The following is the text of an email we received earlier this morning from our legislative office in Albany, concerning a bill that will change the way agents and brokers sell supplementary uninsured/underinsured motorist coverage. As you read this, please keep in mind that neither the Assembly nor the Senate has acted on it and everything in this message is subject to change. This is what we know so far. None of it is law yet, but some or all of it may become law in the near future.
As we’ve previously advised, the leadership in both houses has been discussing legislation that would require all auto policies to have supplementary uninsured/underinsured motorists coverage, unless the policyholder rejects the coverage. We have been part of these discussions over the last few weeks and raised the concerns that had been mentioned in response to our prior email to the committee. Today, a SUM bill was introduced by the Insurance Chairs in both houses and is likely to be taken up before the end of session. It is a better version than the original bill, which had numerous problems that would have made administration difficult. In addition to providing for SUM coverage on all policies, the bill also includes a no-fault fraud component, that we had encouraged the Senate to include as part of the negotiations. Here’s a summary of what the bill provides:
Any auto policy would have Supplementary uninsured/underinsured motorists insurance in the same amount as the bodily injury liability limits on the policy, unless the insured rejects coverage. The rejection of coverage must be memorialized through a signed writing, audio recording, electronic signature or any other means evidencing the insured’s rejection of coverage.
If the rejection or selection of lower SUM coverage is in written or electronic form, then it must be done on a form provided to the insured at the time the policy is sold, purchased, and/or negotiated. The form must fully advise the insured of the nature of the coverage and stat that the coverage is equal to BI limits unless lower limits are requested or the coverage is rejected. The form must be in 12-point bold type and contain a prescribed statement regarding SUM coverage.
If the rejection or selection of lower limits is made verbally, a memorialization in writing or electronic signature may be received by the insurer after to the sale, purchase and/or negotiation of the policy.
If the rejected or selection of lower limits is made verbally, the insurer or their agent shall read the identical or substantially similar language as is prescribed on the form and confirm the client has heard and understood it, and restate it as often as is necessary until the insured has verbally confirmed that they fully understand it.
Insurers must notify policyholders at the time of or within 60 days of each renewal of his or her options regarding SUM coverage pursuant to regulations that may be issued by the Superintendent. Receipt of this annual notice will not constitute an affirmative waiver of the insured’s right to coverage where the insured has not signed a selection or rejection form.
In addition to providing for SUM coverage, the bill also includes a component to address no-fault fraud.
Providers of durable medical equipment who have engaged in fraudulent practices can be prohibited from seeking no-fault payments. This provision is very similar to the law and implementing regulations that allow insurers to refuse payments to medical providers that have engaged in fraudulent practices.
The bill would allow the Superintendent to prohibit a provider of durable medical equipment from demanding or requesting payment under this article for DME for a period to be determined by the superintendent if he determines after notice and a hearing that the provider:
- Has engaged in a pattern or practice of fraudulent, excessive or unlawful billing for DME;
- Has engaged in a pattern or practice of bill for DME that was not provided or that was not necessary;
- Has committed a fraudulent insurance act;
- Has been convicted of a crime involving fraudulent or dishonest practices;
- Has refused to appear before, or answer any questions upon request of the Superintendent or of any authorized officer of the state or refused to produce any relevant information concerning the conduct of the provider DME; or
- Has violated any provision of the no-fault law or regulations.
The superintendent must maintain a list of DME providers that have been prohibited from seeking payment and make the information available to the public.
The provisions of the law would take effect 180 days after it becomes law and would apply to policies issued, entered into or renewed on and after such date.