What's happening
This bill requires business interruption insurance policies to cover COVID-19-related losses for small businesses during the pandemic state of emergency.
Why it matters
Mandates retroactive insurance coverage for COVID-19 business losses. , meaning small businesses with existing business interruption policies will have claims honored even if their policies previously excluded pandemics, providing immediate financial relief for losses incurred since March 7, 2020.
Limits applicability to businesses with fewer than 100 full-time employees. , targeting support to smaller enterprises that are typically less able to absorb prolonged revenue losses, potentially reducing permanent closures and layoffs.
Creates a financial backstop for insurers. , allowing insurance companies that pay out COVID-19-related claims to seek reimbursement from a state-managed fund, which is then replenished by assessments on all insurers operating in New York—spreading the financial impact across the industry and preventing insolvencies.
Establishes oversight and anti-fraud measures. , empowering the superintendent of financial services to set up procedures for claim review, reimbursement, and fraud prevention, which aims to ensure the integrity of the process while expediting assistance to affected businesses.
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Who cares
Headline styles
Cover Pandemic Business Losses
Plain English, a few words. Used as the page title.
Sponsors
2 Co-sponsors
History
- Recommit, enacting clause stricken
- Referred to insurance
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
8178
IN SENATE
April 13, 2020
Introduced by Sen. MAYER -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT in relation to requiring certain perils be covered under business interruption insurance during the coronavirus disease 2019 (COVID-19) pandemic
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. (a) Notwithstanding any provisions of law, rule or regulation to the contrary, every policy of insurance insuring against loss or damage to property, which includes the loss of use and occupancy and business interruption, shall be construed to include among the covered perils under that policy, coverage for business interruption during a period of a declared state emergency due to the coronavirus disease 2019 (COVID-19) pandemic.
(b) The coverage required by this section shall indemnify the insured, subject to the limits under the policy, for any loss of business or business interruption for the duration of a period of a declared state emergency due to the coronavirus disease 2019 (COVID-19) pandemic.
(c) This section shall apply to policies issued to insureds with less than 100 eligible employees in force on the effective date of this act. "Eligible employee" means a full-time employee who works a normal work week of 25 or more hours.
§ 2. (a) An insurer which indemnifies an insured who has filed a claim pursuant to section one of this act may apply to the superintendent of financial services for relief and reimbursement by the department from funds collected and made available for this purpose as provided in section three of this act.
(b) The superintendent of financial services shall establish procedures for the submission and qualification of claims by insurers which are eligible for reimbursement pursuant to this act. The superintendent of financial services shall incorporate in these procedures such standards as are necessary to protect against the submission of fraudulent claims by insureds, and appropriate safeguards for insurers to employ in the review and payment of such claims.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD16053-01-0
S. 8178 2
§ 3. (a) The superintendent of financial services is authorized to impose upon, distribute among, and collect from the companies engaged in business pursuant to the insurance law, such additional amounts as may be necessary to recover the amounts paid to insurers pursuant to section two of this act.
(b) The additional special purpose apportionment authorized pursuant to subdivision (a) of this section shall be distributed in the proportion that the net written premiums received by each company subject to the apportionment authorized by this section for insurance written or renewed on risks in this state during the calendar year immediately preceding, bears to the sum total of all such net written premiums received by all companies writing that insurance or coverage within the state during that calendar year, as reported.
(c) For the purposes of this section, "net written premiums received" means gross direct premiums written, less return premiums thereon and dividends credited or paid to policyholders, as reported on the company's annual financial statement.
§ 4. This act shall take effect immediately, and shall be deemed to have been in full force and effect on and after March 7, 2020 and shall apply to insurance policies in force on that date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act in relation to requiring certain perils be covered under business interruption insurance during the coronavirus disease 2019 (COVID-19) pandemic
Purpose or general idea of bill
This bill is intended to hold harmless businesses who currently hold business interruption insurance, for losses sustained as a result of the current COVID-19 health emergency, but for which no such coverage is currently offered.
Summary of provisions
Section 1 provides a mechanism by which certain businesses that suffer losses due to interruption as a result of the COVID-2019 pandemic may recover those losses from their insurer if they had a policy of business interruption insurance in force on March 7, 2020, the date on which the Governor declared a Public Health Emergency and State of Emergency in Executive Order 202. The bill would apply to businesses covered by such a policy with less than 100 eligible employees in the State of New York. "Eligible employee" is defined as a full-time employee who works a normal work week of 25 or more hours.
Section 2 provides that an insurer which indemnifies an insured who has filed a claim pursuant to its provisions may apply to the Superintendent of the Department of Financial Services for relief and reimbursement from funds collected and made available for this purpose as provided in the bill, pursuant to an additional special purpose assessment under the general scheme already established by law to recover the general expenses of the Department of Financial Services as the regulator of the insurance industry in this State. The superintendent shall establish procedures for the submission and qualification of claims by insurers which are eligible for reimbursement, incorporating such standards as are necessary to protect against the submission of fraudulent claims by insureds, and appropriate safeguards for insurers to employ in the review and payment of such claims.
Section 3 authorizes the superintendent to impose upon, distribute among, and collect from insurance companies, other than life and health insurance companies, the additional amounts as may be necessary to recover the amounts paid pursuant to the bill. The additional special purpose apportionment authorized by the bill shall be distributed according to essentially the same procedures and calculations as are provided currently for the existing special purpose apportionment.
Section 4 sets the effective date.
Justification
Industry sources have indicated that global virus transmission and pandemic are generally excluded from the list of covered perils under the existing standard business interruption insurance policy. The Insur- ance Services Office, ISO, has developed a rider to provide an insured with the option of purchasing such coverage, but to date, no states have yet approved the form. This bill is intended to hold harmless businesses who currently hold business interruption insurance, for losses sustained as a result of the current COVID-19 health emergency, but for which no such coverage is currently offered.
Prior legislative history
None
Fiscal implications
To be determined
Effective date
This act shall take effect immediately, shall be retroactive to March 7, 2020.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.