S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5166
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               March 3, 2023
                                ___________
 
 Introduced  by  M.  of  A.  TANNOUSIS  --  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, paragraph
 5 of subsection (a) as amended by section 27 of part H of chapter 60  of
 the  laws  of  2014 and paragraphs 6 and 7 as amended and paragraph 8 of
 subsection (a) as added by chapter 458 of the laws of 2018,  is  amended
 to read as follows:
   §  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.
                                                            LBD05126-01-3
              

 A. 5166                             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;
   (7)  submitting  reasonably rendered claims to the independent dispute
 resolution process  established  under  article  six  of  the  financial
 services law; or
   (8)  artificially  deflating  or otherwise lowering cost data used for
 adjusted claims, or using cost data that  is  not  appropriate  for  the
 region  of  the state where the loss occurred; this shall include but is
 not limited to claims adjusted by a person  issued  a  temporary  permit
 pursuant  to subsection (n) of section two thousand one hundred eight of
 this chapter[.]; OR
   (9) 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.
   §  2.  The  insurance law is amended by adding a new section 2601-a to
 read as follows:
   § 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
 A. 5166                             3
 
 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
 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 NINE 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.
   § 3. This act shall take effect immediately.