What's happening
This bill requires liability insurers for construction projects covered by New York's "scaffold law" to publicly disclose detailed annual financial and claims data.
Why it matters
Increased transparency could influence insurance rates and premiums. By requiring insurers to disclose how they calculate premiums and the actual costs and claims associated with "scaffold law" coverage, the bill could help property owners, contractors, and legislators better understand—and potentially question—the basis for high insurance costs on construction projects.
Public access to detailed claims and financial data may impact policy debates. Making annual insurer data public, including loss ratios, settlements, and expenses, provides a rare look into the economics of construction liability insurance, arming advocates, researchers, and policymakers with data to assess the effectiveness and financial impact of the "scaffold law."
Potential for improved worksite safety and risk management. The bill requires disclosure of insurer spending on risk management and worksite safety programs. It also mandates the state to recommend strategies for contractors and owners to lower premiums and improve safety, possibly encouraging wider adoption of effective safety practices.
Enforcement mechanisms ensure compliance and accountability. The bill empowers state regulators to impose significant penalties, suspend insurer activities, and audit noncompliant insurers. It also holds insurance executives personally accountable for the accuracy of submitted information, increasing the pressure on insurers to provide full and truthful disclosures.
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Who cares
Scaffold law liability insurers and their CEOs
Insurers would face annual financial and claims reporting requirements, with CEOs personally responsible for accuracy and potentially subject to penalties for incomplete disclosure.
Contractors and property owners
They would gain access to detailed data separating scaffold law coverage costs from general liability insurance costs, including premiums, losses and defense expenses.
Department of Financial Services
The department would collect and publish insurer disclosures, issue annual reports and enforce compliance through penalties, audits or suspensions of authority to issue additional policies.
Construction workers
Required reports would include recommendations on contractor risk management programs intended to reduce premiums and provide safer worksites.
Headline styles
Reveal Construction Insurance Data
Plain English, a few words. Used as the page title.
Sponsors
History
- Referred to insurance
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Require Insurer Financial Transparency
In Assembly Committee · Insurance · Sponsor Harry B. Bronson
Full text
5 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
465
2019-2020 Regular Sessions
IN SENATE (Prefiled)
January 9, 2019
Introduced by Sen. LANZA -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to enacting the "construction insurance transparency act of 2019" requiring all insurers which issue policies of liability insurance insuring against claims made in reliance upon the duty imposed by the "scaffold law" to file annual financial statements and detailed claim data with the superintendent of financial services
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. This act shall be known and may be cited as the "construction insurance transparency act of 2019".
§ 2. Declarations of legislative findings. The legislature hereby finds and declares that persons, corporations, associations or other business entities which issue policies of liability insurance insuring an owner of real property or a contractor who is performing work and services on real property against claims made in reliance upon the duties imposed upon such parties by section 240 of the labor law, commonly referred to as the "scaffold law", owe an obligation to the public, to those they insure and to those who may in the future be insured by them, to fully disclose in a public and transparent manner all elements relating to the premiums paid for such insurance, the method and manner in which such premiums are determined and imposed upon insureds, and claims made by injured persons who rely on owners and contractors to provide a safe and secure worksite as required in such section of such law. It is essential that the public be made aware of such an insurer's responsibility to inform them of their financial condition and solvency, and the details and specifics of the factors and circumstances behind its financial solvency as well as the basis for the rates they charge to owners and contractors to obtain such coverage. The
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04322-01-9
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determination of premiums for such liability insurance policy in this state has, unfortunately, gone on too long in obscurity, with even those who bear the cost of premiums unable to learn why prices are set as they are. As a matter of public trust, liability insurers should be required to make the public aware of the pertinent facts related to their premium determinations and financial solvency by disclosing all the pertinent facts as provided for in this section. It is the further sense of the legislature that this data should be disclosed in an open and public manner, and should be made available without undue cost and delay.
§ 3. The insurance law is amended by adding a new section 343 to read as follows:
§ 343. Financial statement and detailed claim data to be filed with the superintendent. (a) For purposes of this section, the term "insurer" shall mean any person, corporation, association or other business entity which issues a policy of liability insurance insuring a contractor or owner of real property located in this state against claims made by an injured worker, the claim for which is made in reliance upon the duty owed to such worker pursuant to the provisions of section two hundred forty of the labor law.
(b) On or before April first of each year, every insurer shall for the prior calendar year provide the superintendent and the public with a detailed financial statement to supplement and expand upon any other information otherwise provided to the department as it relates an insurer's provision of liability insurance coverage to owners of real property or contractors performing services to owners of real property for claims made by an injured person in reliance upon the duty owed by section two hundred forty of the labor law; provided, however, that the initial financial statement so filed by an insurer after the effective date of this section shall include the information required in this subdivision not only for such prior calendar year but also for the previous nine calendar years prior to such report. The financial statement shall, in depth, separate the cost of providing section two hundred forty of the labor law based coverage from the cost of providing general liability insurance insuring the same owner or contractor with respect to the same property and shall contain at least the following information relating to coverage pursuant to such section: (1) that portion of premiums assessed and attributable to providing such coverage; (2) paid judgments, settlements or losses resulting from such coverage; (3) case reserves for losses which may be attributable to coverage; (4) incurred but not reported loss estimates which may be attributable to coverage; (5) paid defense and cost containment expenses attributable to any claims made based upon such coverage; (6) case reserves for defense and cost containment experience attributable to any claims made based upon such coverage; (7) incurred but not reported defense and cost containment estimates based upon such coverage; (8) premium and loss experience identified by policy limits and deductibles; (9) number of claims initiated and closed; (10) number of claims closed with loss payments; (11) number of open claims at the time such statement is prepared; (12) other expenses by category as determined by the superintendent to reflect the cost to the insurer to provide such coverage as part of a liability insurance policy; (13) investment income realized from that portion of the premium paid for a policy providing such coverage; (14) the amount of exposure to the insurer resulting from the provision of such coverage and whether the insurer has limited the amount of coverage provided together with an estimate of the amount which might be required of the insured to purchase further coverage from an out of state excess lines
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provider, based upon current data available to such in-state provider, especially where such in-state provider operates as an excess line insurer for risks in another state; (15) amounts spent by insurer for risk management programs, or required to be spent by insureds at the behest of the insurer, which programs are designed and intended to promote worksite safety, more particularly as it relates to height related accidents covered by section two hundred forty of the labor law; and (16) the aforegoing experience and information further subdivided by quality of risk as measured by prior loss experience, contractor payroll ranges, contractor number of employee ranges, risk management participation, and other relevant identifiable differences in exposure to insurance loss. The data provided by insurers shall be separated out so that a determination can be made that a claim made or paid is based partially or totally upon section two hundred forty of the labor law; coverage, and not any other provision of statutory or common law imposing another or different or separate standard of care or duty to an injured party. Such financial statement shall include the entirety of such insurer's business activities insuring against risks occurring in this state and shall be in a form determined by the superintendent. The form shall be sufficiently itemized in a manner that allows for an actuarially sound analysis of the income realized by the insurer from all sources during such year, including but not limited to premiums, investment income, and any other category or categories of income as determined by the superintendent to reflect the full disclosure requirements of this section and that portion which may be specifically related to such coverage. At a minimum, such information shall consist of the items set forth in the statement of income, excluding the capital and surplus account section of the property/casualty statutory annual statement, as applicable to the insurer's New York state business, as well as the other information delineated in this subsection. Such financial statement shall also contain a comprehensive and detailed disclosure of the insurer's expenses actually incurred and paid during such calendar year, to include normal business expenses, salaries, commissions, consulting fees, legal expenses, advertising costs and any other category deemed pertinent to the intent of this section. At a minimum, the expense information required shall consist of the items set forth in the underwriting and investment exhibit - part 3 - expenses of the property/casualty statutory annual statement, as applicable to the insurer's New York state business. With respect to salaries (including all other forms of compensation), each insurer shall itemize the salary of the twenty most highly compensated employees of such insurer during such year, provided that the names of such employees need not be disclosed. Such financial statement shall also provide the public with a synopsis of claims or settlements paid for section two hundred forty of the labor law coverage pursuant to such policies or contracts, listing the total of such claims and settlements attributable to such coverage. At a minimum, the claim information required shall consist of the items set forth in the exhibit of premiums and losses of the property/casualty statutory annual statement, as applicable to the insurer's New York state business and identified and categorized separately for each zip code in this state. Such financial statement shall be signed and attested as full, complete and accurate by the chief executive officer of the insurer, and he or she shall be held personally responsible with respect to the accuracy of the content of such statement. The superintendent shall provide insurers with a method to submit their financial statements electronically via the internet, which method
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shall include instructions relating to the use of an electronic signature which shall be subject to, and submitted in accordance with section three hundred sixteen of this article; provided, however, that no exception authorized in such section may be requested or granted.
(c) On or before April first of each year, every insurer shall provide the superintendent with detailed closed claim information for the same insurance coverage as provided for in subsection (b) of this section for the most recently concluded calendar year. Until the superintendent promulgates data collection forms and procedures for the itemization requirements, data shall be collected using, at a minimum, the most recent publicly available forms required by law, or commonly used in the insurance industry. The superintendent may require additional information beyond that which may otherwise be currently required if he or she deems it necessary and warranted without the need to formally adopt a rule or regulation provided such requirement is consistent with the intent of this section. Such detailed claim data shall be signed and attested as full, complete and accurate by the chief executive officer of the insurer, and he or she shall be held personally responsible with respect to the accuracy of the data. The detailed claim data shall be submitted in the same manner as provided for in subsection (b) of this section.
(d) The superintendent shall, in both written form and as part of the department web site, make such financial statements and detailed claim information available to the public. The detailed claim information shall be provided in aggregate form for all insurers and separated by specific insurer, combined without any identification of a specific claim to a specific insurer. None of the publicly available detailed claim information shall identify the individual insurer, defendant or plaintiff, or representative of the same, associated with the claim. Such financial statements and detailed claim information shall be deemed a public document and no person shall be required to file a request for such financial statements pursuant to article six of the public officers law in order to receive a copy thereof, but upon request and payment of the fee for copying such document, it shall be provided forthwith. With respect to the electronic copy of such financial statements and detailed claim information, which shall be accessible on the department's web site, the department shall highlight the availability of such information to the public on such web site, and the link to each insurer's financial statement and the aggregated detailed claim information shall be accessible in a simple and easy manner. Both the financial statement and aggregated detailed claim information on the department's web site shall be available in spreadsheet format, in addition to any other format the superintendent determines is appropriate. Where summaries are included, they shall be written in plain and simple English so that the public at large can easily comprehend the data provided.
(e) On or before July first of each year, the superintendent shall issue reports summarizing and explaining the information collected from the financial statements and the detailed claim information and summarizing the cost and other essential elements relevant to providing section two hundred forty of the labor law coverage. Such report shall further contain such recommendations the superintendent deems advisable to encourage the utilization of risk management programs to be regularly conducted by contractors to reduce premiums and provide workers with a safer work environment, and any other steps contractors or real property owners should utilize in furtherance of the same. The superintendent may seek, and shall be entitled to receive, the aid and assistance of the
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commissioner of labor and any other state or local governmental official charged with responsibility for work site safety in preparing such analysis and recommendations. Copies of such reports shall be forwarded to the temporary president of the senate, the speaker of the assembly and the chairs of the senate and assembly insurance committees. Such reports shall be public documents and shall be accessible both in paper copy and on the department's web site in a similar fashion as provided for in subsection (d) of this section.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to enacting the "construction insurance transparency act of 2019" requiring all insurers which issue policies of liability insurance insuring against claims made in reliance upon the duty imposed by the "scaffold law" to file annual financial statements and detailed claim data with the superintendent of financial services
Purpose
The bill expands upon current insurance reporting laws by providing for more detailed reporting requirements of liability insurers' "financial statements" and "closed claims" data, where those insurers provide coverage against claims made under Labor Law 240. This data collection will provide lawmakers with a source of reliable and accessible data that will better enable them to evaluate liability insurance in this area and assist in providing an optimal product to New York citizens.
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.
Read the full memo (702 words)
The supplemental financial disclosure requirements stipulate that insur- ers 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, includ- ing, 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 transpar- ency 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 scruti- ny.
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, inde- pendent, 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 contrac- tors, 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
2018: S.5109-A- Referred to Insurance 2017: S.5109-Referred to Insurance/A.8949- Referred to Insurance 2016: S.3392-Referred to Insurance/A.4718- Reported to Insurance 2015: S.3392-Referred to Insurance/A.4718- Reported to Codes 2014: S.6700-Referred to Insurance/A.8745- Reported to Codes
Fiscal implications
None.
Effective date
The first day of January next succeeding the date upon which the bill becomes law.
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