Relates to claim settlement practices when an insurer refuses to pay or is delaying payment of a settlement; provides a policyholder a private right of action against such insurer doing business in the state who has refused or delayed payment of an insurance claim.
STATE OF NEW YORK
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166--A
2025-2026 Regular Sessions
IN SENATE(Prefiled)
January 8, 2025
___________
Introduced by Sens. RAMOS, COMRIE, HARCKHAM, HOYLMAN-SIGAL, KRUEGER,
PALUMBO, RIVERA, SALAZAR, SERRANO, STAVISKY -- read twice and ordered
printed, and when printed to be committed to the Committee on Insur-
ance -- committee discharged, bill amended, ordered reprinted as
amended and recommitted to said committee
AN ACT to amend the insurance law, in relation to unfair claim settle-
ment practices
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. This act shall be known and may be cited as the "fair
2 insurance settlement practice act (FISPA)".
3 § 2. The insurance law is amended by adding a new section 2601-a to
4 read as follows:
5 § 2601-a. Unfair claim settlement practices. (a) Unfair claim settle-
6 ment practices. For the purposes of this section, an unfair claims
7 settlement practice shall consist of any of the following acts or omis-
8 sions:
9 (1) misrepresenting or omitting pertinent facts or insurance policy
10 provisions relating to the coverage at issue, including but not limited
11 to, in connection with litigation, failing to disclose all available
12 coverage amounts in compliance with subdivision (f) of section thirty
13 one hundred one of the civil practice law and rules;
14 (2) failing to acknowledge and act reasonably promptly upon communi-
15 cations with respect to claims arising under insurance policies;
16 (3) failing to adopt and implement reasonable standards for the prompt
17 investigation of claims arising under insurance policies;
18 (4) refusing to pay claims without conducting a reasonable investi-
19 gation based upon all available information;
20 (5) failing to affirm or deny coverage of claims within a reasonable
21 time after proof of loss statements have been completed;
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD00680-02-5
S. 166--A 2
1 (6) failing to effectuate prompt, fair and equitable settlements of
2 claims in which liability has become reasonably clear;
3 (7) compelling insureds to institute litigation to recover amounts due
4 under an insurance policy by offering substantially less than the
5 amounts ultimately recovered in actions brought by such insureds;
6 (8) attempting to settle a claim for less than the amount to which a
7 reasonable person would have believed they were entitled by reference to
8 written or printed advertising material accompanying or made part of an
9 application;
10 (9) attempting to settle claims on the basis of an application which
11 was altered without notice to, or knowledge or consent of, the insured;
12 (10) making claims payments to insured or beneficiaries not accompa-
13 nied by a statement setting forth the coverage under which payments are
14 being made;
15 (11) making known to insured or claimants a policy of appealing from
16 arbitration awards in favor of insureds or claimants for the purpose of
17 compelling them to accept settlements of compromises less than the
18 amount awarded in arbitration;
19 (12) delaying the investigation or payment of claims by requiring that
20 an insured or claimant, or the physician of either, submit a preliminary
21 claim report and then requiring the subsequent submission of formal
22 proof of loss forms, both of which submissions contain substantially the
23 same information;
24 (13) failing to settle claims promptly, where liability has become
25 reasonably clear, under one portion of the insurance policy coverage in
26 order to influence settlements under other portions of the insurance
27 policy coverage; or
28 (14) failing to promptly provide a reasonable explanation of the basis
29 in the insurance policy in relation to the facts or applicable law for
30 denial of a claim or for the offer of a compromise settlement.
31 (b) Enforcement. (1) Any person who has been injured or whose rights
32 are affected by the use or employment by an insurer of any method, act
33 or practice declared to be unlawful by this section, may, in addition to
34 any other cause of action authorized by law, bring an action in supreme
35 court for damages and equitable relief, including an injunction, or any
36 other remedy as the court deems to be necessary and proper. Such action
37 may also be filed or maintained by a representative of such person.
38 (2) At least thirty days prior to the filing of any such action pursu-
39 ant to paragraph one of this subsection, a written demand for relief,
40 identifying the claimant and reasonably describing the unfair or decep-
41 tive act or practice relied upon and the injury suffered, shall be
42 mailed or delivered by the claimant to the appropriate person at an
43 applicable insurer. An insurer receiving such a demand for relief who,
44 within thirty days of the delivery of the demand, makes a written tender
45 of settlement which is rejected by the claimant may, in any subsequent
46 action, file such written tender and an affidavit concerning the
47 rejection of such written tender and thereby limit any recovery to the
48 relief tendered if the court finds that the relief tendered was reason-
49 able in relation to the injury actually suffered by the petitioner.
50 (3) If the court finds that any practice deemed unlawful by this
51 section has been committed willfully and with intent to defraud any
52 person then the court shall award two times the damages sustained by
53 such person, plus costs and attorneys' fees to the person bringing an
54 action under this section.
S. 166--A 3
1 (4) No contract for insurance issued or delivered in the state may
2 require an insured to waive the right to a jury trial to adjudicate a
3 dispute arising from a violation of this section.
4 § 3. Section 3425 of the insurance law is amended by adding a new
5 subsection (t) to read as follows:
6 (t) No insurer shall refuse to issue or renew a covered policy solely
7 on the grounds that the policyholder has brought an action pursuant to
8 section two thousand six hundred one-a of this chapter.
9 § 4. This act shall take effect on the ninetieth day after it shall
10 have become a law and shall apply to all acts and omissions by insurers
11 occurring on or after such effective date; provided, however, that para-
12 graph (4) of subsection b of section 2601-a of the insurance law as
13 added by section one of this act shall only apply to insurance contracts
14 entered into after such effective date.
