Enacts the "construction insurance transparency act of 2014" to require insurers providing coverage for liability under the scaffold law to report to the superintendent of financial services

Summary of provisions

The proposed language provides for a publicly accessible and neutral method for the systematic collection of financial and closed claims data for liability insurance covering claims made under Labor Law 240.

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 attributable to coverage for labor law 240 claims and investment income.

Detailed information regarding expenses must also be provided, including, expenses actually incurred and paid, normal business expenses, salaries, commissions, consulting fees, legal expenses, risk management program 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.

Finally, the Department of Financial Services must make all information publicly available on the department's web site.

Justification

For participants in the construction industry liability insurance plays a vital role providing financial security for all parties in the event of an accident. Liability insurance is often required for contractors or property owners to obtain necessary permits or to take on many projects; without liability insurance, participation in this sector of the economy can be impeded. Given the critical role of the construction industry in the State economy, the State has a vested interest in ensuring transparency to ensure that the premiums paid for liability insurance are fairly established. Given perennial calls for reform that would weaken Labor Law 240 -a long-standing and successful worker safety law - based on that laws alleged impact on insurance costs, it is particularly important that insurance covering Labor Law 240 claims is given particular scrutiny.

The determination of premiums for such liability-insurance policies in New York has, gone on too long in obscurity. No independent and neutral mechanism exists to determine why premium rates are set where they are. And, because insurers routinely refuse requests to produce more detailed data, lawmakers, workers and the public have to rely on the industry's reports to make policy decisions.

As a matter of public trust, liability insurers should be required to make policyholders and the public aware of the facts related to premium determinations and financial solvency in this area. Furthermore, independent, objective and accurate data is needed so lawmakers and the public can conduct sound analyses in reaching public policy decisions that impact(s) tens of thousands of New Yorkers working in the construction industry. More detailed claim data would help in evaluating the insurance industry claims that worker safety laws are responsible for driving up insurance premiums paid by property owners and contractors, 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 workers' rights.

Legislative history

None.

Fiscal implications

None.

Effective date

The first day of January next succeeding the date upon which the bill becomes law.