PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Proposed Action:
Amendment of Subpart 60-2 of Title 11 NYCRR.
Statutory authority:
Financial Services Law, sections 202 and 302; Insurance Law, sections 301 and 3420; L. 2012, ch. 496; L. 2013, ch. 11
Finding of necessity for emergency rule:
Preservation of general welfare.
Specific reasons underlying the finding of necessity:
Insurance Law Section 3420 sets forth standard provisions that must be included in all liability policies issued in this state. Insurance Law Section 3420(f)(2) requires motor vehicle liability insurers to provide, at the option of the insured, supplementary uninsured/underinsured motorists (“SUM”) insurance coverage to all policyholders in New York State. This regulation implements Insurance Law Section 3420(f)(2) by establishing a standard policy form for SUM coverage.
On December 17, 2012, Governor Andrew Cuomo signed into law Chapter 496 of the Laws of 2012, which took effect on April 16, 2013, amending Insurance Law Section 3420(f) with respect to SUM coverage for ambulance services, volunteer fire departments, and voluntary ambulance services. Subsequently, on March 15, 2013, Governor Cuomo signed into law Chapter 11 of the Laws of 2013, which also took effect on April 16, 2013, amending Chapter 496. The law now requires that all policies providing SUM coverage that are issued or renewed on or after April 16, 2013 include such coverage for members and employees of fire departments, fire companies, ambulance services, or voluntary ambulance services when the policy insures the fire department, fire company, ambulance service, or voluntary ambulance service.
Insurers must amend their policy forms in accordance with the regulations with respect to new and renewal policies. Accordingly, Insurance Regulation 35-D must remain in effect on an emergency basis until a permanent regulation can be promulgated, so that insurers can continue to issue policy forms in accordance with the regulation.
For the reasons stated above, emergency action is necessary for the general welfare.
To implement chapter 11 of the Laws of 2013 requiring SUM coverage for employees of fire departments and ambulance services.
Text of emergency/proposed rule:
Section 60-2.3(f), INSURING AGREEMENTS I. Definitions: definition (a) is hereby amended to read as follows:
(f) Prescribed SUM endorsement:
SUPPLEMENTARY UNINSURED/UNDERINSURED MOTORISTS ENDORSEMENT--NEW YORK
We, the company, agree with you, as the named insured, in return for payment of the premium for this coverage, to provide Supplementary Uninsured/Underinsured Motorists (SUM) coverage, subject to the following terms and conditions:
INSURING AGREEMENTS
I. Definitions:
For purposes of this SUM endorsement, the following terms have the following meanings.
(a) Insured. The unqualified term "insured" means:
(1) you, as the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse;
(2) any person while acting in the scope of that person's duties for you, except with respect to the use and operation by such person of a motor vehicle not covered under this policy, where such person is:1
(i) your employee and you are a fire department;
(ii) your member and you are a fire company, as defined in General Municipal Law section 100;
(iii) your employee and you are an ambulance service, as defined in Public Health Law section 3001; or
(iv) your member and you are a voluntary ambulance service, as defined in Public Health Law section 3001;
(3) any other person while occupying:
(i) a motor vehicle insured for SUM under this policy; or
(ii) any other motor vehicle while being operated by you or your spouse; and
[(3)] (4) any person, with respect to damages such person is entitled to recover, because of bodily injury to which this coverage applies sustained by an insured under paragraph (1)[ or], (2) or (3) above.
Subdivision 60-2.3(f), CONDITIONS, conditions (1) and (6) are hereby amended to read as follows:
CONDITIONS
1. Policy Provisions. None of the Insuring Agreements, Exclusions or Conditions of the policy shall apply to the SUM coverage except: "Duties After an Accident or Loss"; "Fraud"; and "Termination" if applicable.[*]2
***
6. Maximum SUM Payments: Regardless of the number of insureds, our maximum payment under this SUM endorsement shall be the difference between:
(a) the SUM limits; and
(b) the motor vehicle bodily injury liability insurance or bond payments received by the insured or the insured’s legal representative, from or on behalf of all persons that may be legally liable for the bodily injury sustained by the insured.
The SUM limit shown on the Declarations is the amount of coverage for all damages due to bodily injury in any one accident.[1]3 (The SUM limit shown on the Declarations for “Each Person” is the amount of coverage for all damages due to bodily injury to one person. The SUM limit shown under “Each Accident” is, subject to the limit for each person, the total amount of coverage for all damages due to bodily injury to two or more persons in the same accident.)[ 2]4
1 Language in paragraph (2) may be deleted for covered policies as defined in Section 3425(a)(1) of the New York Insurance Law.
[*]2 Appropriate terms may be substituted to conform with terms used in the policy.
[1]3 Language in this sentence should be used for SUM endorsements issued with a combined single limit, in which case Condition 5 should speak throughout in terms of a singular limit, rather than plural limits.
[2]4 Language in parentheses should be used for SUM endorsements issued with split limits.
This notice is intended:
to serve as both a notice of emergency adoption and a notice of proposed rule making. The emergency rule will expire September 29, 2013.
Text of rule and any required statements and analyses may be obtained from:
Hoda Nairooz, Department of Financial Services, One State Street, New York, NY 10004, (212) 480-5595, email: hoda.nairooz@dfs.ny.gov
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
45 days after publication of this notice.
Regulatory Impact Statement
1. Statutory authority: Sections 202 and 302 of the Financial Services Law and Sections 301 and 3420 of the Insurance Law, Chapter 496 of the Laws of 2012 and Chapter 11 of the Laws of 2013. Financial Services Law Sections 202 and 302 and Insurance Law Section 301 authorize the Superintendent of Financial Services (the “Superintendent”) to prescribe regulations interpreting the provisions of the Insurance Law and to effectuate any power granted to the Superintendent under the Insurance Law.
Insurance Law Section 3420 sets forth standard provisions that must be included in all liability policies issued in this state. Insurance Law Section 3420(f)(2) requires motor vehicle liability insurers to provide, at the option of the insured, supplementary uninsured/underinsured motorists (“SUM”) insurance coverage to all policyholders in New York State.
Chapter 496 of the Laws of 2012 and Chapter 11 of the Laws of 2013 amended Insurance Law Section 3420 in relation to SUM coverage for fire departments, fire companies, ambulance services, and voluntary ambulance services.
2. Legislative objectives: Insurance Law Section 3420 sets forth the minimum provisions that must be included in all liability policies issued in this state to protect the rights of injured persons. On December 17, 2012, Governor Andrew Cuomo signed Chapter 496 of the Laws of 2012, which took effect on April 16, 2013. This bill amended Insurance Law Section 3420(f) with respect to SUM coverage for fire companies, ambulance services, and voluntary ambulance services. Subsequently, Chapter 11 of the Laws of 2013 was enacted on March 15, 2013, which also took effect on April 16, 2013. It amended Chapter 496 to further clarify the SUM coverage for employees and members of a fire department, fire company, ambulance service or voluntary ambulance service. The law now requires that policies providing SUM coverage that are issued or renewed on or after April 16, 2013 include such coverage for members and employees of fire departments, fire companies, ambulance services or voluntary ambulance services when the policy insures the fire department, fire company, ambulance service or voluntary ambulance service.
3. Needs and benefits: Insurance Regulation 35-D implements Insurance Law section 3420(f), which requires motor vehicle liability insurers to provide, at the option of the insured, SUM coverage to all policyholders in New York State. This amendment implements the provisions and purposes of Chapter 496 of the Laws of 2012 and Chapter 11 of the Laws of 2013 by amending the definition of “insured” in the prescribed SUM endorsement contained in Insurance Law Section 60-2.3(f) to include members and employees of a fire department, fire company, ambulance service or voluntary ambulance service when the policy insures the fire department, fire company, ambulance service or voluntary ambulance service.
4. Costs: Motor vehicle insurers will incur some costs because they will have to revise policy forms and send them to their insureds. However, this is mandated by Chapter 496 of the Laws of 2012 and Chapter 11 of the Laws of 2013.
This rule does not impose compliance costs on state or local governments. The Department of Financial Services does not anticipate that it will incur additional costs, although there will be an increased number of filings. However, insurers must use the language prescribed in the regulation and may not deviate from it.
5. Local government mandates: This rule does not impose any program, service, duty or responsibility upon a city, town, village, school district or fire district.
6. Paperwork: Insurance companies will have to submit appropriate filings.
7. Duplication: This rule will not duplicate any existing state or federal rule, but rather implement and conform to the federal requirements.
8. Alternatives: There are no alternatives to this amendment. The changes to the rule are mandated by Chapter 496 of the Laws of 2012 and Chapter 11 of the Laws of 2013.
9. Federal standards: There are no federal standards.
10. Compliance schedule: Pursuant to Chapter 496 of the Laws of 2012 and Chapter 11 of the Laws of 2013, all policies issued or renewed on or after April 16, 2013 covering fire departments, fire companies, ambulance services or voluntary ambulance services providing SUM coverage must include the coverage for such employees and members. This rule initially was promulgated on an emergency basis on April 4, 2013 to take effect on April 16, 2013.
Regulatory Flexibility Analysis
1. Small businesses: The Department of Financial Services (“Department”) finds that this rule will not impose any adverse economic impact on small businesses and will not impose any reporting, recordkeeping or other compliance requirements on small businesses. The basis for this finding is that this rule is directed at property/casualty insurance companies licensed to do business in New York State, none of which falls within the definition of “small business” as found in State Administrative Procedure Act Section 102(8). Specifically, the Department has monitored annual statements and reports on examination of authorized property/casualty insurers subject to this rule and believes that none of the insurers falls within the definition of “small business”, because there are none that are both independently owned and have fewer than one hundred employees.
2. Local governments: The rule does not impose any impacts, including any adverse impacts, or reporting, recordkeeping, or other compliance requirements on any local governments. The basis for this finding is that this rule is directed at property/casualty insurance companies, none of which are local governments.
Rural Area Flexibility Analysis
The Department of Financial Services (“Department”) finds that this rule does not impose any additional burden on persons located in rural areas, and the Department finds that it will not have an adverse impact on rural areas. This rule applies uniformly to regulated parties that do business in both rural and non-rural areas of New York State.
Job Impact Statement
The Department of Financial Services finds that this rule should have no impact on jobs and employment opportunities. The rule implements the provisions and purposes of Chapter 496 of the Laws of 2012 and Chapter 11 of the Laws of 2013 amending the definition of “insured” to provide coverage for members and employees of a fire department, fire company, ambulance service or voluntary ambulance service when the named insured is the fire department, fire company, ambulance service or voluntary ambulance service.
