S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4089

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                            January 29, 2015
                               ___________

Introduced by M. of A. MALLIOTAKIS, BORELLI, BROOK-KRASNY, CURRAN, GRAF,
  McKEVITT,  RAIA,  SALADINO,  TENNEY  -- Multi-Sponsored by -- M. of A.
  McDONOUGH -- 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:

  Section  1.  Section  2601  of  the  insurance  law,  paragraph  4  of
subsection (a) as amended by chapter 547 of the laws of 1997, paragraphs
5  and  6 of subsection (a) as amended and paragraph 7 of subsection (a)
as added by section 27 of part H of chapter 60 of the laws of  2014,  is
amended to read as follows:
  S  2601.  Unfair claim settlement practices; penalties. (a) No insurer
doing business in this state shall engage  in  unfair  claim  settlement
practices. Any of the following acts by an insurer, if committed without
just  cause  and  performed with such frequency as to indicate a general
business practice, shall constitute unfair claim  settlement  practices,
PROVIDED,  HOWEVER,  THAT  IN  THE  EVENT  THE  GOVERNOR HAS PURSUANT TO
SECTION TWENTY-NINE-A OF THE EXECUTIVE LAW SUSPENDED ANY STATUTE IN THIS
CHAPTER AS A RESULT OF  A  STATE  DISASTER  EMERGENCY,  SUCH  ACT  SHALL
CONSTITUTE AN UNFAIR CLAIM SETTLEMENT PRACTICE WITHOUT RESPECT TO WHETH-
ER SUCH ACT WAS INDICATIVE OF A GENERAL BUSINESS PRACTICE:
  (1)  knowingly  misrepresenting to claimants pertinent facts or policy
provisions relating to coverages at issue;
  (2) failing to acknowledge with reasonable promptness pertinent commu-
nications as to claims arising under its policies;
  (3) failing to adopt and implement reasonable standards for the prompt
investigation of claims arising under its policies;
  (4) not attempting in good faith to effectuate prompt, fair and  equi-
table  settlements  of  claims  submitted  in which liability has become
reasonably clear, except where there is a reasonable basis supported  by

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07981-01-5
              

A. 4089                             2

specific  information  available  for  review by the department that the
claimant has caused the loss to occur by arson. After receiving a  prop-
erly  executed  proof  of loss, the insurer shall advise the claimant of
acceptance or denial of the claim within thirty working days;
  (5) compelling policyholders to institute suits to recover amounts due
under its policies by offering substantially less than the amounts ulti-
mately recovered in suits brought by them;
  (6)  failing  to promptly disclose coverage pursuant to subsection (d)
or subparagraph (A) of paragraph two of subsection (f) of section  three
thousand four hundred twenty of this chapter; [or]
  (7)  submitting  reasonably rendered claims to the independent dispute
resolution process  established  under  article  six  of  the  financial
services law[.]; OR
  (8)  IN  ADDITION  TO  THE FOREGOING, WHEN THE GOVERNOR HAS DECLARED A
STATE DISASTER EMERGENCY, THE FOLLOWING PRACTICES SHALL BE DEEMED UNFAIR
CLAIM SETTLEMENT PRACTICES:
  (A) ATTEMPTING TO SETTLE A CLAIM ON THE BASIS OF A DOCUMENT  THAT  WAS
ALTERED WITHOUT NOTICE TO THE CONSUMER;
  (B)  MAKING A MATERIAL MISREPRESENTATION FOR THE PURPOSE OF SETTLING A
CLAIM ON LESS FAVORABLE TERMS THAN THOSE PROVIDED IN THE POLICY;
  (C) FAILING TO PROMPTLY NOTIFY THE INSURED OF ANY ADDITIONAL  INFORMA-
TION  NECESSARY  FOR THE PROCESSING OF THE CLAIM, AS WELL AS THE REASONS
WHY SUCH INFORMATION IS NECESSARY;
  (D) FAILING TO CONDUCT AN ON-SITE  INSPECTION  WITHIN  SEVEN  BUSINESS
DAYS FROM SUBMISSION OF THE CLAIM;
  (E)  FAILING  TO  PROVIDE  THE  CLAIMANT WITH A COPY OF THE ADJUSTER'S
REPORT WITHIN THREE BUSINESS DAYS FROM THE INSPECTION;
  (F) FAILING TO PROVIDE A DETERMINATION  ON  THE  CLAIM  WITHIN  THIRTY
CALENDAR DAYS FROM FURNISHING CLAIMANT WITH A COPY OF THE REPORT; AND
  (G)  IF DAMAGES ARE DETERMINED TO BE COVERED UNDER THE POLICY, FAILING
TO PAY AT LEAST TWENTY PERCENT OF THE TOTAL  CLAIM  UPON  SUCH  DETERMI-
NATION AND THE CLAIM IN FULL WITHIN THIRTY DAYS OF DETERMINATION.
  (b)  Evidence  as to numbers and types of complaints to the department
against an insurer and as to the department's complaint experience  with
other insurers writing similar lines of insurance shall be admissible in
evidence in any administrative or judicial proceeding under this section
or  article  twenty-four or seventy-four of this chapter, but no insurer
shall be deemed in violation of this section solely  by  reason  of  the
numbers and types of such complaints.
  (c)  If it is found, after notice and an opportunity to be heard, that
an insurer has violated this section,  each  instance  of  noncompliance
with  subsection  (a) [hereof] OF THIS SECTION may be treated as a sepa-
rate violation of this section  for  purposes  of  ordering  a  monetary
penalty  pursuant  to subsection (b) of section one hundred nine of this
chapter. A violation of this section shall not be a misdemeanor.
  S 2. The insurance law is amended by adding a new  section  2601-a  to
read as follows:
  S  2601-A.  UNFAIR  CLAIM  SETTLEMENT  PRACTICES DURING STATE DISASTER
EMERGENCY; CIVIL REMEDY. (A) IN THE EVENT THE GOVERNOR HAS  PURSUANT  TO
SECTION TWENTY-NINE-A OF THE EXECUTIVE LAW SUSPENDED ANY STATUTE IN THIS
CHAPTER AS A RESULT OF A STATE DISASTER EMERGENCY AN INSURER DOING BUSI-
NESS  IN  THIS STATE SHALL BE LIABLE TO THE HOLDER OF A POLICY ISSUED OR
RENEWED PURSUANT TO ARTICLE THIRTY-FOUR OF THIS CHAPTER FOR  DAMAGES  AS
PROVIDED IN THIS SECTION UPON SUCH POLICY HOLDER PROVING BY A PREPONDER-
ANCE  OF THE EVIDENCE THAT SUCH INSURER'S REFUSAL TO PAY OR UNREASONABLE
DELAY IN PAYMENT TO THE POLICY HOLDER OF AMOUNTS CLAIMED  TO  BE  DUE  A

A. 4089                             3

POLICY  WAS NOT SUBSTANTIALLY JUSTIFIED. AN INSURER IS NOT SUBSTANTIALLY
JUSTIFIED IN REFUSING TO PAY OR IN UNREASONABLY  DELAYING  PAYMENT  WHEN
THE INSURER:
  (1) INTENTIONALLY, RECKLESSLY OR BY GROSS NEGLIGENCE FAILED TO PROVIDE
THE POLICY HOLDER WITH ACCURATE INFORMATION CONCERNING POLICY PROVISIONS
RELATING TO THE COVERAGE AT ISSUE;
  (2)  FAILED  TO  EFFECTUATE IN GOOD FAITH A PROMPT, FAIR AND EQUITABLE
SETTLEMENT OF A CLAIM SUBMITTED BY SUCH POLICY HOLDER IN WHICH LIABILITY
OF SUCH INSURER TO SUCH POLICY HOLDER WAS REASONABLY CLEAR;
  (3) FAILED 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;
  (4)  FAILED TO MAKE A FINAL DETERMINATION AND NOTIFY THE POLICY HOLDER
IN WRITING OF ITS POSITION ON BOTH  LIABILITY  FOR,  AND  THE  INSURER'S
VALUATION  OF,  A  CLAIM  WITHIN  NINETY  DAYS  OF  THE DATE ON WHICH IT
RECEIVED ACTUAL OR CONSTRUCTIVE NOTICE OF THE LOSS UPON WHICH THE  CLAIM
IS BASED;
  (5)  FAILED TO ACT IN GOOD FAITH BY COMPELLING POLICY HOLDER TO INSTI-
TUTE SUIT TO RECOVER AMOUNTS DUE UNDER ITS POLICY BY  OFFERING  SUBSTAN-
TIALLY  LESS  THAN  THE  AMOUNTS ULTIMATELY RECOVERED IN SUIT BROUGHT BY
SUCH POLICY HOLDER; OR
  (6) HAS ENGAGED IN ANY  OTHER  UNFAIR  CLAIM  SETTLEMENT  PRACTICE  AS
DEFINED IN PARAGRAPH EIGHT OF SUBSECTION (A) OF SECTION TWO THOUSAND SIX
HUNDRED ONE OF THIS ARTICLE.
  (B) ANY POLICY HOLDER WHO ESTABLISHES LIABILITY PURSUANT TO SUBSECTION
(A) OF THIS SECTION SHALL BE ENTITLED TO RECOVER, IN ADDITION TO AMOUNTS
DUE  UNDER  THE POLICY, INTEREST, COSTS, AND DISBURSEMENTS, COMPENSATORY
DAMAGES AND REASONABLE ATTORNEYS' FEES INCURRED  BY  THE  POLICY  HOLDER
FROM  THE  DATE  OF  THE  LOSS, IN RECOVERING MONIES DUE PURSUANT TO THE
TERMS OF THE POLICY.
  (C) ANY POLICY HOLDER MAY RECOVER DAMAGES FROM AN INSURER DOING  BUSI-
NESS  IN THIS STATE PURSUANT TO THIS SECTION EITHER AS PART OF AN ACTION
TO RECOVER UNDER THE TERMS OF AN  INSURANCE  POLICY  OR  IN  A  SEPARATE
ACTION.
  (D)  IN  ANY  TRIAL  OF  A CAUSE OF ACTION ASSERTED AGAINST AN INSURER
PURSUANT TO THIS SECTION, EVIDENCE OF SETTLEMENT DISCUSSIONS WRITTEN AND
VERBAL OFFERS TO COMPROMISE AND OTHER EVIDENCE RELATING  TO  THE  CLAIMS
PROCESS  SHALL  BE ADMISSIBLE. IF CAUSES OF ACTION RELATING TO LIABILITY
OF THE INSURER UNDER THE POLICY AND UNDER THIS SECTION  ARE  ALLEGED  IN
THE  SAME  ACTION,  THE COURT MAY BIFURCATE THE TRIAL OF ISSUES SO AS TO
AVOID PREJUDICE TO THE INSURER ON THE ISSUE OF LIABILITY UNDER THE POLI-
CY AND FACILITATE ADMISSIBILITY OF EVIDENCE  ON  THE  CAUSES  OF  ACTION
ASSERTED PURSUANT TO THIS SECTION.
  (E)  ALL  AMOUNTS  RECOVERED  FROM  AN  INSURER  AS ACTUAL DAMAGES AND
REASONABLE ATTORNEYS' FEES IN ANY  ACTION  AUTHORIZED  IN  THIS  SECTION
SHALL  BE  EXCLUDED BY THE INSURER IN ITS DETERMINATIONS OF THE PREMIUMS
IT WILL CHARGE ALL POLICY HOLDERS ON ALL POLICIES ISSUED BY IT.
  S 3. This act shall take effect immediately; provided,  however,  that
the  amendments  to  paragraphs  5, 6, and 7 of paragraph (a) of section
2601 of the insurance law made by section one of  this  act  shall  take
effect  on  the same date and in the same manner as section 27 of part H
of chapter 60 of the laws of 2014, takes effect.