On Could 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 approved 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 approved to put in writing property/casualty insurance coverage in New York State (‘insurers’) to supply loss mitigation instruments and providers to insureds without cost or a decreased charge…and to encourage insurers, the [NYPIUA], and fee service organizations…to file with the [Department] actuarially acceptable reductions for insureds for the set up of gadgets or methods that mitigate or forestall losses….” In consequence 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 numerous value-added services or products that an insurer or producer could provide for gratis or a decreased charge 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 charge, 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 offer, 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 gadgets and electrical hearth sensors and screens….” Nonetheless, 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 offer, to an individual, any helpful 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 provided in a good and nondiscriminatory method to love individuals.”
Lastly, the Letter states if a “software or service exceeds $25 in market worth, then it have to 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 software or service is included within the coverage, the Division could nonetheless decide the inclusion of the software or service to “violate different provisions of the Insurance coverage Regulation or rules promulgated thereunder”, similar to unfair commerce observe statutes, ought to such software 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 complete textual content of the Letter will be discovered here.
[1] See, e.g., Maine Insurance Bulletin 426, dated October 25, 2017.
[2] We observe N.Y. Ins. Regulation § 4224(c) governs prohibited inducements as relevant to life and accident and medical health insurance. The foregoing statute supplies aside from “wellness applications”, 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, enable or give, or provide to pay, enable or give, instantly or not directly, as an inducement to any individual to insure, or shall give, promote or buy, or provide to offer, 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 helpful consideration or inducement no matter not laid out in such coverage or contract aside from any helpful 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.
