BILL NUMBER:S5890

TITLE OF BILL:

An act to amend the insurance law, in relation to permitting insurers
to provide certain loss prevention and risk management devices to
insureds and prospective insureds

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 of the bill amends the insurance law to allow auto insurance
companies to provide certain loss prevention and risk management
devices to their insureds and prospective insureds, and to offer
certain incentives for participating in such programs.

Section 2 of the bill provides for an effective date.

JUSTIFICATION:

This bill would allow insurance companies to offer incentives to both
insureds and prospective insureds, for participating in certain loss
prevention and risk management programs through the use of "telematics
devices" to monitor the driving habits of those individuals
participating in the rewards program. "Telematics" refers to the
technology of sending, receiving, and storing information relating to
remote objects, such as vehicles, via telecommunication devices. The
              

term is often used to refer specifically to the use of the technology
in connection with the provision of auto insurance

The bill would clarify that telematics rewards programs do not violate
the "anti-rebate" provisions of Section 2324 of the New York State
Insurance Law. Currently, it is estimated that the vast majority of
the states allow for such telematics rewards programs and recognize
that these programs do not in any way constitute an improper rebate
under. their state's respective anti-rebate statutes. This bill would
clarify this program in New York in a similar fashion. By being able
to offer incentives for both insured and prospective insureds to
participate in telematics and risk management programs, insurance
companies can help drivers to improve their driving habits, thereby
resulting in safer conditions on the state's roads and highways.
Additionally, participation in this type of real-time data monitoring
program would be completely voluntary and would have no effect on the
existing rates of insured drivers, should they decide not to
participate.

The auto insurance industry is revolutionizing as technology develops,
and this legislation simply amends present law to recognize both the
validity, desirability and legality of a program that simply could not
have been anticipated when the anti-rebate sections of the Insurance
Law were first adopted.

PRIOR LEGISLATIVE HISTORY:

None, new bill.

FISCAL IMPLICATIONS:


None.

EFFECTIVE DATE:

The bill is effective immediately.