The following article by PIA of NY outlines the recent modification to insurance law mandated by Gov. Andrew Cuomo. The primary directive of the order is to extend grace periods for policyholders as they face financial hardship due to the ongoing Cornoavirus crisis and places a moratorium on insurers cancelling, non-renewing, or conditionally renewing any insurance policy issued to any individual or small business (as defined by the executive order) for a period of 60 days.
Mar 31, 2020
Gov. Cuomo issues executive order modifying Insurance Law
Gov. Andrew M. Cuomo issued Executive Order 202.13, on March 30, 2020. The order makes changes to multiple sections of law effective from March 30 through April 28, 2020. Some changes modify sections of the Insurance Law, including the following:
Sections 3203 and 4510 of the Insurance Law are modified to extend the grace period for the payment of premiums and fees to 90 days for any life insurance policyholder or fraternal benefit society certificate holder, who is facing a financial hardship as a result of the COVID-19 pandemic.
Sections 3203, 3219 and 3220 of the Insurance Law are modified to provide a life insurance policyholder or annuity contract holder or a certificate holder under a group policy or contract with 90 days to exercise rights or benefits under the applicable life insurance policy or annuity contract for any policyholder, contract holder or certificate holder under the group policy or contract who is unable to timely exercise rights or benefits as a result of the COVID-19 pandemic.
Section 1116 and Articles 34 (property and casualty), 53 (motor vehicle insurance assigned risk plans), 54 (N.Y. Property Insurance Underwriting Association), and 55 (Medical Malpractice Insurance Association) of the Insurance Law and Sections 54 and 226 of the Workers’ Compensation Law are modified to impose a moratorium on an insurer canceling, nonrenewing, or conditionally renewing any insurance policy issued to an individual or small business—or in the case of a group insurance policy—insuring certificate holders who are individuals or who own small businesses, for a period of 60 days, for any policyholder—or in the case of a group insurance policy—group policyholder or certificate holder, facing financial hardship as a result of the COVID-19 pandemic. The foregoing relief also shall apply to the kinds of insurance set forth in paragraphs (16–fidelity and surety insurance), (17–credit insurance), (20–marine and inland marine insurance), (21–marine protection and indemnity insurance), (24–credit unemployment insurance), (26–gap insurance), and (30–involuntary unemployment insurance) of Section 1113(a) of the Insurance Law. For purposes of this executive order, a small business shall mean any business located in New York state, that is independently owned and operated, and employs fewer than 100 people.
Section 576 of the Banking Law is modified to grant the superintendent of financial services the authority to promulgate an emergency regulation to apply the provisions of the executive order relevant to policy cancellations, to premium-finance agencies (as defined in Article XII-B of the Banking Law), subject to the safety and soundness considerations of the premium-finance agencies.
What this order does is allow for more time and grace periods for people to pay premiums and fees or collect on certain policies (such as life insurance) given the difficulties many are facing right now, such as job loss.
Ideally, policyholders would continue to pay their premiums so they do not have large bills later on; the executive order is not meant to give policyholders incentive to not pay their premiums,” but it gives people who need it a grace period. The order does not specify how people who do not pay would have to pay after the delay, but this could come later or be part of the emergency regulation that the order allows the superintendent of DFS to promulgate. How this will be dealt with, if at all, is not immediately clear, but we will be sure to communicate any information we get on this issue.