The 2015 Legislative Session in New York came to a close in the wee hours of June 26. Among the bills introduced this session was S-4049/A-0257 amending the New York Insurance Law with respect to unfair claims settlement practices. Specifically, the bill, if enacted, would have established “a civil private cause of action by a policyholder who has suffered unfair claim settlement practices by an insurer.” Current law allows policy holders with these grievances against their insurers to file a complaint with the New York Department of Financial Services (NYDFS).
The bill outlines ten instances in which an insured could bring a claim. They include without limitation:
- Failure to provide the policy holder with accurate information concerning policy provisions relating to the coverage at issue; or
- Failure to effectuate, in good faith, a prompt, fair and equitable settlement of a claim submitted by such policy holder in which the liability of such insurer to such policy holder was reasonably clear; or
- Failure to provide a written denial of a policy holder’s claim with a full and complete explanation of such denial, including references to specific policy provisions wherever possible.
There is concern that the if the bill was enacted, higher insurance premiums would result to counter the increase in litigation costs. There is also some concern that the bill does not sufficiently differentiate between first and third party claims and could create confusion within the court system.
This bill was one of many that were being considered in the final hours of the 2015 legislative session. However, the chances of it being considered were slim given the ambitious agenda by Governor Andrew Cuomo who worked with legislative leaders on legislation including rent control rules in New York City and tax and education legislation.
No votes were taken on this bill in either the Assembly or Senate, though it is expected to be reconsidered in the next legislative session in January 2016. However, the regulatory setting could be vastly different by that point. One noticeable difference is that New York will have a new Superintendent of Financial Services, as current Superintendent Benjamin Lawsky resigned in June 2015. It is unknown whether the new NYDFS Superintendent would push such a measure in the 2016 legislature.