving these objectives, it is vital that information about automobile insurance be available.
There are many entities that give the insurance industry's perspective on automobile insurance. These entities include Insurance Services Office (ISO), the Insurance Research Council (IRC) and the Insurance Information Institute (III). ISO submits filings on behalf of insurance companies to the Department of Insurance. The IRC is funded and operated by a consortium of insurance companies which publishes "studies" which merit careful analysis. A recent IRC publication regarding automobile injury claims(1) stated "Shifts in treatment alternatives and increased costs have led to the continued escalation of medical care expenses," "Total claimed losses and total claim payments have grown faster than inflation, spurred by increases in medical expenses" and "Attorney involvement is associated with extensive medical treatment, elevated claimed losses, and lower net compensation for claimants."
The III acts as an advocate for the insurance industry. A recent document by the III(2) claims that the New York No-Fault system is in "crisis" and "out of control." The III then suggests insurance industry "solutions" to these alleged "problems." However, it is impossible to discern the veracity or accuracy of the contentions of the IRC or the III absent analysis of their underlying data. All of these insurance industry organizations have access to detailed financial and claim data that insurance companies do not make available to the public.
As things currently stand, no independent and neutral mechanism exists to determine the root cause of declared insurance "crises" and policy cancellations. And, because the insurers typically refuse requests to produce more detailed data, lawmakers and consumers have to rely on the industry's reports to make policy decisions.
Clearly, independent, objective and accurate data is needed so lawmakers and the public can conduct sound analyses in reaching a public policy decision that impacts millions of New York citizens. For example, more detailed claim data would help in evaluating the insurance industry claims that the no-fault system is out of control and that benefits to consumers need to be restricted. In the absence of this basic data, it is impossible for lawmakers and consumers to engage in rational decision-making about insurance industry proposals that would severely limit consumer rights.
In order to level the playing field, and have a vibrant public discussion and analysis of the issues involving automobile insurance, it is critically important that all parties involved in the discussion of automobile insurance have access to comprehensive information. This bill takes a step in that direction by starting to make publicly available certain information that insurance companies have resisted disclosing. This bill will provide for the vigilant financial examination of insurer activities and allows consumers to monitor insurance industry for fair treatment.
LEGISLATIVE HISTORY: 2009-10: S.7531/A.10738 (Weinstein) - Referred to Insurance
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.
EFFECTIVE DATE: Immediately.
FOOTNOTES: (1) Insurance Research Council, Auto Injury Insurance Claims: Countrywide Patterns in Treatment Cost, and Compensation, 2008 Edition, January 2008, at 4 - 5. This report states that detailed data on more than 1,500 New York automobile claims was collected, but the IRC has not made that information public so that other entities could perform their own analysis.
(2) Insurance Information Institute, New York PIP Insurance Update, Is New York's No-Fault Crisis Returning?, November 5, 2009.
STATE OF NEW YORK ________________________________________________________________________ 3271 2011-2012 Regular Sessions IN SENATE February 15, 2011 ___________Introduced by Sen. HASSELL-THOMPSON -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law, in relation to requiring all motor vehicle insurers to file annual financial statements and detailed claim data with the superintendent of insurance THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Legislative intent. The legislature hereby finds and declares that insurance companies issuing motor vehicle policies in this state owe a duty to those they insure and to those who may in the future be insured by them, to fully disclose in a public and transparent manner all elements relating to their financial condition and solvency. Such obligation is essential in maintaining the public's inherent right to know the details and specifics of such insurer's expenses and claims history on a global basis so, as consumers, they can make a reasoned and rational selection of the insurer with which they intend to do business. As premiums escalate, it is more incumbent on such insurers to honor this obligation by making the public aware of the rationale they use in determining the premiums they charge, and it is the sense of the legis- lature that where the data used is available, it should be disclosed in an open and public manner. S 2. The insurance law is amended by adding a new section 342 to read as follows: S 342. FINANCIAL STATEMENT AND DETAILED CLAIM DATA TO BE FILED WITH THE DEPARTMENT. (A) FOR PURPOSES OF THIS SECTION, THE TERM "INSURER" SHALL MEAN ANY PERSON, CORPORATION, ASSOCIATION OR OTHER BUSINESS ENTITY AUTHORIZED TO ISSUE A MOTOR VEHICLE INSURANCE POLICY IN THIS STATE. (B) ON OR BEFORE APRIL FIRST OF EACH YEAR, EVERY INSURER SHALL PROVIDE THE SUPERINTENDENT WITH A DETAILED FINANCIAL STATEMENT TO SUPPLEMENT AND EXPAND UPON THE INFORMATION CONTAINED IN THE STATUTORY ANNUAL STATEMENT FOR THE MOST RECENTLY CONCLUDED CALENDAR YEAR. THE FINANCIAL STATEMENTEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD03114-01-1 S. 3271 2
SHALL CONTAIN INFORMATION ON A COMBINED BASIS FOR ALL LINES OF INSURANCE AS WELL AS INFORMATION SEPARATELY FOR EACH OF THE FOLLOWING LINES OF INSURANCE: (1) PRIVATE PASSENGER AUTOMOBILE OTHER LIABILITY, (2) PRIVATE PASSENGER AUTOMOBILE PERSONAL INJURY PROTECTION, (3) PRIVATE PASSENGER AUTOMOBILE PHYSICAL DAMAGE, (4) COMMERCIAL AUTOMOBILE OTHER LIABILITY, (5) COMMERCIAL AUTOMOBILE PERSONAL INJURY PROTECTION, AND (6) COMMERCIAL AUTOMOBILE PHYSICAL DAMAGE. THAT FINANCIAL STATEMENT SHALL INCLUDE THE ENTIRETY OF ITS BUSINESS ACTIVITIES CONDUCTED IN THIS STATE, OR CONDUCTED OUTSIDE THIS STATE, BUT HAVING A NEXUS TO INSURANCE POLICIES OR CONTRACTS OF INSURANCE INSURING PERSONS OR RISKS IN THIS STATE, CONSISTENT WITH THE PROCEDURES FOR DETERMINING NEW YORK STATE INSURANCE BUSINESS FOR STATUTORY ANNUAL STATEMENT REPORTING PURPOSES. SUCH STATE- MENT SHALL BE IN A FORM DETERMINED BY THE SUPERINTENDENT. THE FORM SHALL BE SUFFICIENTLY ITEMIZED IN A MANNER THAT ALLOWS FOR AN ACTUARIALLY SOUND ANALYSIS OF THE INCOME REALIZED BY THE INSURER FROM ALL SOURCES DURING SUCH YEAR, INCLUDING BUT NOT LIMITED TO PREMIUMS, INVESTMENT INCOME, PROFIT FROM SALE OF ASSETS AND ANY OTHER CATEGORY OR CATEGORIES OF INCOME AS DETERMINED BY THE SUPERINTENDENT TO REFLECT THE FULL DISCLOSURE REQUIREMENTS OF THIS SECTION. AT A MINIMUM, SUCH INFORMATION SHALL CONSIST OF THE ITEMS SET FORTH IN THE STATEMENT OF INCOME, EXCLUD- ING THE CAPITAL AND SURPLUS ACCOUNT SECTION OF THE PROPERTY/CASUALTY STATUTORY ANNUAL STATEMENT, AS APPLICABLE TO THE INSURER'S NEW YORK STATE BUSINESS, AS WELL AS THE OTHER INFORMATION DELINEATED IN THIS SUBSECTION. SUCH FINANCIAL STATEMENT SHALL ALSO CONTAIN A COMPREHENSIVE AND DETAILED DISCLOSURE OF THE INSURER'S EXPENSES ACTUALLY INCURRED AND PAID DURING SUCH CALENDAR YEAR, TO INCLUDE NORMAL BUSINESS EXPENSES, SALARIES, COMMISSIONS, CONSULTING FEES, LEGAL EXPENSES, ADVERTISING COSTS AND ANY OTHER CATEGORY DEEMED PERTINENT TO THE INTENT OF THIS SECTION. AT A MINIMUM, THE EXPENSE INFORMATION REQUIRED SHALL CONSIST OF THE ITEMS SET FORTH IN THE UNDERWRITING AND INVESTMENT EXHIBIT - PART 3 - EXPENSES OF THE PROPERTY / CASUALTY STATUTORY ANNUAL STATEMENT, AS APPLICABLE TO THE INSURER'S NEW YORK STATE BUSINESS. WITH RESPECT TO SALARIES (INCLUDING ALL OTHER FORMS OF COMPENSATION), EACH INSURER SHALL ITEMIZE THE SALARY OF THE TWENTY MOST HIGHLY COMPENSATED EMPLOYEES OF SUCH INSURER DURING SUCH YEAR, PROVIDED THAT THE NAME OF SUCH EMPLOYEES NEED NOT BE DISCLOSED. SUCH FINANCIAL STATEMENT SHALL ALSO PROVIDE THE PUBLIC WITH A SYNOPSIS OF CLAIMS OR SETTLEMENTS PAID PURSUANT TO SUCH POLICIES OR CONTRACTS, LISTING THE TOTAL OF SUCH CLAIMS AND SETTLEMENTS BY TYPE OF INSURANCE OR THE RISK INSURED. AT A MINIMUM, THE CLAIM INFOR- MATION REQUIRED SHALL CONSIST OF THE ITEMS SET FORTH IN THE EXHIBIT OF PREMIUMS AND LOSSES OF THE PROPERTY / CASUALTY STATUTORY ANNUAL STATE- MENT, AS APPLICABLE TO THE INSURER'S NEW YORK STATE BUSINESS AND IDENTI- FIED AND CATEGORIZED SEPARATELY FOR EACH ZIP CODE IN THIS STATE. SUCH FINANCIAL STATEMENT SHALL BE SIGNED AND ATTESTED AS FULL, COMPLETE AND ACCURATE BY THE CHIEF EXECUTIVE OFFICER OF THE INSURER, AND HE OR SHE SHALL BE HELD PERSONALLY RESPONSIBLE WITH RESPECT TO THE ACCURACY OF THE CONTENT OF SUCH STATEMENT. THE SUPERINTENDENT SHALL PROVIDE INSURERS WITH A METHOD TO SUBMIT THEIR FINANCIAL STATEMENTS ELECTRONICALLY VIA THE INTERNET, WHICH METHOD SHALL INCLUDE INSTRUCTIONS RELATING TO THE USE OF AN ELECTRONIC SIGNATURE WHICH SHALL BE SUBJECT TO, AND SUBMITTED IN ACCORDANCE WITH SECTION THREE HUNDRED SIXTEEN OF THIS ARTICLE; PROVIDED, HOWEVER, THAT NO EXCEPTION AUTHORIZED IN SUCH SECTION MAY BE REQUESTED OR GRANTED. (C) ON OR BEFORE APRIL FIRST OF EACH YEAR, EVERY INSURER SHALL PROVIDE THE SUPERINTENDENT WITH DETAILED CLOSED CLAIM INFORMATION FOR THE SAME LINES OF INSURANCE PROVIDED FOR IN SUBSECTION (B) OF THIS SECTION FORS. 3271 3
THE MOST RECENTLY CONCLUDED CALENDAR YEAR. UNTIL THE SUPERINTENDENT PROMULGATES DATA COLLECTION FORMS AND PROCEDURES FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE, DATA SHALL BE COLLECTED USING, AT A MINIMUM, THE MOST RECENT PUBLICLY AVAILABLE FORMS USED BY THE INSURANCE RESEARCH COUNCIL FOR ITS AUTO INJURY SURVEY. THE SUPERINTENDENT MAY REQUIRE ADDI- TIONAL INFORMATION BEYOND THAT WHICH IS CONTAINED IN SUCH SURVEY IF HE OR SHE DEEMS IT NECESSARY AND WARRANTED. INSTEAD OF COLLECTING INFORMA- TION FOR ALL PRIVATE PASSENGER AUTOMOBILE CLAIMS THE SUPERINTENDENT MAY COLLECT DATA FOR A STATISTICALLY VALID SAMPLE OF CLAIMS. THE MINIMUM SAMPLE SIZE SHALL REPRESENT FIVE PER CENTUM OF THE NUMBER OF CLAIMS FOR EACH YEAR. UNTIL THE SUPERINTENDENT PROMULGATES DATA COLLECTION FORMS AND PROCEDURES FOR COMMERCIAL AUTOMOBILE INSURANCE, DATA SHALL BE COLLECTED USING INFORMATION WHICH MAY BE AVAILABLE FROM ANY OTHER SOURCE. FOR COMMERCIAL AUTOMOBILE CLAIMS, INSTEAD OF COLLECTING INFORMA- TION FOR ALL CLAIMS THE SUPERINTENDENT MAY COLLECT DATA FOR A STATIS- TICALLY VALID SAMPLE OF CLAIMS. THE MINIMUM SAMPLE SIZE SHALL REPRESENT TEN PER CENTUM OF THE NUMBER OF CLAIMS FOR EACH YEAR FOR SUCH LINE OF INSURANCE. SUCH DETAILED CLAIM DATA SHALL BE SIGNED AND ATTESTED AS FULL, COMPLETE AND ACCURATE BY THE CHIEF EXECUTIVE OFFICER OF THE INSUR- ER, AND HE OR SHE SHALL BE HELD PERSONALLY RESPONSIBLE WITH RESPECT TO THE ACCURACY OF THE DATA. THE DETAILED CLAIM DATA SHALL BE SUBMITTED IN THE SAME MANNER AS PROVIDED FOR IN SUBSECTION (B) OF THIS SECTION. (D) THE SUPERINTENDENT SHALL, IN BOTH WRITTEN FORM AND AS PART OF THE DEPARTMENT WEB SITE, MAKE SUCH FINANCIAL STATEMENTS AND DETAILED CLAIM INFORMATION AVAILABLE TO THE PUBLIC. THE DETAILED CLAIM INFORMATION SHALL BE PROVIDED IN AGGREGATE FORM FOR ALL INSURERS COMBINED WITHOUT ANY IDENTIFICATION OF A SPECIFIC CLAIM TO A SPECIFIC INSURER. NONE OF THE PUBLICLY AVAILABLE DETAILED CLAIM INFORMATION SHALL IDENTIFY THE INDIVIDUAL INSURER, DEFENDANT OR PLAINTIFF ASSOCIATED WITH THE CLAIM. SUCH FINANCIAL STATEMENTS AND DETAILED CLAIM INFORMATION SHALL BE DEEMED A PUBLIC DOCUMENT AND NO PERSON SHALL BE REQUIRED TO FILE A REQUEST FOR SUCH FINANCIAL STATEMENTS PURSUANT TO ARTICLE SIX OF THE PUBLIC OFFICERS LAW IN ORDER TO RECEIVE A COPY THEREOF, BUT UPON REQUEST AND PAYMENT OF THE FEE FOR COPYING SUCH DOCUMENT, IT SHALL BE PROVIDED. WITH RESPECT TO THE ELECTRONIC COPY OF SUCH FINANCIAL STATEMENTS AND DETAILED CLAIM INFORMATION, WHICH SHALL BE ACCESSIBLE ON THE DEPARTMENT'S WEB SITE, THE DEPARTMENT SHALL HIGHLIGHT THE AVAILABILITY OF SUCH INFORMATION TO THE PUBLIC ON SUCH WEB SITE, AND THE LINK TO EACH INSURER'S FINANCIAL STATE- MENT AND THE AGGREGATED DETAILED CLAIM INFORMATION SHALL BE ACCESSIBLE IN A SIMPLE AND EASY MANNER. BOTH THE FINANCIAL STATEMENT AND AGGREGATED DETAILED CLAIM INFORMATION ON THE DEPARTMENT WEB SITE SHALL BE AVAILABLE IN EXCEL FORMAT, IN ADDITION TO ANY OTHER FORMAT THE SUPERINTENDENT DETERMINES IS APPROPRIATE. (E) ON OR BEFORE JULY FIRST OF EACH YEAR, THE SUPERINTENDENT SHALL ISSUE REPORTS SUMMARIZING AND EXPLAINING THE INFORMATION COLLECTED FROM THE FINANCIAL STATEMENTS AND THE DETAILED CLAIM INFORMATION. COPIES OF SUCH REPORTS SHALL BE FORWARDED TO THE TEMPORARY PRESIDENT OF THE SENATE, THE SPEAKER OF THE ASSEMBLY AND THE CHAIRS OF BOTH THE SENATE AND ASSEMBLY INSURANCE COMMITTEES. SUCH REPORTS SHALL BE PUBLIC DOCU- MENTS AND SHALL BE ACCESSIBLE BOTH IN PAPER COPY AND ON THE DEPARTMENT'S WEB SITE. (F) WHERE AN INSURER FAILS OR REFUSES TO PROVIDE THE SUPERINTENDENT WITH A FULL AND COMPLETE DISCLOSURE AS REQUIRED BY THIS SECTION, THE SUPERINTENDENT SHALL TAKE SUCH ACTION HE OR SHE DEEMS NECESSARY TO BRING THE INSURER INTO FULL COMPLIANCE. SUCH ACTION MAY INCLUDE IMPOSITION OF A CIVIL PENALTY OF UP TO FIFTY THOUSAND DOLLARS ASSESSED AGAINST THES. 3271 4
INSURER FOR EACH VIOLATION, TEMPORARY SUSPENSION OF ANY RIGHT TO ISSUE ADDITIONAL POLICIES OR CONTRACTS UNTIL THE INSURER BRINGS ITSELF INTO FULL COMPLIANCE, AN AUDIT OF THE INSURER'S RECORDS BY THE DEPARTMENT OR ITS DESIGNATED REPRESENTATIVE TO OBTAIN THE INFORMATION AND WHICH AUDIT SHALL BE PAID FOR BY THE INSURER, OR ANY OTHER CIVIL REMEDY THE SUPER- INTENDENT DEEMS WARRANTED OR NECESSARY UNTIL SUCH INSURER FULLY COMPLIES. IN ADDITION THE OFFICER WHOSE SIGNATURE IS AFFIXED TO SUCH STATEMENT MAY BE PERSONALLY PENALIZED TO THE SAME EXTENT. (G) THE SUPERINTENDENT MAY PROMULGATE SUCH RULES AND REGULATIONS HE OR SHE DEEMS NECESSARY FOR THE PROPER ADMINISTRATION OF THE PROVISIONS OF THIS SECTION, AND SUCH RULES AND REGULATIONS MAY BE PROMULGATED ON AN EMERGENCY BASIS IF THE SUPERINTENDENT WARRANTS SUCH ACTION TO BE NECES- SARY. S 3. Severability. If any item, clause, sentence, subparagraph, subdi- vision or other part of this act, or the application thereof to any person or circumstances shall be held to be invalid, such holding shall not affect, impair or invalidate the remainder of this act but it shall be confined in its operation to the item, clause, sentence, subpara- graph, subdivision or other part of this act directly involved in such holding, or to the person and circumstances therein involved. S 4. This act shall take effect immediately.