2010 INSURANCE LEGISLATIVE ISSUES
by Alan Plafker, President & CEO
Member Brokerage Service LLC
A Melrose Credit Union Service Organization
On July 26, 2008, Gov. David Paterson signed Chapter 392 of the Laws of 2008 adding Article 6-G to the Executive Law (www.NYILDBF.com), as well as amending the workers’ compensation law and insurance law. This legislation created the Independent Livery Drivers Benefit Fund. The fund provides workers’ compensation benefits for serious injuries and crimes committed against drivers dispatched by qualifying independent livery bases licensed in Westchester County, Nassau County and New York City.
BenefitsCovered drivers receive benefits payable under the workers’ compensation law for injuries:
(1) resulting from a crime against such livery driver as evidenced by a police report, or
(2) for the following conditions:
(a) the amputation or loss of an arm, leg, hand, foot, multiple fingers, index finger, multiple toes, ear, or nose,
(b) paraplegia or quadriplegia, or
(c) total and permanent blindness or deafness.
In addition, benefits are payable for the death of a driver (Section 160-ddd of Article 6-G).
LicenseEffective Jan. 1, 2010 in order to obtain, renew or retain a license each base must provide the governing Taxi and Limousine Commission with a certificate certifying that they are a member of the fund, or provide proof of a workers’ compensation policy for its drivers. Membership in the fund costs $260 per affiliated vehicle.
RegulationSince insurers have shown an interest in offering Article 6-G coverage on a workers’ compensation policy, the NYSID has promulgated an emergency fourth amendment to Regulation No. 119 (www.ins.state.ny.us/r_emergy/pdf/re119_5txt.pdf) effective Dec. 16, 2009. The amendment gives authorized insurers the means to write policies providing this coverage as an alternative to membership in the fund.
The author of this article, Alan Plafker, was appointed by Governor Paterson to the New York Independent Livery Driver Benefit Fund Board of Directors and can be contacted at (718) 523-1300 ext 1082 if there are any questions.
PIANY’s legislative priorities are of particular importance to the insurance buying public throughout New York state.
The association’s key goals for the year are as follows:
(Note: PIANY is a trade association representing professional, independent insurance agencies, brokerages and their employees throughout the state.)
Consumer issuesPIANY also plans to continue to work on issues:
- associated with New York’s out-of-state workers’ compensation requirements created by the 2007 workers’ compensation reform law;
- raising the current statutory threshold that enables carriers to surcharge policyholders for “fender-bender” automobile accidents;
- repealing the mandatory photo inspection requirements under Regulation 79;
- adding workers’ compensation to the type of insurance protected under Section 3426 of the Insurance Law; and
- reversing the department’s position regarding the ability of agents to request cancellation of policies where a policyholder’s check has been returned for insufficient funds.
Coastal homeowners’ insuranceAmong the issues important to our members this year is coastal homeowners’ insurance affordability and availability. PIANY plans to reissue its survey of coastal homeowners insurance to provide real market data to policy makers as they tackle this issue. The survey was last completed in 2007 and found that downstate insurance agents were seeking alternative sources of coverage as many of their regular homeowners insurance companies continued steps to reduce exposure in downstate New York. The survey found that use of the state’s official last resort market to insure coastal homes was climbing with 51 percent of agents saying they sometimes used New York Property Insurance Underwriting Association in 2007, compared to 47 percent in 2006, and 41 percent in February 2006.
Standardize homeowners insurance windstorm triggersWindstorm coverage requires classifications of wind damage in order for a policy to cover damage related to specific “trigger” events. However, these “triggers” differ from policy to policy potentially leaving gaps for insurance consumers. The development of uniform hurricane deductible triggers is something that must be addressed before we witness the consequences that will occur the next time a catastrophic event hits New York’s coastal areas.
Raise the minimum threshold for automobile surchargesThis legislation would raise the minimum threshold of property damage that, if exceeded in a motor vehicle accident, would allow an insurer to impose a policy premium surcharge. The threshold was established more than a decade ago and should be updated to reflect inflation. The new law would double the amount from $1,000 to $2,000.
The repeal of mandatory photo inspectionsCurrently, insurers must require these inspections which call for photos to be taken of a car before collision or comprehensive insurance is issued. Though originally intended to reduce insurance fraud, the requirement represents an onerous burden for the insured as failure to obtain an inspection, with sometimes as little as five days notice, can result in a lapse of physical damage coverage. Methods for verifying and tracking the existence and physical condition of vehicles have improved greatly since the regulation was enacted making the regulation antiquated and unnecessary.
Continue fighting auto insurance fraudA recent Insurance Information Institute analysis found that New York’s automobile insurers saw their typical no-fault payment for the medical care of accident victims rise by 56 percent in the second quarter of 2009. The I.I.I. study went on to endorse a number of legislative changes that PIANY is pursuing as part of the NY First automobile fraud coalition including:
- mandatory arbitration of no-fault claims;
- a repeal of the case law established by the Presbyterian Hospital case;
- increasing penalties for “runners;” and
- implementation of medical protocols for no-fault injuries.
Further Explanations of No-Fault Auto Insurance Issues
The term "no-fault" auto insurance is often used loosely to denote any auto insurance program that allows policyholders to recover financial losses from their own insurance company regardless of fault. But in its strictest form no-fault applies only to state laws that both provide for the payment of no-fault first-party benefits and restrict the right to sue, the so-called “limited tort” option. The first party (policyholder) benefit coverage is known as personal injury protection (PIP).
Under current no-fault laws, motorists may sue for severe injuries and for pain and suffering only if the case meets certain conditions. These conditions, known as a threshold, relate to the severity of injury. They may be expressed in verbal terms (a descriptive or verbal threshold) or in dollar amounts of medical bills, a monetary threshold. Some laws also include minimum requirements for the days of disability incurred as a result of the accident.
Because high threshold no-fault systems restrict litigation, they tend to reduce costs and delays in paying claims. Verbal thresholds eliminate the incentive to inflate claims that may exist when there is a dollar "target" for medical expenses. However, in some states the verbal threshold has been eroded over time by broad judicial interpretation of the verbal threshold language, and PIP coverage has become the target of abuse and fraud by dishonest doctors and clinics that bill for unnecessary and expensive medical procedures, pushing up costs.
Medical payments under no-fault (PIP, or personal injury protection benefits) are rising dramatically in part due to fraud and abuse. PIP average claims costs in the third quarter of 2009 stood at $8,690, the third highest in the country, the first being Michigan and the second being New Jersey.
Since the end of 2004 when the last crisis ended with legislation that cut the time for filing claims and thus the opportunities for fraud, claims costs have risen an astounding 55 percent and fraud investigations have more than doubled. In 2008 the number of arrests for no-fault fraud was 52 percent higher than in 2007.
Corrupt medical professionals, attorneys and street level criminals who work on their behalf have been able to exploit the system because of loopholes in the law. New York’s new Superintendent of Insurance, James Wrynn, is proposing revisions to Regulation 68 which implements New York’s no-fault law. The changes would more effectively combat fraud and abuse, he says.
One proposal would require claimants to provide additional information to help ensure that the treatments being claimed for were medically necessary. Another proposal would simplify the procedures required for insurers to suspend payment of claims to a medical clinic while an investigation of the clinic’s licensing status was underway. The Superintendent also called for legislative action including modifications to the rule that insurers who do not deny a claim within 30 days must pay that claim. This encourages unscrupulous individuals and medical providers to file numerous claims for the same case knowing that the insurer investigating the claim will have to pay the claim if it is not denied within the time period.
For more information, talk to your insurance professional, or the author of this article.
Your Professional Insurance Agent…
We want you to know about the insurance you’re buying.Alan Plafker is President of Member Brokerage Service LLC, a Melrose Credit Union Service Organization. He is a licensed Insurance Broker and serves as Treasurer on the Board of Directors the PIANY (Professional Insurance Agents Association of NY), serves on the Board of CIBGNY (Council of Insurance Brokers of Greater NY), and was appointed by Governor Paterson to the New York Independent Livery Driver Benefit Fund Board of Directors. His Agency insures thousands of polices for TLC Insurance as well as many policies for all types of insurance. You can reach him in his Briarwood, Queens office at: (718) 523-1300 ext. 1082, or visit the website at: www.MemberBrokerage.com.
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