Requires all motor vehicle insurers to file annual detailed financial and claim data statements with the superintendent of financial services

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 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 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 insurance companies have resisted disclosing. This bill will provide for the vigilant financial

examination of insurer activities and allows consumers to monitor insurance industry for fair treatment.

Legislative history

S5009/A7603 of 2011-12; Referred to Insurance

Fiscal implications for state and local governments

None.

Effective date

Immediately.