PIANY Summarizes 2004 Legislative Issues

January 30, 2004

The Professional Insurance Agents of New York, Inc. has released a statement summarizing the issues that face insurance producers and companies in the 2004 New York legislative session.

The PIANY listed its legislative concerns, as well as its position and recommendations, on the following issues:

Auto insurance. Fast-track figures indicate that shorter Regulation 68 no-fault time frames and aggressive prosecutions are driving down no-fault costs. The industry will need to fight off a legislative attempt to roll-back the timeframes, while trying to get agreement and buy-in to some additional fraud-fighting tools, like the “runner” bill. PIANY has secured sponsorship for a bill that would raise the accident surcharge to $2,000 in property damage from the current $1,000. The initiative has attracted wide interest and support, but faces opposition from auto insurers that would lose the revenue from these surcharges. Also, PIANY is fighting a provision in the governor’s budget that would let New York counties and New York City elect to make insurers collect and remit up to an additional $5.00 fee per vehicle per year on the motor vehicle policies of residents.

Credit scoring. No action has resulted to date from a hearing held by the Assembly late last year on the use of credit information in insurance underwriting. Meanwhile, the Federal Trade Commission is undertaking a study of the practice. Clearly, this issue is not going away. PIANY’s Board has adopted a position supporting provisions developed by the National Conference of Insurance Legislators and already enacted by at least 16 states to address some of the issues that arise when credit factors are used. However, PIANY believes these provisions should apply equally to commercial lines, where scoring has become increasingly prevalent.

NYPIUA. We face another potential shut-down of NYPIUA’s new-business authority when its authorization expires again on April 30, 2004. The outlook is uncertain, as NYPIUA unfortunately has become a pawn used in negotiations of unrelated issues. PIANY supports removing NYPIUA from this roller coaster by making it a permanent legal entity.

Labor Law. All eyes are on the Insurance Department, which has not yet issued a decision based on a series of hearing on whether to require NYPIUA to start a residual market for specified commercial liability lines-notably contractors’ liability. PIANY and virtually the entire insurance industry, as well as some contractors’ groups, testified against this proposal and urged that the NYSID concentrate instead on helping reform New York’s Labor Law.

Workers’ compensation. New York’s weekly benefits have not been raised since 1993. It’s virtually certain to be addressed in this election year. If benefits rise to the levels of surrounding states, premium indications could go up by 25 percent-unless some cost-cutting measures are included in the same legislation. PIANY supports adding cost savers to this mix. New York businesses can’t afford a 25 percent hike in these costs; moreover, we would face the prospect of rate suppression, which could dry up an already-tight market.

Wrap-ups. PIANY has fought for years against provisions that would let the state and/or various public entities require the use of a wrap-up insurance program on public construction. This provision is back in the 2004 budget submitted by Governor Pataki.

Loss runs. PIANY is mounting a strong push to require insurers to include loss data with cancellation, non-renewal and conditional renewal notices. Our members tell us it’s a real headache to request and wait for this information when an urgent search is underway for replacement coverage.

Fire fees. New York City’s Mayor Bloomberg is urging that the fire fee be doubled from two to four percent on fire policies written there. Just another example of the impact of local budget shortfalls on insurers and their policyholders.

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