Creates office of insurance consumer advocate within department of insurance

BILL NUMBER:S2220

Title of bill

An act to amend the insurance law, in relation to establishing the office of insurance consumer advocate within the insurance department and describing its powers and duties

Summary

The insurance law is amended by adding a new section 210-b to create the Office of Insurance Consumer Advocate. The duties of such will include, but not be limited to: review of rate applications; participation in public hearings; and review and recommend legislation related to improving the insurance process for consumers.

Justification

On April 7, 1986 a report of the Governor's Advisory Commission on Liability Insurance, "INSURING OUR FUTURE" -commonly known as the Jones Commission Report- embraced the idea of creating an Office of Insurance Consumer Advocate. The report stated that, "Although the Insurance Department generally attends to the interests of insurance consumers, there is no New York State appointee who is exclusively charged with that task of representing consumer interests with respect to insurance matters." The report continues by stressing that the ratemaking process cannot be completely fair unless "a named individual is designated to represent this interest (consumer) and is given full access to the information necessary to intervene on an informed timely basis."

This recommendation is similar to the Texas law which established the Division of Consumer Protection within the State Board of Insurance to represent the interest of insurance consumers statewide. With this report in mind, with the Texas model as an example, and with the large rate hikes that have been awarded to health insurance carriers, now is the time to ensure that consumers' point of view is adequately represented. These increases have a detrimental effect on all policyholders, but especially those with fixed incomes. Such increases could force many senior citizens to cancel coverage. Such issues must be fully analyzed before a rate increase is granted. Blue Cross of Western New York and Blue Shield of Western New York, for example, recently received a 19.1% and 22.8% rate increase respectively. Customers cannot continue to sustain these drastic increases.

Fiscal implications

Not known at this time.

Effective date

This act shall take effect 60 days after it shall have become law.