The NYS Insurance Fund and 30 Days' Notice of Cancellation

Question from an IIABNY member: We continually have major issues with the New York State Insurance Fund. One of the most confusing issues is cancellation of policies with them and their "30 days after notice is given" policy. When we send them a Lost Policy Release, it is noted in their system, but they will not cancel a policy for 30 days, leaving insureds with large bills and over-lapping coverages. Given this day and age of people changing insurance companies at the drop of a dime, it is very hard to explain to them that NYSIF will not cancel their policy for an additional 30 days despite a legal document authorizing them too.
 
I guess I am looking for a little guidance on whom to contact at NYSIF or how to go about raising this issue (I am positive it is not the first time it has come up) with them. 

Answer: In this case, I have to let the State Insurance Fund off the hook and blame the New York State Legislature. The legislature writes the laws, and this is what they wrote in New York Workers’ Compensation Law Section 94:

Any employer may, upon (obtaining insurance coverage from a private carrier or providing proof of its ability to self-insure), withdraw from the fund by turning in his insurance contract for cancellation, provided he has given written notice to the fund of his intention to withdraw not less than thirty days before the effective date of such cancellation. Upon receipt of such notice the fund shall, at least ten days prior to the effective date file in the office of the chairman a notice of such cancellation date. (emphasis added)

In no event shall the insurance contract be deemed cancelled until at least ten days after the date of such filing, any earlier date mentioned in the notice to the contrary notwithstanding. (emphasis added again)

If an employer withdraws from the fund upon (obtaining coverage from a private carrier), the new insurance contract with the stock corporation, mutual corporation or reciprocal insurer shall be deemed not to take effect until the cancellation of such employer's contract with the state insurance fund has become effective.

Therefore, by law an employer cannot withdraw from the NYSIF without providing at least 30 days’ notice. Plus, the NYSIF must give at least 10 days’ notice to the Workers Compensation Board, and the policy is not cancelled until those 10 days are up. You don’t add these together – the Fund could receive a notice today advising of cancellation on Aug. 5, send the notice to the WCB tomorrow, and the cancellation will take effect on Aug. 5. Nothing in the law requires the Fund to wait. But the fact remains that the law requires the employer to give the 30 days’ notice.
 
Because this is a legal requirement, I don’t think the Fund is in a position to do anything about your insureds’ problem. By law, the replacing policy cannot take effect until the end of the 30-day notice period, so there really should not be dual coverage and premiums for the same time period.

Leave a Comment

Comments

[Stacymarie LaVacca]

This is so frustrating. I was once able to get the new carrier to send an indemnity agreement to State Insurance Fund to cancel flat when we advised of the cancellation within 30 days and they didnt process it. With this said, how exactly are we supposed to start a new policy with an unknown effective date? If that state gets their notice within 30 days and doesn't notify the board for another 30 days- and the insured should not have duplicate coverage, how exactly do you ask the new company to bind and hold until we have an effective date? Something must be done about this.

[Tim Dodge]

Stacymarie,
It does sound pretty frustrating. The way the law reads, an employer should be able to tell the State Fund on Sept. 22, "I'm out of here on Nov. 1," and the Fund would inform the Workers Comp Board in plenty of time to meet the 10 day advance notice requirement. If they're not doing that, the Department of Labor should be notified, as the Fund is part of that department. In the above case, you should be able to apply for coverage with a private carrier effective Nov. 1 without incident.

[Bob Fancher]

The issue become a larger issue when you find out how they compute the short term short rate penalty. Before changing the effective date and cancelling sometime during the NYSIF term to meet the cancellation requirement, call the NYSIF and ask for the short rate penalty. If you miss the 30 day window I would wait a year to consider a change, or look into a NYSIF safety group as I believe you can move to a safety group without the 30 days notice. I guess the best advice here if you miss the 30 days’ notice is to be certain what the consequences of any other action will be, before making any other change.

[Tim Dodge]

Bob,

Good advice. Better to know what the damage is up front.

[rca astra]

You have made some really good points there. I looked on the web for more info about the issue and found most individuals will go along with your views on this site. Auto Insurance Agents In Binghamton, NY

[asigurari auto]

Life Insurance should be simpler, shouldn't it? There are so many options and so many details that I seriously doubt that anybody knows exactly what the best option is in his personal situation.

[rca astra]

Really good points there. I looked on the web for more info about the issue.

[preturi RCA]

There are so many options and so many details that I seriously doubt that anybody.