BILL NO A01008
SAME AS SAME AS S03327
SPONSOR Weinstein (MS)
COSPNSR Ortiz, Dinowitz, Peoples-Stokes
MLTSPNSR
Add S342, Ins L
Requires all motor vehicle insurers to file annual detailed financial and claim
data statements with the superintendent of financial services; provides that
all such statements shall be made available to the public.
BILL NUMBER:A1008
TITLE OF BILL: An act to amend the insurance law, in relation to
requiring all motor vehicle insurers to file annual financial
statements and detailed claim data with the superintendent of
financial services
PURPOSE OF BILL: The bill expands upon current insurance reporting
laws by providing for more detailed reporting requirements of
automobile insurers' "financial statements" and "closed claims" data.
This enhanced data collection will provide lawmakers with a source of
reliable and accessible data that will better enable them to evaluate
automobile insurance and assist in providing an optimal product to New
York citizens.
SUMMARY OF PROVISIONS OF BILL: The proposed language provides for a
publicly accessible and neutral method for the systematic collection
of automobile insurers' financial and closed claims data. The
supplemental financial disclosure requirements stipulate that insurers
must provide detailed information concerning all sources of "income"
including, but not limited to, data on premiums received, investment
income, and profit from the sale of assets. Detailed information
regarding expenses must also be provided, including, expenses actually
incurred and paid, normal business expenses, salaries, commissions,
consulting fees, legal expenses, and advertising costs. A synopsis of
the total claims or settlements paid in each financial statement and
specific data on claims that have been settled with or without a
payment (closed claims) must also be provided.
Additionally, all submitted data must be signed by the insurer's chief
executive officer, attesting its' accuracy. Civil penalties will be
assessed against companies that fail to comply with any of the
provisions of the bill. The proposal also indicates that the insurance
department must make all information publicly available to consumers
on the department's web site.
JUSTIFICATION: Automobile insurance is a vital part of the New York
State economy and is of high importance to the-citizens of New York.
Personal automobile insurance premiums in 2008 were $9.8 billion.
Commercial automobile insurance premiums in 2008 were $2.0 billion.
Automobile liability insurance protects against the possible adverse
financial consequences of being held liable for damage to another
person or another's property. Personal injury protection provides
first party medical benefits when an injury arises from an automobile
accident, as well as, providing other financial benefits such as
partial wage loss reimbursement. Physical damage insurance covers
damage to the policyholder's own vehicle; which is often one the
largest financial assets of a person; as well as being vital to other
aspects of a person's life such as transportation to and from work. A
failure to have fairly priced automobile insurance with adequate
benefits from solvent insurance companies could have dire consequences
for New York.
Given the significance of automobile insurance to New York State and
its citizens, the State has a compelling public interest in ensuring
that the parties with a stake in the transactions; policyholders,
insurance companies and the general public; are all treated fairly. It
is also important to ensure that the benefits to citizens are
adequate, that insurance companies have the opportunity to earn a fair
profit, that insurance companies will be able to make good on the
promises contained in insurance policies, and that insurance companies
operate in a fair efficient manner. In order for lawmakers to be able
to carefully evaluate various alternatives for achieving these
objectives, it is vital that information about automobile insurance be
available.
There are many entities that give the insurance industry's perspective
on automobile insurance. These entities include Insurance Services
Office (ISO), the Insurance Research Council (IRC) and the Insurance
Information Institute (III). ISO submits filings on behalf of
insurance companies to the Department of Insurance. The IRC is funded
and operated by a consortium of insurance companies which publishes
"studies" which merit careful analysis. A recent IRC publication
regarding automobile injury claims {1} stated "Shifts in treatment
alternatives and increased costs have led to the continued escalation
of medical care expenses," "Total claimed losses and total claim
payments have grown faster than inflation, spurred by increases in
medical expenses" and "Attorney involvement is associated with
extensive medical treatment, elevated claimed losses, and lower net
compensation for claimants."
The III acts as an advocate for the insurance industry. A recent
document by the III{2} claims that the New York No-Fault system is in
"crisis" and "out of control." The III then suggests insurance
industry "solutions" to these alleged "problems." However, it is
impossible to discern the veracity or accuracy of the contentions of
the IRC or the III absent analysis of their underlying data. All of
these insurance industry organizations have access to detailed
financial and claim data that insurance companies do not make
available to the public.
As things currently stand, no independent and neutral mechanism exists
to determine the root cause of declared insurance "crises" and policy
cancellations. And, because the insurers typically refuse requests to
produce more detailed data, lawmakers and consumers have to rely on
the industry's reports to make policy decisions.
Clearly, independent, objective and accurate data is needed so
lawmakers and the public can conduct sound analyses in reaching a
public policy decision that impacts millions of New York citizens. For
example, more detailed claim data would help in evaluating the
insurance industry claims that the no-fault system is out of control
and that benefits to consumers need to be restricted. In the absence
of this basic data, it is impossible for lawmakers and consumers to
engage in rational decision-making about insurance industry proposals
that would severely limit consumer rights.
In order to level the playing field, and have a vibrant public
discussion and analysis of the issues involving automobile insurance,
it is critically important that all parties involved in the discussion
of automobile insurance have access to comprehensive information. This
bill takes a step in that direction by starting to make publicly
available certain information that most insurance companies have not
disclosed in the past. This bill will provide for the vigilant
financial examination of insurer activities and allows consumers to
monitor insurance industry for fair treatment.
LEGISLATIVE HISTORY: 2010: A.10738/S.7531 - A. Insurance/S. Insurance
2011: A.631/S.3271 - A. Insurance/S. Insurance
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.
EFFECTIVE DATE: Immediately.
{1} Insurance Research Council, Auto Injury Insurance Claims:
Countrywide Patterns in Treatment, Cost, and Compensation, 2008
Edition, January 2008, at 4 - 5. This report states that detailed data
on more than 1,500 New York automobile claims was collected, but the
IRC has not made that information public so that other entities could
perform their own analysis.
{2} Insurance Information Institute, New York PIP Insurance Update, Is
New York's No-Fault Crisis Returning?, November 5, 2009.
