NY State Senate Bill 2021-S5585

Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to insurance
Mar 11, 2021	referred to insurance

2021-S5585 (ACTIVE) - Details

See Assembly Version of this Bill:: A6811
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §2601-a, Ins L
Versions Introduced in Other Legislative Sessions:: 2011-2012: S4735
2013-2014: S2544
2015-2016: S29, A8025
2017-2018: S242, A921
2019-2020: S5336, A2822
2023-2024: S2487, A1119

2021-S5585 (ACTIVE) - Summary

Provides that an insurer doing business in this state shall be liable to a policy holder for such insurer's refusal to pay or unreasonable delay of payment to the policy holder if such refusal or delay was not substantially justified; enumerates instances whereby an insurer's refusal or delay of payment is not substantially justified including intentional negligence, failure to act in good faith, failure to provide written denial of claim, failure to make final determination of claim within six months, and failure to promptly proceed with the appraisal process.

2021-S5585 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5585

SPONSOR: COMRIE
 
TITLE OF BILL:

An act to amend the insurance law, in relation to unfair claim settle-
ment practices

 
PURPOSE:

To allow holders of property and casualty insurance policies to recover
damages when an insurance company's refusal to pay or unreasonable delay
in paying a claim was not substantially justified.

 
SUMMARY OF PROVISIONS:

This bill provides that an insurer doing business in this state shall be
liable to a holder of property and casualty insurance policy for damages
upon such policy holder proving that such insurer's refusal to pay or
unreasonable delay in payment to the policy holder of amounts claimed to
be due there under was not substantially justified. An insurer would not

be substantially justified in refusing to pay or in unreasonably delay-
ing payment when: I.  Intentionally, recklessly or by gross negligence
failed to provide the policy holder with accurate information concerning
policy provision relating to coverage at issue; or 2. Failed to effectu-
ate, 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; or3. Failed to provide a writ-
ten denial of a policy holder's claim with a full and complete explana-
tion of such denial, including references to specific policy provisions
wherever possible; or4. Failed to make a final determination and notify
the policy holder in writing of its position on both the liability for,
and the insurer's valuation of, a claim within six months of the date on
which it received actual or constructive notice of the loss upon which
the claim is based; or5. Failed to act in good faith by compelling the
policy holder to initiate a lawsuit to recover under the policy by
offering substantially less than the amounts ultimately recovered in the
suit by the policy Holder or 6. Failed to promptly proceed with the
appraisal process once such has been demanded in any claim where cover-
age for a portion of the claim has been accepted by such insurer and a
disagreement exists between the insured and the insurer with respect to
the value of covered property or the amount, or extent of the covered
loss. Any policy holder who establishes liability shall be entitled to
recover, in addition to amounts due under the policy, interest, costs,
and disbursements, compensatory damages and reasonable attorneys fees.
Finally, there are procedural rules established to insure that the
insurer receives a fair trial on the issue of liability under the terms
of the policy before the issue of substantial justification is consid-
ered.

 
JUSTIFICATION:

Existing law provides a code of conduct for insurers in this state.
Insurance Law Section 2601 now provides that no insurer in this state
shall engage in five enumerated unfair claims settlement practices.
Yet, only the Superintendent of Insurance can enforce these provisions
against the company. The holders of property and casualty insurance
policies who have incurred substantial costs in obtaining reimbursement
under the policy terms have no remedy. Any doubt about this unfortunate
state of the law was removed by the Court of Appeals in its 1994 deci-
sion in ROCANOVA V. EQUITABLE LIFE, 83 NY2nd 603 (1984). "The law of
this State does not currently recognize a private cause of action under
Insurance Law § 2601. To the extent that a variety of appellate division
decisions hold otherwise, they are not to be followed". ROCANOVA V.
EQUITABLE LIFE, 83 NY2d at 614-515.  (emphasis added). Citizens of this
state who pay insurance premiums should expect insurers to live up to
their policy obligations. Under existing statutes and case law, an
insurer can simply refuse to pay a claim or offer an amount well below
the value of the loss with impunity. SEE E.G. LTS CONTRACTORS V. HART-
FORD INS., 99 AD2d 644 (4th Dept. 1984) no remedy for unreason able
delay in payment; UNILAND DEV. V. HOME INS., 97 AD2d 973 (4th Dept.
1983) no remedy for intentional refusal to pay Even if the policy holder
sues and wins the full amount of the claim, he or she loses because of
the costs and counsel fees associated with bringing the successful
action. This fact gives insurers a terribly unfair advantage in negoti-
ating a settlement of any claim because of the ability of the insurers
to financially bear the burden of litigation which the ordinary citizen
cannot afford to do. top 1 The Superintendent of Insurance regulates the
industry within the constraints of available resources Each citizen
should be entitled to prove his or her claim in court when an insurer
takes a position in settling a claim which is found not to have been
substantially justified.

 
LEGISLATIVE HISTORY:

S.486-A of 1997-98;

S.545 of 1999-00;

S.577 of 2001-02;

S.1486-A of 2003-04;

S.51 of 2005-06;

S.1269/A.10307 of 2007-08;

S.4735/A.5589 of 2011-2012;

2013-2014 - S.2544/A.3305

2015-2016 - A. 8025; referred to insurance

REFERRED TO INSURANCE

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
January 1st next succeeding the date on which it shall have become,a
law.

2021-S5585 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5585
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                              March 11, 2021
                                ___________
 
 Introduced  by  Sen.  COMRIE -- read twice and ordered printed, and when
   printed to be committed to the Committee on Insurance
 
 AN ACT to amend the insurance law, in relation to unfair  claim  settle-
   ment practices
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. The insurance law is amended by adding a new section 2601-a
 to read as follows:
   § 2601-A. UNFAIR CLAIM SETTLEMENT  PRACTICES;  CIVIL  REMEDY.  (A)  AN
 INSURER  DOING BUSINESS 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 PREPONDERANCE 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  UNDER  A POLICY WAS NOT SUBSTANTIALLY JUSTIFIED.  AN INSURER IS
 NOT SUBSTANTIALLY JUSTIFIED IN REFUSING TO PAY OR IN UNREASONABLY DELAY-
 ING 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 TIMELY 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 SIX MONTHS OF THE DATE ON WHICH IT RECEIVED
 ACTUAL OR CONSTRUCTIVE NOTICE OF THE LOSS UPON WHICH THE CLAIM IS BASED;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD06480-01-1

 S. 5585                             2
 
   (5)  FAILED  TO  ACT  IN GOOD FAITH BY COMPELLING THE POLICY HOLDER TO
 INSTITUTE SUIT TO RECOVER AMOUNTS  DUE  UNDER  ITS  POLICY  BY  OFFERING
 SUBSTANTIALLY LESS THAN THE AMOUNTS ULTIMATELY RECOVERED IN SUIT BROUGHT
 BY SUCH POLICY HOLDER; OR
   (6)  FAILED  TO  PROMPTLY PROCEED WITH THE APPRAISAL PROCESS ONCE SUCH
 HAS BEEN DEMANDED IN ANY CLAIM WHERE COVERAGE FOR A PORTION OF THE CLAIM
 HAS BEEN ACCEPTED BY SUCH INSURER AND A DISAGREEMENT EXISTS BETWEEN  THE
 INSURED AND THE INSURER WITH RESPECT TO THE VALUE OF COVERED PROPERTY OR
 THE AMOUNT, OR EXTENT OF THE COVERED LOSS.
   (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, CONSEQUENTIAL 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 AS WELL AS PUNITIVE DAMAGES CAPPED
 AT TWO TIMES THE VALUE OF THE COVERED LOSS ESTABLISHED AT TRIAL.
   (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.
   (1)  AS A CONDITION TO ANY RECOVERY PURSUANT TO SUBSECTION (A) OF THIS
 SECTION, A CIVIL REMEDY NOTICE OF THE ALLEGED VIOLATION  MUST  BE  FILED
 WITH  BOTH  THE  INSURER AND THE DEPARTMENT AT LEAST SIXTY DAYS PRIOR TO
 COMMENCEMENT OF AN ACTION SEEKING RELIEF PURSUANT TO SUBSECTION  (A)  OF
 THIS SECTION.
   (2)  THE CIVIL REMEDY NOTICE MUST BE ON A FORM APPROVED BY THE DEPART-
 MENT AND INCLUDE THE  FOLLOWING  INFORMATION,  IF  SUCH  INFORMATION  IS
 REASONABLY KNOWN TO THE INSURED:
   (A)  THE  STATUTORY  PROVISION, INCLUDING THE SPECIFIC LANGUAGE OF THE
 STATUTE WHICH THE INSURER IS ALLEGED TO HAVE VIOLATED.
   (B) THE FACTS AND CIRCUMSTANCES GIVING RISE TO THE VIOLATION.
   (C) THE NAME OF ANY INDIVIDUAL INVOLVED IN THE VIOLATION.
   (D) REFERENCE TO SPECIFIC POLICY LANGUAGE  THAT  IS  RELEVANT  TO  THE
 VIOLATION, IF ANY.
   (E) A STATEMENT THAT THE NOTICE IS GIVEN IN ORDER TO PROTECT THE RIGHT
 TO PURSUE THE CIVIL REMEDY.
   (3)  THE  INSURER  WHO IS THE SUBJECT OF THE CIVIL REMEDY NOTICE SHALL
 HAVE SIXTY DAYS FROM THE FILING OF  THE  REQUIRED  NOTICE  TO  CURE  THE
 VIOLATION.    NO CIVIL ACTION UNDER THIS SECTION WILL BE SUSTAINABLE IF,
 WITHIN SIXTY DAYS AFTER THE REQUIRED NOTICE FILING, THE  DAMAGES  SOUGHT
 ARE PAID.
   (4) THE RIGHTS ENUMERATED HEREIN ARE NOT THE EXCLUSIVE REMEDIES AVAIL-
 ABLE  TO  THE INSURED AND DO NOT PRECLUDE ANY COMMON LAW CLAIMS OR OTHER
 STATUTORY CLAIMS THAT MAY EXIST.
   (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,  LOSS RESERVE AMOUNTS 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 POLICY 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, CONSE-
 QUENTIAL DAMAGES, REASONABLE ATTORNEYS' FEES AND PUNITIVE DAMAGES IN ANY
 ACTION AUTHORIZED IN THIS SECTION SHALL BE EXCLUDED BY  THE  INSURER  IN

 S. 5585                             3
 
 ITS  DETERMINATIONS OF THE PREMIUMS IT WILL CHARGE ALL POLICY HOLDERS ON
 ALL POLICIES ISSUED BY IT.
   §  2. This act shall take effect on the first of January next succeed-
 ing the date on which it shall have become a law, and shall apply to all
 acts and omissions by insurers occurring  on  or  after  such  effective
 date.

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Senate Bill S5585

Sponsored By

Archive: Last Bill Status - In Senate Committee Insurance Committee

2021-S5585 (ACTIVE) - Details

2021-S5585 (ACTIVE) - Summary

2021-S5585 (ACTIVE) - Sponsor Memo

2021-S5585 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S5585

Share this bill

Sponsored By

Leroy Comrie

Archive: Last Bill Status - In Senate Committee Insurance Committee

2021-S5585 (ACTIVE) - Details

2021-S5585 (ACTIVE) - Summary

2021-S5585 (ACTIVE) - Sponsor Memo

2021-S5585 (ACTIVE) - Bill Text download pdf

Comments