On Might 23, 2024, the New York Division of Monetary Companies (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 fee 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 free of charge or a decreased price…and to encourage insurers, the [NYPIUA], and fee service organizations…to file with the [Department] actuarially applicable reductions for insureds for the set up of gadgets or programs that mitigate or forestall losses….” Consequently in an increase within the InsurTech house, 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 might provide for gratis or a decreased 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 gratis or for a decreased price, the Letter reminds insurers that N.Y. Ins. Regulation § 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 provide, to an individual, a rebate or inducement that’s not specified within the insurance coverage coverage.” Examples of such loss mitigation instruments and providers embody “sensible water monitor and shutoff gadgets and electrical hearth sensors and screens….” Nevertheless, the Letter additional reminds insurers that N.Y. Ins. Regulation § 2324(a) “permits an insurer to pay or provide to pay, or give or provide to provide, to an individual, any useful consideration, together with merchandise or periodical subscriptions, not exceeding $25 in worth, that’s not specified within the coverage.” The precious consideration not exceeding $25 should “be paid or provided in a good and nondiscriminatory method to love individuals.”
Lastly, the Letter states if a “instrument or service exceeds $25 in market worth, then it have to be specified within the insurance coverage coverage, have a reputable nexus to the insurance coverage, and be essentially or correctly incidental to the insurer’s insurance coverage enterprise.” Nevertheless, the Letter makes clear that, even when such instrument or service is included within the coverage, the Division might nonetheless decide the inclusion of the instrument or service to “violate different provisions of the Insurance coverage Regulation or rules promulgated thereunder”, equivalent to unfair commerce observe statutes, ought to such instrument or service not “have a reputable nexus to the insurance coverage, and [is not] essentially or correctly incidental to the insurer’s insurance coverage enterprise….”
The complete textual content of the Letter may be discovered here.
[1] See, e.g., Maine Insurance Bulletin 426, dated October 25, 2017.
[2] We be aware N.Y. Ins. Regulation § 4224(c) governs prohibited inducements as relevant to life and accident and medical health insurance. The foregoing statute supplies apart from “wellness packages”, as described in N.Y. Ins. Regulation § 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 health 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 provide to pay, permit or give, instantly or not directly, as an inducement to any individual to insure, or shall give, promote or buy, or provide to provide, promote or buy, as such inducement, or interdependent with any coverage of life insurance coverage or annuity contract or coverage of accident and medical health insurance…any useful consideration or inducement no matter not laid out in such coverage or contract apart from any useful consideration, together with however not restricted to merchandise or periodical subscriptions, not exceeding twenty-five {dollars} in worth….” N.Y. Ins. Regulation § 4224(c). See additionally, NY Insurance Circular Letter No. 9, dated March 3, 2009; NY OGC Opinion, dated June 6, 2003.
