Bill Text: NY A04699 | 2013-2014 | General Assembly | Introduced
Bill Title: Relates to unfair claim settlements after a natural disaster.
Spectrum: Moderate Partisan Bill (Republican 9-2)
Status: (Introduced - Dead) 2014-01-08 - referred to insurance [A04699 Detail]
Download: New_York-2013-A04699-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
4699
2013-2014 Regular Sessions
I N A S S E M B L Y
February 7, 2013
___________
Introduced by M. of A. MALLIOTAKIS -- read once and referred to the
Committee on Insurance
AN ACT to amend the insurance law, in relation to unfair claim settle-
ments after a natural disaster
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Section 2601 of the insurance law, paragraphs 4 and 5 of
2 subsection (a) as amended by chapter 547 of the laws of 1997, and para-
3 graph 6 of subsection (a) as amended by chapter 388 of the laws of 2008,
4 is amended to read as follows:
5 S 2601. Unfair claim settlement practices; penalties. (a) No insurer
6 doing business in this state shall engage in unfair claim settlement
7 practices. Any of the following acts by an insurer, if committed without
8 just cause and performed with such frequency as to indicate a general
9 business practice, shall constitute unfair claim settlement practices,
10 PROVIDED, HOWEVER, THAT IN THE EVENT THE GOVERNOR HAS PURSUANT TO
11 SECTION TWENTY-NINE-A OF THE EXECUTIVE LAW SUSPENDED ANY STATUTE IN THIS
12 CHAPTER AS A RESULT OF A STATE DISASTER EMERGENCY, SUCH ACT SHALL
13 CONSTITUTE AN UNFAIR CLAIM SETTLEMENT PRACTICE WITHOUT RESPECT TO WHETH-
14 ER SUCH ACT WAS INDICATIVE OF A GENERAL BUSINESS PRACTICE:
15 (1) knowingly misrepresenting to claimants pertinent facts or policy
16 provisions relating to coverages at issue;
17 (2) failing to acknowledge with reasonable promptness pertinent commu-
18 nications as to claims arising under its policies;
19 (3) failing to adopt and implement reasonable standards for the prompt
20 investigation of claims arising under its policies;
21 (4) not attempting in good faith to effectuate prompt, fair and equi-
22 table settlements of claims submitted in which liability has become
23 reasonably clear, except where there is a reasonable basis supported by
24 specific information available for review by the department that the
25 claimant has caused the loss to occur by arson. After receiving a prop-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08241-01-3
A. 4699 2
1 erly executed proof of loss, the insurer shall advise the claimant of
2 acceptance or denial of the claim within thirty working days;
3 (5) compelling policyholders to institute suits to recover amounts due
4 under its policies by offering substantially less than the amounts ulti-
5 mately recovered in suits brought by them; or
6 (6) failing to promptly disclose coverage pursuant to subsection (d)
7 or subparagraph (A) of paragraph two of subsection (f) of section three
8 thousand four hundred twenty of this chapter.
9 (7) IN ADDITION TO THE FOREGOING, WHEN THE GOVERNOR HAS DECLARED A
10 STATE DISASTER EMERGENCY, THE FOLLOWING PRACTICES SHALL BE DEEMED UNFAIR
11 CLAIM SETTLEMENT PRACTICES:
12 (A) ATTEMPTING TO SETTLE A CLAIM ON THE BASIS OF A DOCUMENT THAT WAS
13 ALTERED WITHOUT NOTICE TO THE CONSUMER;
14 (B) MAKING A MATERIAL MISREPRESENTATION FOR THE PURPOSE OF SETTLING A
15 CLAIM ON LESS FAVORABLE TERMS THAN THOSE PROVIDED IN THE POLICY;
16 (C) FAILING TO PROMPTLY NOTIFY THE INSURED OF ANY ADDITIONAL INFORMA-
17 TION NECESSARY FOR THE PROCESSING OF THE CLAIM, AS WELL AS THE REASONS
18 WHY SUCH INFORMATION IS NECESSARY;
19 (D) FAILING TO CONDUCT AN ON-SITE INSPECTION WITHIN SEVEN BUSINESS
20 DAYS FROM SUBMISSION OF THE CLAIM;
21 (E) FAILING TO PROVIDE THE CLAIMANT WITH A COPY OF THE ADJUSTER'S
22 REPORT WITHIN THREE BUSINESS DAYS FROM THE INSPECTION;
23 (F) FAILING TO PROVIDE A DETERMINATION ON THE CLAIM WITHIN THIRTY
24 CALENDAR DAYS FROM FURNISHING CLAIMANT WITH A COPY OF THE REPORT; AND
25 (G) IF DAMAGES ARE DETERMINED TO BE COVERED UNDER THE POLICY, FAILING
26 TO PAY AT LEAST TWENTY PERCENT OF THE TOTAL CLAIM UPON SUCH DETERMI-
27 NATION AND THE CLAIM IN FULL WITHIN THIRTY DAYS OF DETERMINATION.
28 (b) Evidence as to numbers and types of complaints to the department
29 against an insurer and as to the department's complaint experience with
30 other insurers writing similar lines of insurance shall be admissible in
31 evidence in any administrative or judicial proceeding under this section
32 or article twenty-four or seventy-four of this chapter, but no insurer
33 shall be deemed in violation of this section solely by reason of the
34 numbers and types of such complaints.
35 (c) If it is found, after notice and an opportunity to be heard, that
36 an insurer has violated this section, each instance of noncompliance
37 with subsection (a) hereof may be treated as a separate violation of
38 this section for purposes of ordering a monetary penalty pursuant to
39 subsection (b) of section one hundred nine of this chapter. A violation
40 of this section shall not be a misdemeanor.
41 S 2. The insurance law is amended by adding a new section 2601-a to
42 read as follows:
43 S 2601-A. UNFAIR CLAIM SETTLEMENT PRACTICES DURING STATE DISASTER
44 EMERGENCY; CIVIL REMEDY. (A) IN THE EVENT THE GOVERNOR HAS PURSUANT TO
45 SECTION TWENTY-NINE-A OF THE EXECUTIVE LAW SUSPENDED ANY STATUTE IN THIS
46 CHAPTER AS A RESULT OF A STATE DISASTER EMERGENCY AN INSURER DOING BUSI-
47 NESS IN THIS STATE SHALL BE LIABLE TO THE HOLDER OF A POLICY ISSUED OR
48 RENEWED PURSUANT TO ARTICLE THIRTY-FOUR OF THIS CHAPTER FOR DAMAGES AS
49 PROVIDED IN THIS SECTION UPON SUCH POLICY HOLDER PROVING BY A PREPONDER-
50 ANCE OF THE EVIDENCE THAT SUCH INSURER'S REFUSAL TO PAY OR UNREASONABLE
51 DELAY IN PAYMENT TO THE POLICY HOLDER OF AMOUNTS CLAIMED TO BE DUE A
52 POLICY WAS NOT SUBSTANTIALLY JUSTIFIED. AN INSURER IS NOT SUBSTANTIALLY
53 JUSTIFIED IN REFUSING TO PAY OR IN UNREASONABLY DELAYING PAYMENT WHEN
54 THE INSURER:
A. 4699 3
1 (1) INTENTIONALLY, RECKLESSLY OR BY GROSS NEGLIGENCE FAILED TO PROVIDE
2 THE POLICY HOLDER WITH ACCURATE INFORMATION CONCERNING POLICY PROVISIONS
3 RELATING TO THE COVERAGE AT ISSUE;
4 (2) FAILED TO EFFECTUATE IN GOOD FAITH A PROMPT, FAIR AND EQUITABLE
5 SETTLEMENT OF A CLAIM SUBMITTED BY SUCH POLICY HOLDER IN WHICH LIABILITY
6 OF SUCH INSURER TO SUCH POLICY HOLDER WAS REASONABLY CLEAR;
7 (3) FAILED TO PROVIDE A WRITTEN DENIAL OF A POLICY HOLDER'S CLAIM WITH
8 A FULL AND COMPLETE EXPLANATION OF SUCH DENIAL, INCLUDING REFERENCES TO
9 SPECIFIC POLICY PROVISIONS WHEREVER POSSIBLE;
10 (4) FAILED TO MAKE A FINAL DETERMINATION AND NOTIFY THE POLICY HOLDER
11 IN WRITING OF ITS POSITION ON BOTH LIABILITY FOR, AND THE INSURER'S
12 VALUATION OF, A CLAIM WITHIN NINETY DAYS OF THE DATE ON WHICH IT
13 RECEIVED ACTUAL OR CONSTRUCTIVE NOTICE OF THE LOSS UPON WHICH THE CLAIM
14 IS BASED;
15 (5) FAILED TO ACT IN GOOD FAITH BY COMPELLING POLICY HOLDER TO INSTI-
16 TUTE SUIT TO RECOVER AMOUNTS DUE UNDER ITS POLICY BY OFFERING SUBSTAN-
17 TIALLY LESS THAN THE AMOUNTS ULTIMATELY RECOVERED IN SUIT BROUGHT BY
18 SUCH POLICY HOLDER; OR
19 (6) HAS ENGAGED IN ANY OTHER UNFAIR CLAIM SETTLEMENT PRACTICE AS
20 DEFINED IN PARAGRAPH SEVEN OF SUBSECTION (A) OF SECTION TWO THOUSAND SIX
21 HUNDRED ONE OF THIS ARTICLE.
22 (B) ANY POLICY HOLDER WHO ESTABLISHES LIABILITY PURSUANT TO SUBSECTION
23 (A) OF THIS SECTION SHALL BE ENTITLED TO RECOVER, IN ADDITION TO AMOUNTS
24 DUE UNDER THE POLICY, INTEREST, COSTS, AND DISBURSEMENTS, COMPENSATORY
25 DAMAGES AND REASONABLE ATTORNEYS' FEES INCURRED BY THE POLICY HOLDER
26 FROM THE DATE OF THE LOSS, IN RECOVERING MONIES DUE PURSUANT TO THE
27 TERMS OF THE POLICY.
28 (C) ANY POLICY HOLDER MAY RECOVER DAMAGES FROM AN INSURER DOING BUSI-
29 NESS IN THIS STATE PURSUANT TO THIS SECTION EITHER AS PART OF AN ACTION
30 TO RECOVER UNDER THE TERMS OF AN INSURANCE POLICY OR IN A SEPARATE
31 ACTION.
32 (D) IN ANY TRIAL OF A CAUSE OF ACTION ASSERTED AGAINST AN INSURER
33 PURSUANT TO THIS SECTION, EVIDENCE OF SETTLEMENT DISCUSSIONS WRITTEN AND
34 VERBAL OFFERS TO COMPROMISE AND OTHER EVIDENCE RELATING TO THE CLAIMS
35 PROCESS SHALL BE ADMISSIBLE. IF CAUSES OF ACTION RELATING TO LIABILITY
36 OF THE INSURER UNDER THE POLICY AND UNDER THIS SECTION ARE ALLEGED IN
37 THE SAME ACTION, THE COURT MAY BIFURCATE THE TRIAL OF ISSUES SO AS TO
38 AVOID PREJUDICE TO THE INSURER ON THE ISSUE OF LIABILITY UNDER THE POLI-
39 CY AND FACILITATE ADMISSIBILITY OF EVIDENCE ON THE CAUSES OF ACTION
40 ASSERTED PURSUANT TO THIS SECTION.
41 (E) ALL AMOUNTS RECOVERED FORM AN INSURER AS ACTUAL DAMAGES AND
42 REASONABLE ATTORNEYS' FEES IN ANY ACTION AUTHORIZED IN THIS SECTION
43 SHALL BE EXCLUDED BY THE INSURER IN ITS DETERMINATIONS OF THE PREMIUMS
44 IT WILL CHARGE ALL POLICY HOLDERS ON ALL POLICES ISSUED BY IT.
45 S 3. This act shall take effect immediately.
