On Might 23, 2024, the New York Division of Monetary Providers (the “Division”) issued Insurance coverage Round Letter No. 3 (the “Letter”). The Letter is addressed to “all insurers licensed to put in writing property/casualty insurance coverage in New York State, the New York Property Insurance coverage Underwriting Affiliation [‘NYPIUA’], and price service organizations.” The aim of the Letter is to “encourage all insurers licensed to put in writing property/casualty insurance coverage in New York State (‘insurers’) to supply loss mitigation instruments and providers to insureds at no cost or a diminished price…and to encourage insurers, the [NYPIUA], and price service organizations…to file with the [Department] actuarially applicable reductions for insureds for the set up of units or techniques that mitigate or stop losses….” In consequence in an increase within the InsurTech area, in 2021 the Nationwide Affiliation of Insurance coverage Commissioners (“NAIC”) up to date the anti-rebating part of the NAIC Model Unfair Trade Practices Act (#880) (Part 4(I)) by excluding varied value-added services or products that an insurer or producer could supply for free of charge or a diminished price from the definition of impermissible discrimination or rebates. Different states have additionally carried out such adjustments.[1]
With respect to insurers offering loss mitigation instruments and providers to insureds for free of charge or for a diminished price, the Letter reminds insurers that N.Y. Ins. Legislation § 2324(a) “applies to property/casualty insurance coverage[2] and customarily prohibits an insurer from paying or providing to pay, or giving or providing to present, to an individual, a rebate or inducement that’s not specified within the insurance coverage coverage.” Examples of such loss mitigation instruments and providers embrace “good water monitor and shutoff units and electrical fireplace sensors and displays….” Nonetheless, the Letter additional reminds insurers that N.Y. Ins. Legislation § 2324(a) “permits an insurer to pay or supply to pay, or give or supply to present, to an individual, any beneficial consideration, together with merchandise or periodical subscriptions, not exceeding $25 in worth, that’s not specified within the coverage.” The dear consideration not exceeding $25 should “be paid or supplied in a good and nondiscriminatory method to love individuals.”
Lastly, the Letter states if a “device or service exceeds $25 in market worth, then it should be specified within the insurance coverage coverage, have a respectable nexus to the insurance coverage, and be essentially or correctly incidental to the insurer’s insurance coverage enterprise.” Nonetheless, the Letter makes clear that, even when such device or service is included within the coverage, the Division could nonetheless decide the inclusion of the device or service to “violate different provisions of the Insurance coverage Legislation or rules promulgated thereunder”, corresponding to unfair commerce apply statutes, ought to such device or service not “have a respectable nexus to the insurance coverage, and [is not] essentially or correctly incidental to the insurer’s insurance coverage enterprise….”
The total textual content of the Letter could be discovered here.
[1] See, e.g., Maine Insurance Bulletin 426, dated October 25, 2017.
[2] We notice N.Y. Ins. Legislation § 4224(c) governs prohibited inducements as relevant to life and accident and medical insurance. The foregoing statute offers aside from “wellness packages”, as described in N.Y. Ins. Legislation § 3239, “no such life insurance coverage firm…and no officer, agent, solicitor or consultant thereof and no such insurer doing in [New York] the enterprise of accident and medical insurance and no officer, agent, solicitor or consultant thereof, and no licensed insurance coverage dealer and no worker or different consultant of any such insurer, agent or dealer, shall pay, permit or give, or supply to pay, permit or give, immediately or not directly, as an inducement to any individual to insure, or shall give, promote or buy, or supply to present, promote or buy, as such inducement, or interdependent with any coverage of life insurance coverage or annuity contract or coverage of accident and medical insurance…any beneficial consideration or inducement no matter not laid out in such coverage or contract aside from any beneficial consideration, together with however not restricted to merchandise or periodical subscriptions, not exceeding twenty-five {dollars} in worth….” N.Y. Ins. Legislation § 4224(c). See additionally, NY Insurance Circular Letter No. 9, dated March 3, 2009; NY OGC Opinion, dated June 6, 2003.
