Relates to providing conditional renewal notices to policyholders

BILL NUMBER:S7268

Title of bill

An act to amend the workers' compensation law, in relation to providing conditional renewal notices to policyholders

Purpose

The purpose of this bill is to require that insurance carriers provide conditional renewal notices to workers' compensation policyholders when the premium will increase more than ten percent or where there is an increased deductible or a change in classification that may result in a reduction of dividends.

Summary of provisions

This legislation amends subdivision 5 of section 54 of the workers compensation law, as amended by section 23 of part GG of chapter 57 of the laws of 2013.

Justification

Under current Insurance Law Section 3426(e), commercial policyholders are entitled to receive a conditional renewal notice 60 to 120 days in advance of the expiration date of their policy if the premium for their renewal policy will increase by more than ten percent, or if the renewal policy will have a change of limits, change in type of coverage, reduction of coverage, or an increased deductible. The law requiring such notices protects the customer by affording the opportunity to look for alternative coverage before their current policy expires.

Unfortunately, the rules for workers' compensation policies are not the same. A worker's compensation carrier is not required to provide any notice to a policyholder when the renewal premium will increase by more than ten percent. The current law also does not provide for a notice if the renewal policy will be subject to an increased deductible or a change in classification with regard to payments of dividends that may result in a reduction in the dividends paid.

Instead, businesses with worker's compensation policies often receive the bill for their renewal policy just days before the effective date, only to find that the premium has increased substantially, or the deductible has increased or the dividend payment has decreased. Since the policyholders were not given any advance notice, they have lost the opportunity to look for alternative coverage and must renew their policy at the new, higher rate, or other unfavorable terms. This legislation will provide worker's compensation policy holders the same 60-120 day renewal notice period afforded to commercial policy holders when significant adjustments are being made to the proposed new policy.

Legislative history

This is a new bill.

Fiscal implications

To be determined.

Effective date

This act shall take effect on the one hundred twentieth day after it shall have become a law, and shall apply to all policies issued or renewed on or after such effective date.