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Insurance Dept. Opinions: No-Fault, Consumer Privacy, & Auto Total Losses

The New York Insurance Department’s Office of General Counsel issued a small crop of advisory legal opinions in October:

• A Directors & Officers Liability policy many not include a provision that places the duty to defend upon the insured, rather than the insurer.
• New York Insurance Law might permit a self-funded health benefit plan to retain an insurer to administer claims, and have the insurer advance the funds for claim payments, subject to subsequent reimbursement.
• An individual receiving a stipend under the federal Foster Grandparent Program who is injured in a motor vehicle accident may receive compensation for the stipend through a lost earnings claim made under the no-fault coverage of the vehicle in which the inquirer was traveling.
• Neither the Insurance Law nor regulations require an insurer or its agent to purge information it receives from persons who request an insurance quote. Insurance Department regulations require the insurer to maintain certain information for minimum specified periods. An insurer and its agent may not disclose a consumer’s personal information to third parties unless they fulfill specific procedural requirements.
• New York Insurance Law and regulations do not define the term “replacement cost.” If a payment made on an estimated claim represents payment of only the undisputed elements of the claim, the insured may accept the check, and then seek payment for the disputed amount within the limitations of the insurance policy. If the payment represents a full settlement of the claim, and the insured accepts the payment, then the insured may not seek additional payment for damages sustained.
• When a claimant elects to retain title to an automobile that is a total loss - under which the vehicle’s salvage value will be deducted from the settlement payment - the amount of sales tax is added to the value of the vehicle prior to the accident. An insurance company is not required under the New York Insurance Law or regulations to include title transfer costs associated with the purchase of a replacement vehicle in determining the actual cash value of a motor vehicle that has suffered a total loss. However, the law and regulations do not prohibit the company from paying that extra sum as a component of loss, so long as it does so in a uniform and non-discriminatory manner.

The Department posted these and other opinions in October. Visit the Department’s Web site to find any opinion issued since 2000.

Dems Solidify Grip on Albany; What Will the Future Hold?

New York voters on Tuesday sent a shock wave through Albany by giving the Democrats a majority in the State Senate. The last time the Senate was out of GOP control, many (if not most) Americans did not yet have color television. The last time the Democrats controlled both legislative chambers and the governor's mansion, Joe DiMaggio had yet to play a baseball game for the New York Yankees.

What will it all mean for New Yorkers in general and the New York insurance industry in particular? For one thing, the industry's long relationship with Republican Senator James Seward has been rudely interrupted. Seward, long-time chair of the Insurance Committee, will be replaced by an as-yet unknown Democrat. The industry had a relatively cooperative relationship with Seward; many insurance players fear a cooler reception from the new sherriff.

However, the champagne glasses hadn't yet dried before the new majority ran into problems. As Tom Precious reported in the Nov. 6 Buffalo News:

But while they high-fived in the hallways in Albany on Wednesday, Democrats, who enjoy a long New York tradition of infighting, provided a sizable dose of political intrigue as four New York City lawmakers — dubbed the Gang of Four — refused to back the current top Democrat as the next majority leader.

The possible renegade Democrats sent signals that one or more could even join up with Republicans to block a Democratic takeover, a theory prodded along when the four huddled to discuss their strategy and what they want in return for their support of a new Senate leader. They even released a photograph of their session just for good measure.

Top Democrats, however, insisted all was fine, though insiders note that Gov. David A. Paterson is not a major fan of Malcolm Smith of Queens, the senator in line to take over the Senate.

Meanwhile, the Associated Press reported that people living in Upstate are worried that, with the Senate in Democratic (read: New York City) control, the state government will forget that New York State extends north of Yonkers. Some commentators believe those fears are exaggerated:

But Smith, the Senate Democratic leader, has given greater attention to upstate concerns in recent years. He formed an upstate caucus within his delegation to draw up laws and programs to help those lawmakers' regions, proposed revamping economic development programs aimed at upstate to make them more effective and sought the hardest cap on property tax growth.

"Just because it's Democratic controlled doesn't mean it's liberal control," said Steven Greenberg of the Siena College poll, noting that a narrow Senate Democratic majority can't afford to lose any upstate Democrats.

Democrats clearly know the potential power of an upstate vote. Brooklyn-born Democrat Sen. Charles Schumer and Westchester County resident Sen. Hillary Rodham Clinton often travel upstate to talk about the likes of apples, dairy farming and rural truck traffic.

With the state government facing a large and growing budget deficit, insurance issues may get short shrift when the new legislature convenes in January. When former Governor Eliot Spitzer took office in 2007 and chose Assemblyman (and Insurance Committee chair) Pete Grannis to run the Department of Environmental Conservation, the legislative session nearly ended before Assembly Speaker Sheldon Silver picked Rochester Assemblyman Joseph Morelle to head up the committee. If the new Senate majority leader, whoever that may be, takes a similar approach to naming a Senate Insurance Committee chair, the insurance industry can probably look forward to a whole lot of not much legislative activity in 2009.

One never knows what may happen in the state capitol, however, so don't touch that dial.

Insurance Dept. Opinions: Accident & Health Plans, Deposits on Auto Insurance

The New York Insurance Department’s Office of General Counsel issued a small crop of advisory legal opinions in October:

• To qualify for group health insurance, covered individuals do not have to be in a formal employer-employee relationship, if the “employer” exercises control over the “employee.” However, most independent contractors would not qualify for employer-employee group health insurance. New York Insurance Law and regulations do not regulate the amount of the employer’s contribution for group health insurance.
• An insurer may not issue a group occupational accident policy to cover a courier company’s independent contractor courier-drivers.
• New York Vehicle and Traffic Law requires an insurer to collect at least ten percent of the annual premium due for all new auto insurance policies. Insurers must apply the law in a fair and non-discriminatory manner to all new applicants. Specifically, an insurer may not require applicants to pay different down payments unless the underwriting criteria used to determine the down payments relate to the risks being insured.
• The Insurance Department has full authority over self-funded association groups.

The Department posted these and other opinions in September. Visit the Department’s Web site to find any opinion issued since 2000.