Provides that wireless communications equipment insurance policies shall not be subject to rules providing for producer compensation transparency

BILL NUMBER:S5550

Title of bill

An act to amend the insurance law, in relation to wireless communications equipment insurance policies

Purpose or general idea of bill

To clarify the disclosure requirements for wireless communications equipment insurance companies.

Summary of specific provisions

Section one of the bill amends section 3449 of the Insurance Law to permit promulgation of compensation disclosure regulations by the department of financial services that are suitable to wireless communications equipment insurance policies sales.

Existing law

The wireless communications vendor ("wireless vendor") is licensed as a "limited licensee" under Section 2131 of the Insurance Law. As required under § 2131(e)(2), when the wireless vendor offers the purchaser of wireless communications equipment the option of purchasing wireless communications equipment insurance, the wireless vendor makes available to the purchaser written materials summarizing the material terms of the insurance coverage, including the name of the insurer and the agent licensed under section 2103(b) of the Insurance Law. Additionally, such materials indicate that this product may be a duplication of coverage already provided by a renter's, homeowner's, automobile or other liability insurance.

In 2005, the Insurance Law was amended by adding a section 3449 (Chapter 426 of the Laws of 2005) that requires certain notice periods when a wireless equipment policy is cancelled and allows an insurer to automatically terminate a policy when a customer terminated service with a carrier or when equipment insurance benefits are exhausted. Section 3449 also empowers the superintendent of financial services to promulgate regulations regarding wireless communications equipment insurance policies.

Justification

Wireless communications equipment policy transactions are relatively low cost, low risk transactions that should have concise disclosures of key issues that communicate to consumer's the key information most relevant to their purchase decision. Any compensation disclosure should reflect the simple nature of such transactions. These transactions are distinct from traditional insurance transactions, such as those for coverage of life, homes, cars and disabilities in that they are low cost and require the use of simple commitments, coverage of certain clearly delineated losses by a consumer, comprehensible notice, delineated billing, and cancellation and refund rights. Additionally, these transactions are not complicated by various offers from the equipment seller of competing insurance products. This bill will allow the department of financial services to provide for a suitable compensation regulatory treatment while maintaining the set of disclosures necessary for a consumer to make an informed insurance purchasing decision, namely the key terms, costs, and procedures of the wireless equipment insurance product as already provided for by the Legislature.

Prior legislative history

New bill

Fiscal implications

None

Effective date

This act shall take effect immediately.