Relates to providing conditional renewal notices to policyholders.
TITLE OF BILL: An act to amend the workers' compensation law, in relation to providing conditional renewal notices to policyholders
PURPOSE: The purpose of this bill is to require that insurance carriers provide conditional renewal notices to workers' compensation policyholders when the premium will increase more than ten percent or where there is an increased deductible or a change in classification that may result in a reduction of dividends.
SUMMARY OF PROVISIONS: This legislation amends subdivision 5 of section 54 of the workers compensation law, as amended by section 23 of part GG of chapter 57 of the laws of 2013.
JUSTIFICATION: Under current Insurance Law Section 3426(e), commercial policyholders are entitled to receive a conditional renewal notice 60 to 120 days in advance of the expiration date of their policy if the premium for their renewal policy will increase by more than ten percent, or if the renewal policy will have a change of limits, change in type of coverage, reduction of coverage, or an increased deductible. The law requiring such notices protects the customer by affording the opportunity to look for alternative coverage before their current policy expires.
Unfortunately, the rules for workers' compensation policies are not the same. A worker's compensation carrier is not required to provide any notice to a policyholder when the renewal premium will increase by more than ten percent. The current law also does not provide for a notice if the renewal policy will be subject to an increased deductible or a change in classification with regard to payments of dividends that may result in a reduction in the dividends paid.
Instead, businesses with worker's compensation policies often receive the bill for their renewal policy just days before the effective date, only to find that the premium has increased substantially, or the deductible has increased or the dividend payment has decreased. Since the policyholders were not given any advance notice, they have lost the opportunity to look for alternative coverage and must renew their policy at the new, higher rate, or other unfavorable terms. This legislation will provide worker's compensation policy holders the same 60-120 day renewal notice period afforded to commercial policy holders when significant adjustments are being made to the proposed new policy.
LEGISLATIVE HISTORY: This is a new bill.
FISCAL IMPLICATIONS: To be determined.
EFFECTIVE DATE: This act shall take effect on the one hundred twentieth day after it shall have become a law, and shall apply to all policies issued or renewed on or after such effective date.
STATE OF NEW YORK ________________________________________________________________________ 7268 IN SENATE May 8, 2014 ___________Introduced by Sen. ROBACH -- read twice and ordered printed, and when printed to be committed to the Committee on Labor AN ACT to amend the workers' compensation law, in relation to providing conditional renewal notices to policyholders THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 5 of section 54 of the workers' compensation law, as amended by section 23 of part GG of chapter 57 of the laws of 2013, is amended to read as follows: 5. Cancellation, CONDITIONAL RENEWAL and termination of insurance contracts. No contract of insurance issued by an insurance carrier against liability arising under this chapter shall be cancelled within the time limited in such contract for its expiration unless notice is given as required by this section. When cancellation is due to non-pay- ment of premiums and assessments, such cancellation shall not be effec- tive until at least ten days after a notice of cancellation of such contract, on a date specified in such notice, shall be filed in the office of the chair and also served on the employer. When cancellation is due to any reason other than non-payment of premiums and assessments, such cancellation shall not be effective until at least thirty days after a notice of cancellation of such contract, on a date specified in such notice, shall be filed in the office of the chair and also served on the employer; provided, however, in either case, that if the employer has secured insurance with another insurance carrier which becomes effective prior to the expiration of the time stated in such notice, the cancellation shall be effective as of the date of such other coverage. No insurer shall refuse to renew any policy insuring against liability arising under this chapter unless at least thirty days prior to its expiration notice of intention not to renew has been filed in the office of the chair and also served on the employer. Such notice shall be served on the employer by delivering it to him, her or it or by sending it by mail, by certified or registered letter, return receipt requested, addressed to the employer at his, her or its last known place of business; provided that, if the employer be a part-EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14461-01-4 S. 7268 2
nership, then such notice may be so given to any of one of the partners, and if the employer be a corporation then the notice may be given to any agent or officer of the corporation upon whom legal process may be served; and further provided that an employer may designate any person or entity at any address to receive such notice including the desig- nation of one person or entity to receive notice on behalf of multiple entities insured under one insurance policy and that service of notice at the address so designated upon the person or entity so designated by delivery or by mail, by certified or registered letter, return receipt requested, shall satisfy the notice requirement of this section. Provided, however, the right to cancellation of a policy of insurance in the state fund shall be exercised only for non-payment of premiums and assessments or as provided in section ninety-four of this chapter. A CONTRACT OF INSURANCE SHALL REMAIN IN FULL FORCE AND EFFECT SUBJECT TO THE SAME TERMS AND CONDITIONS, LOSS COST MULTIPLIERS AND CLASSIFICA- TION OF THE EMPLOYER WITH REGARD TO THE PAYMENT OF DIVIDENDS, PURSUANT TO SECTIONS FOUR THOUSAND ONE HUNDRED SIX AND FOUR THOUSAND ONE HUNDRED FOURTEEN OF THE INSURANCE LAW, UNLESS WRITTEN NOTICE IS MAILED OR DELIV- ERED BY THE CARRIER TO THE EMPLOYER, AT THE ADDRESS SHOWN ON THE POLICY, AND TO SUCH EMPLOYER'S AUTHORIZED AGENT OR BROKER, INDICATING THE CARRI- ER'S INTENTION TO CONDITION RENEWAL UPON INCREASED DEDUCTIBLE, CHANGE IN CLASSIFICATION WITH REGARD TO THE PAYMENT OF DIVIDENDS THAT MAY RESULT IN A REDUCTION IN DIVIDENDS PAID, OR UPON INCREASED PREMIUMS IN EXCESS OF TEN PERCENT (EXCLUSIVE OF ANY PREMIUM INCREASE GENERATED AS A RESULT OF INCREASED LOSS COSTS FILED AND APPROVED IN ACCORDANCE WITH SUBSECTION (E) OF SECTION TWO THOUSAND THREE HUNDRED FIVE OF THE INSURANCE LAW, INCREASED EXPOSURE UNITS, OR AS A RESULT OF EXPERIENCE RATING, LOSS RATING, RETROSPECTIVE RATING OR AUDIT). SUCH NOTICE SHALL BE MAILED OR DELIVERED AT LEAST SIXTY, BUT NOT MORE THAN ONE HUNDRED TWENTY, DAYS IN ADVANCE OF THE EXPIRATION DATE OF THE POLICY, AND SHALL CONTAIN THE SPECIFIC REASON OR REASONS FOR CONDITIONAL RENEWAL, SET FORTH THE AMOUNT OF ANY PREMIUM INCREASE (OR, WHERE SUCH AMOUNT CANNOT REASONABLY BE DETERMINED AS OF THE TIME THE NOTICE IS PROVIDED, A REASONABLE ESTIMATE OF THE PREMIUM INCREASED BASED UPON THE INFORMATION AVAILABLE TO THE INSURANCE CARRIER AT THAT TIME), A REASONABLE ESTIMATE OF THE POTENTIAL REDUCTION IN DIVIDENDS ATTRIBUTABLE TO THE CHANGE IN CLASSIFICATION, AND THE AMOUNT OF THE INCREASED DEDUCTIBLE. NOTHING IN THIS SUBDIVISION WILL REQUIRE THE INSURANCE CARRIER TO PROVIDE SUCH NOTICE WHEN THE EMPLOYER, AN AGENT OR BROKER AUTHORIZED BY THE EMPLOYER, OR ANOTHER INSURANCE CARRIER OF THE EMPLOYER HAS MAILED OR DELIVERED WRITTEN NOTICE THAT THE POLICY HAS BEEN REPLACED OR IS NO LONGER DESIRED. EVERY NOTICE MAILED OR DELIVERED BY AN INSURANCE CARRIER PURSUANT TO THIS SUBDIVISION SHALL ADVISE THE EMPLOYER AND SUCH EMPLOYER'S AUTHOR- IZED AGENT OR BROKER OF THE AVAILABILITY OF LOSS INFORMATION CONSISTENT WITH THIS SUBDIVISION UPON WRITTEN REQUEST BY THE EMPLOYER OR SUCH EMPLOYER'S AUTHORIZED AGENT OR BROKER, THE INSURANCE CARRIER SHALL MAIL OR DELIVER LOSS INFORMATION COVERING THE PERIOD OF TIME COVERAGE HAS BEEN PROVIDED BY THE INSURANCE CARRIER, WITHIN TEN DAYS OF SUCH REQUEST. SUCH INFORMATION SHALL INCLUDE INFORMATION ON CLOSED AND OPEN CLAIMS AND ANY NOTICES OF OCCURRENCES, INCLUDING DATES AND DESCRIPTIONS OF OCCUR- RENCES AND AMOUNTS OF ANY PAYMENTS OR AMOUNTS HELD IN RESERVE FOR FUTURE PAYMENTS. The provisions of this subdivision shall not apply with respect to policies containing coverage pursuant to subsection (j) of section three thousand four hundred twenty of the insurance law relating to everyS. 7268 3
policy providing comprehensive personal liability insurance on a one, two, three or four family owner-occupied dwelling. In the event such cancellation or termination notice is not filed with the chair within the required time period, the chair shall impose a penalty in the amount of up to five hundred dollars for each ten-day period the insurance carrier or state insurance fund failed to file the notification. All penalties collected pursuant to this subdivision shall be deposited in the uninsured employers' fund. S 2. This act shall take effect on the one hundred twentieth day after it shall have become a law, and shall apply to all policies issued or renewed on or after such effective date.