Relates to the requirement for policyholders to provide 30 days notice to withdraw from the state insurance fund

Section 2 is the effective date.

Justification

The State Insurance Fund (S1F) is a non-profit agency of the State of New York established in 1914 to provide a guaranteed source of workers' compensation insurance coverage for employers in New York State. SIF is the largest single carrier of workers' compensation insurance in the State, with 40 percent of the market.

Although a quasi-public agency, SIF was intended by the Legislature to be treated the same as a private insurance company. See Commissioners of State insurance Fund v. Low, 285 App. Div. 525, 138 N.Y.S 2d 437 (3rd Dept 1955) It is more closely equated to an insurance company than to a typical state agency Martin Minkiowtiz, PRACTICE COMMENTARIES, N.Y. Work. Comp. Section 76 (McKinney 1994)

Despite the fact that SIF was intended to be treated as a private insurance company, it is not licensed by the New York State DFS, nor is it subject to the Department's oversight and regulation. As a result, SIF policyholders are put at a disadvantage when compared to policyholders of private workers' compensation insurers.

As a result, SIF policyholders have reported various unfair practices which have gone unchecked. One common complaint is that SIF takes retaliatory actions against policyholders who seek to move their business from SIF to another coverage provider. Policyholders have reported aggressive and unfair tactics, such as SIF suddenly revising audits and questioning classifications in an effort to charge a departing customer a higher premium.

To rectify one of these inequities, the bill would place SIF on an even footing with other insurers providing workers' compensation insurance by removing the 30 day notice requirement placed upon policyholders who have secured a new insurance policy with another carrier. Currently, SIF policyholders that want to cancel their policy with SIF because they have found other coverage must provide SIF with 30 days advance written notice. During this notice period, policyholders report that SIF employs aggressive and retaliatory tactics in an effort to retain the business. Under the legislation, the 30 day notice requirement would only be required when you are not replacing a policy. If you are replacing a policy, the 30 day notice is not required and the effective date of cancellation is the effective date of the new policy. Therefore, you can move the policy at any point, even less than 30 days, if you can demonstrate that you have a replacement policy and provide them with notice.

Moreover, if SIF policyholders cannot provide 30 days notice, they find themselves subject to excessive short-rate penalty provisions that unfairly burden New York's businesses.

It is simply unfair to require policyholders of the SIF to provide more notice than is required of policyholders of private carrier's. This statutory provision has outlived its usefulness and has become an article of anti-competitive protectionism for the Fund.

Legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect on the ninetieth day after it shall have become law.