Insurance comm annual report.indd - New York State Senate

2009/2010 Annual Report of 

The New York State Senate 

STANDING 

COMMITTEE 

ON 

INSURANCE 

senator neil D. Breslin 

Chairman

December 14, 2010 

Secretary of the Senate 

New York State Senate 

State Capitol 

Albany, New York 12247 

Dear Secretary of the Senate, 

I am pleased to submit to you a copy of the 2009/2010 annual report of the New 

York State Senate Standing Committee on Insurance. 

This report outlines the Committee’s overall activity during the 2009/2010 

legislative cycle. In my first term as Chairman, I am pleased to report that the 

Committee approved landmark legislation to make all types of insurance more 

affordable and accessible to our community. The Committee was active holding 

public hearings on subjects including, medical malpractice reform, no-fault 

automobile insurance fraud and the need to provide coverage for the diagnosis 

and treatment of autism spectrum disorder. 

These hearings provided us with vital information and helped the Committee 

develop legislation including Senate Bill 7000B which mandated that health 

insurance companies provide coverage for the treatment and diagnosis of autism 

spectrum disorder and Senate Bill 8414 “The Automobile Fraud Prevention Act 

of 2010.” The committee also approved landmark legislation known as “Ian’s 

Law” which makes it illegal for insurers to drop entire classes of insurance as a 

pretext to deny coverage to individual policyholders. The following report 

discusses in greater detail many of the issues the Committee was involved in, 

some of which will still be topics of discussion for the upcoming legislative cycle. 

In closing, I would like to thank each legislator and all staff members who have 

worked so hard to make many of these accomplishments possible, in particular 

Senator Seward my insurance partner. I am looking forward to an equally 

productive session in 2011. 

Sincerely, 

Neil D. Breslin 

Chairman 

2

Table of Contents 

Introduction ----------------------------------------------------------4 

Summary of Committee Activity----------------------------------6 

Property/ Casualty Insurance--------------------------------------10 

Health Insurance-----------------------------------------------------27 

Life Insurance--------------------------------------------------------36 

Public Hearing on Autism Spectrum Disorder-------------------41 

Public Hearing on Medical Malpractice Reform----------------46 

Public Hearing on No-Fault Fraud---------------------------------51 

3

Introduction 

This report is a synopsis of the activity of the Insurance Committee covering the 2009/ 2010 

legislative session. The committee is chaired by Senator Neil D. Breslin, and is composed of 16 

senators plus the chair. The committee provides oversight for all segments of the insurance 

industry: property/casualty, health, and life insurance. The report outlines all chaptered bills, bills 

which only passed the senate, public hearings, and committee nominations. The committee has 

the responsibility to regulate the growing insurance industry while at the same time ensuring the 

industry remains competitive. 

Many significant legislative initiatives were enacted into law during 2009/2010 legislative 

session to make health insurance more accessible and affordable. These initiatives run the gamut 

from extending COBRA to 36 months to making health care more affordable and available to 

volunteer firefighters and independent contractors. The committee also approved landmark 

consumer protection measures such as a bill which would regulate the growing life settlement 

market in New York to ensure, among other things, that the medical and financial information of 

those who enter into a life settlement transaction is protected. These and many other noteworthy 

initiatives were taken during this legislative session, the rest of the report examines these and 

many other significant industry reforms. 

Senator Breslin and Insurance 

Superintendent Wrynn 

Senator Breslin at the autism public hearing 

Troy Oechsner from the Insurance 

Department at the autism public hearing 

Lorri Unumb from Autism Speaks at 

the autism public hearing 

4

The New York State Senate 

Standing Committee on Insurance 

Honorable Neil D. Breslin 

Chairman 

Committee Members 

Honorable William T. Stachowski 

Honorable Carl Kruger 

Honorable Kevin S. Parker 

Honorable John L. Sampson 

Honorable Antoine M. Thompson 

Honorable Craig M. Johnson 

Honorable Pedro Espada Jr. 

Honorable Jose Peralta 

Honorable James L. Seward 

Honorable Kenneth P. LaValle 

Honorable William J. Larkin Jr. 

Honorable James S. Alesi 

Honorable Vincent L. Leibell 

Honorable Martin J. Golden 

Honorable Catharine M. Young 

Honorable Roy McDonald 

Ranking Minority Member 

Committee Staff 

Kate M. Powers 

Evan C. Schneider 

Juan Gabriel Genao 

David A. Rozen 

Counsel 

Committee Director 

Committee Clerk 

Legislative Fellow 

Central Staff 

Emily E. Whalen 

Gideon Grande 

Associate Counsel- Majority Counsel/ Program 

Fiscal Analyst- Senate Finance Committee/Majority 

5

Summary of Committee Activity 

Total number of committee meetings----------------------------------------------------- 

Total number of bills referred to committee --------------------------------------------- 

Total number of bills reported from committee----------------------------------------- 

Total number of committee bills that became law--------------------------------------- 

Total number of committee bills vetoed -------------------------------------------------- 

2009 2010 

7 9 

188 256 

20 42 

13 20 

1 1 

Public Hearings 

The role of health insurance in the diagnosis and 

treatment of autism spectrum disorder 

October 23, 2009 

Senate Standing Committee on Insurance 

Senate Standing Committee on Health 

Senate Standing Committee on Mental Health and Developmental Disabilities 

Medical Malpractice Reform 

December 1, 2009 



Senate Standing Committee on Codes 

No-fault Fraud in New York State 

February 2, 2010 


2009-2010 Nominations 

New York State Insurance Department 

Position Nominated For: Superintendent of Insurance 

Agency Description: The Insurance Department is charged with regulating the insurance industry 

and with balancing the interests of insurance consumers, companies and producers. Specific 

statutory responsibilities include: approving the formation, consolidation or merger of insurance 

organizations and all new insurance products, monitoring the financial stability of insurers, 

overseeing the testing and licensing of agents, adjusters, consultants and insurance intermediaries 

and disciplining licensees who violate the Insurance Law or regulations. The Department is 

headed by the Superintendent, who is appointed by the Governor with the advice and consent of 

the Senate, and serves at the Governor’s pleasure. 

6

* James J. Wrynn, J.D., ARM, ACI 

- Employment History: 

1992 – 2009: Founding Member, Mackay, Wrynn & Brady, LLP 

1995 – 2000: Counsel, Assemblyman Mark Weprin 

1982-1992: Trial Attorney, McCormick, Dunne & Foley 

- Education: 

1984: J.D., St. John’s University School of Law 

1981: B.S., St. John’s University College of Business Administration 

New York State Insurance Fund 

Position Nominated For: Commissioner 

Agency Description: The State Insurance Fund’s mission is to provide timely and appropriate 

indemnity and medical payments to injured workers; drive down the cost of workers’ 

compensation insurance for businesses operating in the State; ensure that all NY businesses have 

a market for workers’’ compensation insurance available to them at a fair price; maintain a 

solvent state insurance fund that is always available for NY businesses; and be a competitive 

force in the marketplace and an industry leader in price, quality, and service. The Fund is 

administered by eight Commissioner’s all of whom are appointed by the Governor with the 

advice and consent of the Senate, and serve a term of three years, and shall serve until their 

successors are appointed and have qualified. 

* Theodore K. Cheng 


Senior Litigation Associate, Proskauer Pose, LLP 

Chair, New York State Commission on Increasing Diversity in the State 

Government Workforce 

Special Assistant District Attorney, New York and Kings County District 

Attorney’s Offices 

Special Assistant Corporation Counsel, New York City Law Department 

- Education: 

1997: J.D., New York University School of Law 

1991: A.B., Harvard University 

* Eileen Frank 


President & CEO, JP West, Inc. 

Vice President & Director of Underwriting, Operations & Compliance, GAN 

North America Insurance Company. 

Officer, Commerce & Industry Insurance Co. (a division of AIG) 

Officer, Home Insurance Co. 

- Education: 

Dillard University 

* H. Sidney Holmes III 


Corporate Partner, Winston & Strawn, LLP 

Commissioner, Port Authority of New York 

Board Member, New York Urban League 

Board Member, Brooklyn Navy Yard Development Corp. 

7

- Education: 

1979: J.D., Hofstra University School of Law 

1976: B.A., Columbia University 

* Robert H. Hurlbut 


1995: Reappointed Commissioner of the New York State Insurance Fund 

1994: Formed and became President of Hurlbut Trust 

1989: Appointed Commissioner of the New York State Insurance Fund 

1968: Founded and became President of Vari-Care, Inc. 

1964: Organized and became President of ROHM Services Corp. 

- Education: 

1957: Cornell University College of Hotel Administration 

* Steven P. Polivy 


2008 – 2010: Office Managaing Shareholder & Chair – Economic Development 

Practice Group, Akerman Senterfitt, LLP 

1996-2008: various positions (Managing Partner, Partner, Of Counsel), 

Stadtmauer Bailkin, LLP 

1995: Of Counsel, Dornbush Mensch, Madelstam & Shaeffer, LLP 

1986-1994: Partner/ Associate, Berger & Steingut, LLP 

1983-1986: Associate, Baskin & Steingut, PC 

1982-1983: Counsel to the Chairman, Mortgagee Affiliates Corp. 

1980-1982: Assistant District Attorney, Kings County District Attorney’s Office 

- Education: 

1980: J.D., Benjamin N. Cardozo School of Law 

1977: A.B., Vassar College 

* Kenneth R. Theobalds 


2002-2010: Vice President of Governmental Affairs, Entergy 

1992-1995: Deputy Executive Director, New York State Insurance Fund 

1989-1992: Assistant Secretary to the Governor, Executive Chamber 

- Education: 

B.S., Cornell University 

Special Advisory Panel on Homeowners’ Insurance/ Catastrophe Coverage – CMAP 

Advisoy Council 

Council Description: To provide the association with advice and assistance with the operations 

of the coastal market assistance program. 

* Jeffrey H. Greenfield 


Managing Member, NGL Insurance Group, LLC 

Commissioner, Nassau County Planning Commission 

Past President, Council of Insurance Brokers of Greater New York 

2004: President, Downstate Insurance Council 

1996: Chairman, BRACE (Coalition of IIAANY, PIANY and Life Underwriters) 

1994-1995: President, Professional Insurance Agents of New York Stat, Inc. 

8

* N. Stephen Ruchman 


2008 –present: Partner, B&B Insurance 

1964-2008: Founder & Principle, Ruchman Insurance Agency 

1961-1964; Producer, Continental American Life Insurance 

- Education: 

B.A., Michigan State University 

Temporary Panel on Homeowners’ Insurance Coverage 

Panel Description: The Temporary Panel on Homeowner’s Insurance Coverage was created to 

study the affordability and availability of homeowners’ insurance coverage in the Empire State, 

in particular to the market dynamics in the coastal homeowners' insurance market. 

* Floyd Holloway, Jr. 

Employment History: 

Counsel, State Farm Insurance Company 

2003-2005: Chairman, New York Insurance Association 

2001-2004: Commissioner, American Bar Association’s Minority Counsel 

Program 

Education: 

J.D., Georgetown University Law Center 

B.A., Georgetown University College of Arts and Sciences 

* Michael W. O’Malley 


Manager, The Chubb Group of Insurance Companies 

Member, New York Property Insurance Underwriting Association Board of 

Directors 

Member, Florida Windstorm Underwriting Association Board of Directors 

Member, New Jersey Insurance Underwriting Association Board of Directors 

Member, Delaware and Pennsylvania Property Insurance Placement Facilities 

Board of Directors 

Education: 

Lehigh University 

* James D. Sutton 


1992-present: President, James F. Sutton Agency Ltd. 

1982-1992: Vice President Sales and Marketing, James F. Sutton Agency Ltd. 

1978-1982: Insurance Underwriter, Maryland Casualty, American International 

Underwriters, Chubb & Son, INA International 

Education: 

B.A., Hofstra University 

9

PROPERTY/CASUALTY 

Property/Casualty insurance covers damage to or loss of policyholders’ property and legal 

liability for damages caused to other people or their property. It is just one segment of the 

insurance industry which includes auto, homeowners’ and commercial insurance. The property/ 

casualty sector is a cyclical business with wide fluctuations in competition, profits, premiums, 

and amounts of coverage. 

This report encompasses the 2009 though 2010 legislative session. During these two years the 

committee considered a wealth of legislation pertaining to property/ casualty insurance. Most 

notably the committee approved legislation such as S. 7845, which prohibits an insurer from 

denying benefits for certain emergency services rendered as a result of the insured being 

intoxicated or under the influence of narcotics. This piece of legislation will not only ensure that 

health care providers are properly compensated for rendering these services, but it will also 

improve the level of care New Yorkers will receive, ultimately leading to fewer drug or alcoholrelated 

injuries. 

In the following sections we have outlined all pieces of legislation pertaining to property/ 

casualty insurance which were either enacted into law or only passed the senate. All of these 

pieces of legislation sought to create a balance between the regulatory environment and 

consumer protection, while fostering the health of the insurance industry in New York State. 

2009 

LEGISLATION ENACTED INTO LAW 

Bill No./ Sponsor Chapter Title 

S3635B/ Breslin 293 Revises the standards relating to incorporation of stock/ 

mutual insurance companies in New York State. 

S3628/ Breslin 48 Authorizes foreign insurance companies to transfer their 

corporate domicile to New York. 

S4768/ Breslin 289 Relates to establishing risk-based capital requirements 

applicable to fraternal benefit societies and to repeal 

paragraph 2 of subsection (b) of section 4530 of such 

laws relating thereto. 

S4602/ Breslin 447 Authorizes superintendent of insurance to approve a 

demonstration program where an eligible insurer issues 

group health insurance policies to eligible associations 

LEGISLATION WHICH PASSED THE SENATE ONLY 

Bill No./ Sponsor 

Title 

S5980/ Klein Requires insurers to provide victims of domestic violence with the 

option of providing alternative contact information 

10

LEGISLATION VETOED 


Title 

S3577/ Breslin Relates to authorizing the issuance of limited licenses to self-service 

storage companies for the sale of insurance coverage on personal 

property stored in self-service storage spaces 

S3635B/ Chapter 293/ Breslin 

This bill revises the standards relating to the incorporation of stock or mutual insurance 

companies so that the incorporators of an insurance corporation need only list their city and state 

of residence in newspapers and the company charter. Additionally, this bill reduces the number 

of directors from thirteen to seven and removes the requirement that not less than two directors 

be residents of New York State. Lastly, this legislation reduces the number of officers who must 

be directors from two to one. 

S3628/ Chapter 48/ Breslin 

This law extends the scope of the existing insurer re-domestication law (Section 7120 of the 

Insurance Law) to apply to non-life insurance companies domiciled in another state, but 

authorized to do insurance business in New York. Under the bill, a foreign non-life insurance 

company that is authorized in New York would have the ability to change its domicile to New 

York, with the approval of the New York Superintendent of insurance and the ranking insurance 

official of the foreign non-life insurer's current state of domicile. 


This legislation amends the insurance law to make all authorized fraternal benefit societies 

subject to the risk-based capital ("RBC") requirements of insurance Law §1322. Currently, a 

fraternal benefit society must file an RBC report only if it provides the benefits set forth in 

Insurance Law §4527, or makes optional investments set forth in Insurance Law §4530. Only 

four fraternal benefit societies are currently subject to the RBC requirements set forth in 

Insurance Law §1322. 

Risk-based capital is a formula which looks at the volatility of an insurer’s assets to determine 

the health and solvency of the insurer and to better predict when a company is showing signs of 

financial stress. 

This bill amends the insurance law to make all authorized fraternal benefit societies subject to 

the risk-based capital requirements of Insurance Law § 1322. This would facilitate the Insurance 

Department's ability to assess their capitalization levels as related to their insurance operations 

and to require implementation of remedial actions, if appropriate. As is the case for societies that 

are currently subject to the RBC reporting requirements pursuant to Insurance Law § 4527 and 

§4530, filings would be made using a form approved by the Superintendent, which may include 

the form and instructions developed and approved by the National Association of Insurance 

Commissioners specifically for fraternal benefit societies. 

11


This bill authorizes the superintendent of Insurance to permit a health insurance company 

primarily owned or controlled by a tax exempt association of independent workers to provide 

group health insurance coverage exclusively to the association's members. 

Independent contractors, part-time workers, temporary workers and other individuals who 

perform work outside the scope of a full-time employment relationship with an employer 

frequently lack access to employment-based group health insurance coverage. As a result, these 

independent workers, who comprise a growing portion of the workforce, are more likely than 

traditional employees to be uninsured. 

The demonstration program authorized by this bill is intended to test new models for enabling 

independent workers to create their own health insurance programs that meet their special needs, 

while ensuring compliance with solvency requirements, benefit mandates and other obligations 

imposed on insurers under this chapter and any regulations issued by the superintendent. The 

demonstration program will enable the legislature and the superintendent to evaluate whether 

these new models for delivering health insurance benefits to independent workers are effective 

and should be expanded to other segments of the population that lack access to employment 

based health insurance. 

S5980/ Passed Senate/ Klein 

This legislation allows victims of domestic violence to seek medical and mental health services 

and to use their health insurance and other insurance coverage to pay for those services without 

fear that insurance correspondence will be sent to the address of the policyholder, who may be 

the alleged abuser. Instead, this bill will allow victims of domestic violence to designate 

alternative contact information so they can receive insurance correspondence related to their 

health care or other related insurance claims in a safe location of their own choosing, such as the 

home of a friend or family member, a post office box or a shelter. 

S3577/ Veto Message No. 27 / Breslin 

Insurance Law Section 2131 authorizes the Superintendent of Insurance ("Superintendent") to 

issue limited licenses to franchisees of vehicle rental companies and wireless communications 

equipment vendors. The limited licenses authorize the franchisees and vendors to act as agents of 

insurance companies and sell insurance to customers in connection with the sale or lease of 

their products. This bill would amend the Insurance Law to permit the Superintendent to 

issue similar licenses to self-service storage companies. This would allow such companies to 

sell insurance to their customers for property placed in storage units. 

While the intent of this bill is laudable - to facilitate the purchase of insurance by consumers 

who may not otherwise be covered for a loss the bill raises several policy and technical concerns 

that warrant its disapproval. 

12

First, as noted in the sponsor's memorandum, "self-storage companies require that renters of 

storage space have insurance coverage to protect their stored personal property as a condition of 

renting storage space." However, consumers are often unaware of whether their homeowners’ 

or renters policy already provides coverage for such losses. As such, and perhaps as a result of 

imprudent advice from potentially untrained or improperly trained storage space 

counterpersons, consumers might purchase unnecessary and expensive insurance, or fall prey 

to overly aggressive sales tactics. 

Second, while this bill requires self-service storage companies to provide brochures and other 

written materials to prospective customers, it does not require that such brochures and materials 

be filed with the Insurance Department for review prior to their use. This requirement is 

currently applicable to wireless communication equipment vendors who sell insurance and the 

same standards should also be applicable to self- service storage companies in order to properly 

protect consumers. 

Third, this bill does not amend Insurance Law Sections 3425 and 3426, which set forth 

requirements for the cancellation and nonrenewal of personal and commercial lines insurance 

policies. These lines of coverage include most self-service storage insurance policies, such as 

those at issue here. If left un-amended, these sections would not provide appropriate 

protections for self-service storage customers, and would foster confusion, errors and 

unnecessary expense in regard to the coverage provided by this legislation. For example, 

Insurance Law Section 3425, which applies to personal lines policies, mandates a minimum 

three-year renewal policy period, while Insurance Law Section 3426, which applies to 

commercial lines policies, mandates only a one-year renewal policy period. Both these time 

periods make little sense in regard to the coverage at issue, since self-storage customers seek 

protection only while the property is stored within the storage unit, unlike the more permanent 

protection provided by Insurance Law Sections 3425 and 3426. 

Finally, this bill provides for an immediate effective date. This will make it extremely difficult 

for the Insurance Department to implement the provisions of this bill in a manner that adequately 

protects consumers. 

2010 



S638A/ Larkin 11 Requires report due the governor and legislature to 

include the incidence of misrepresentation by insured of 

the principal place where vehicles are driven and stored. 

S2088A/ Breslin 25 Relates to standard fire insurance policies. 

S5110/ Breslin 389 Authorizes municipal reciprocal insurers to offer full 

faith and credit surety bonds for public officers 

S6948/ Breslin 404 Enacts provisions relating to reciprocal insurers having a 

corporate attorney-in-fact wholly owned by subscribers 

at the reciprocal insurers. 

13

S6954C/ Breslin 470 Eliminates the board of fire underwriters; repealer 

S6949A/ Breslin 210 Relates to the listing of group policyholders in a 

directory. 

S7772/ Breslin 448 Expands definition of an independent worker and 

requirements for an eligible insurer's application. 

S1700B/ Breslin 277 Increases from $1,000 to $2,000 the property damage 

threshold after which a motor vehicle accident report 

must be filed with the commissioner of motor vehicles. 

S4651/ Sampson 322 Establishes that insurers providing rental vehicle 

reimbursement coverage shall not require an insured to 

utilize a particular rental vehicle company; requires an 

insurer writing automobile insurance which includes 

rental vehicle reimbursement coverage to inform the 

consumer of his or her right to choose a rental vehicle 

company to utilize in the event he or she utilizes such 

coverage. 

S7773A/ Breslin 544 Enacts provisions providing sponsored group personal 

insurance and allows such insurance to be written by 

authorized insurers. 

S7845/ Breslin 303 Relates to insurance losses as a result of the insured 

being intoxicated or under the influence of narcotics 

S7118A/ Breslin 368 Authorizes limited licenses to self-storage companies for 

the sale of insurance on personal property stored at 

storage facilities. 



Title 

S2092/ Breslin Relates to service contracts 

S3554/ Breslin Relates to insurance losses as a result of the insured being intoxicated 

or under the influence of narcotics 

S4116/ Breslin Relates to allowable investments and activities of employees of the 

department of insurance 

S5203/ Breslin Relates to requiring certain polices of insurance for public vessels 

which carry passengers 

S5203/ Breslin Requires the owners of public vessels intending to operate on navigable 

waters of the state to obtain marine protection and indemnity insurance 

S5980/ Klein Requires insurers to provide victims of domestic violence with the 

option of providing alternative contact information 

S6270A/ Breslin Authorizes the superintendent of insurance to suspend the risk to 

capital requirement for writing new mortgage guaranty insurance risks 

S7674/ Breslin Permits unauthorized foreign or alien insurers to contact nonresident 

persons, firms, associations or corporations to make insurance 

contracts. 

S4869B/ Breslin Establishes the "Interstate insurance product regulation compact" to 

14

egulate certain insurance products among member states and to 

promote and protect the interest of consumers of individual and group 

annuity, life insurance, disability income and long-term care insurance 

products. 

S7220/ Breslin Exempts large commercial insureds from certain rate and policy form 

requirements. 

S7794A/ Breslin Permits certain agreements by domestic mutual insurance corporations. 

S638A/ Chapter 11/ Larkin 

Within the Metro areas of New York State, automobile insurance is appropriately higher in 

relation to the more rural, less populated areas of New York State. The reasons for higher rates 

of automobile insurance in Metro areas include higher incidents of accidents, theft, and damage. 

The practice of misrepresenting the place where an automobile is garaged or driven is a 

dishonest way of reducing the costs paid for insurance. Residents of areas where insurance costs 

are higher should not be permitted to pay lower rates for automobile insurance based simply on 

documentation that states their motor vehicle is garaged in an area where insurance costs are 

lower. This act is causing an imbalance in the insurance pool of some regions in less populated 

areas of New York State, causing rates for less populated regions to be artificially inflated. This 

legislation seeks to report on these incidents in order to combat these abuses and make such 

misrepresentation a fraudulent insurance act. 

S2088A/ Chapter 25/ Breslin 

The appraisal provision required by law in the standard fire insurance policy is a vehicle to assist 

in quickly settling contract disputes between the insured and insurer, rather than more time 

consuming litigation. Without the appraisal process the insured is forced to accept an offer from 

the carrier that they think is deficient or to pursue recovery through litigation which is made cast 

prohibitive by the expenses of bringing the action. A 2002 decision of the Supreme Court, 

Appellate Division, Fourth Department (THOMAS H. FAHRENHOLZ V. SECURITY 

MUTUAL INSURANCE COMPANY AND THE KREINER COMPANY, INC), pointed out 

that further legislative action is required to eliminate the prohibition set forth in CPLR 7601 

against seeking specific performance of the appraisal provision in the standard fire insurance 

policy Section 7601 of the Civil Practice Law and Rules which now allows an individual to start 

a special proceeding to enforce a contract or agreement, exempts fire insurance policies from 

such proceedings. 

This bill amends the problems inherent in CPLR 7601 by providing clear language to allow 

either party to utilize the appraisal process more frequently and thereby avoid the high costs and 

delays inherent in protracted litigation. 

S2092/ Passed Senate Only/ Breslin 

Service contracts are popular products with consumers because it gives them peace of mind, 

knowing that they have managed the cost of future repairs of their vehicles. Allowing the 

15

provision of windshield repair and paint less dent removal service contracts be sellers and 

suppliers of such services will give consumers the option of purchasing such coverage 

in lieu of bearing the risk of repair. Through the purchase of these contracts, consumers will not 

have to bear the cost of repairing cracks or chips in their vehicle windshields, or removing small 

dents, dings or creases from their motor vehicles. 

This bill expands the definition of service contracts to include contracts made by a supplier or 

seller of a service for repair of cracks or chips in a motor vehicle windshield and for repair or 

removal of dents, dings or creases from a motor vehicle without affecting the existing paint 

finish. 


Under the Public Health Law and the federal Emergency Medical Treatment and Active Labor 

Act, health services providers are required to provide emergency medical services to persons in 

need of such care. The Insurance Law, however, permits no-fault insurers to deny coverage 

where the insured person is injured while operating a vehicle in an intoxicated state. As a result, 

health services providers are sometimes not compensated for services they are required to render 

to stabilize their patients in emergency situations. This is both inequitable to doctors and, by 

leading doctors to avoid blood alcohol and other tests for intoxication or drug use for fear they 

will lead to denial of compensation, undermines medically appropriate screening procedures. 

This bill provides for a narrow amendment to Insurance Law § 5103(b)(2). This amendment 

would prohibit a no-fault insurer from excluding from coverage a person who sustains injuries as 

a result of operating a motor vehicle while intoxicated, with respect to necessary emergency 

health services rendered in a general hospital, as defined in Public Health Law § 2801(10), 

including ambulance services attendant thereto and related medical screening. This amendment 

is intended to permit a health service provider to obtain reimbursement for any necessary 

emergency services performed in a general hospital or by an ambulance worker outside of a 

general hospital, on a person who has sustained injuries as a result of operating a motor vehicle 

while intoxicated or drug impaired. This bill also would permit reimbursement for necessary 

related medical screening, such as blood alcohol and drug tests, performed in a general hospital 

or by an ambulance worker outside of a general hospital. 


Section 204 of the Insurance Law was designed to ensure that the Insurance Department and its 

employees regulate the insurance industry in a disinterested and ethical manner. As a general 

matter, the statute continues to serve the legislative purposes underpinning its predecessor's 

enactment nearly one hundred and fifty years ago when the Insurance Department was first 

established, which included precluding not only impropriety but also the appearance of 

impropriety. Significant changes in the financial world and the nature of investments since the 

statute's reenactment in 1939 have raised questions as to the reach of Section 204. 

Section 204 was not intended to prohibit passive investment in investment companies that 

incidentally own a securities of insurance companies or in securities of issuers that own licensees 

with insurance operations that are not material to the business of the issuers taken as a whole. 

16

Accordingly, this bill amends Section 204 in a reasonable manner that maintains the statutory 

intent. 

The bill also provides an important safeguard in that it prohibits employees of the Insurance 

Department from investing in mutual funds that are designed to primarily or exclusively invest in 

the securities of licensees of the Department. Specialty funds, sometimes call "Sector Funds," 

may be designed to invest primarily in life insurance companies. An investment in such a fund 

by a Department employee would be prohibited by this bill. 

Finally, Section 16(3)(d) of the New York State banking law as amended by Chapter 318 of the 

laws of 1995 to make changes similar to this bill for employees of the Banking Department. The 

employees of the two agencies should be treated in a similar matter, and this bill accomplishes 

those goals. 


On October 2, 2005, the ship, the Ethan Allen, capsized on Lake George resulting in the deaths 

of twenty individuals. This tragedy brought to light the fact that there is no requirement that 

public vessels carry liability insurance. This legislation will enhance the safety and security of 

the public who utilize commercial watercraft for recreational and business purposes. 

This bill requires public vessels operating in New York State to carry marine protection and 

indemnity insurance, permits excess line brokers to provide marine liability insurance, and 

allows owners of public vessels to be self-insured upon approval of the commissioner of parks, 

recreation and historic preservation. 

S5980/ Passed Senate Only/ Klein 

This legislation allows victims of domestic violence to seek medical and mental health services 

and to use their health insurance and other insurance coverage to pay for those services without 

fear that insurance correspondence will be sent to the address of the policyholder, who may be 

the alleged abuser. Instead, this bill will allow victims of domestic violence to designate 

alternative contact information so they can receive insurance correspondence related to their 

health care or process other related insurance claims in a safe location of their own choosing, 

such as the home of a friend or family member, a post office box or a shelter. 

This bill will help protect the privacy and safety of domestic abuse victims regardless of whether 

they remain in the same household with their abuser. Victims who leave abusive environments 

will be better able to access important medical and mental health care services if they can use 

their existing health insurance without fear that claim and billing correspondence will reveal 

their location or other sensitive information. Similarly, individuals living in abusive situations 

will also be more likely to seek necessary treatment if their privacy can be assured, and that 

treatment may be able to help them connect with the resources available in their communities to 

help victims of domestic violence. 

17

S6270A/ Passed Senate Only/ Breslin 

Mortgage guaranty insurance companies are forbidden from writing business when the ratio of 

their total policy liability to their policyholder's surplus exceeds a ratio of 25 to 1. This standard 

was developed in the 1960s when the modern mortgage guaranty insurance industry was in its 

early stages and no risk-to-capital ratio requirement existed. Given the nascent state of the 

industry, the 25 to 1 rule was reasonable, but by its very nature was inflexible and not reflective 

of changing or special circumstances. In particular, a mortgage guaranty insurer is likely to reach 

the 25 to 1 standard in the midst of a high claims paying cycle (as the industry is currently 

experiencing), but may have more than enough capital to pay expected claims on its insurance in 

force. If mortgage guaranty insurers are compelled to cease writing new business as Section 

6502 currently dictates, the ability of those insurers to remain viable commercial entities, and to 

write insurance after the end of this high claims-paying cycle, will be impaired. 

Under the amendment to section 6502 (b) (1), the Superintendent is authorized to evaluate 

whether the risk to capital requirement should be suspended for a particular insurer and to 

determine the period of time and conditions under which the suspension of that requirement will 

apply. Permitting a mortgage guaranty insurer to operate above the 25 to 1 requirement for a 

limited period would allow the insurer to increase its capital base for paying claims and insuring 

loans in the future. Furthermore, if mortgage guaranty insurers are required to cease writing 

new business as triggered by the current risk to capital requirement, fewer loans will be insured 

in New York, further fueling pressures on the availability of mortgage finance credit. As a 

consequence, the housing recovery in New York (and elsewhere) will likely be impeded, with a 

concomitant adverse impact on the state's economic recovery. 


Under current law, an entity cannot act on behalf of an unauthorized insurer from offices in the 

State even if the actions including the solicitation, negotiation or underwriting of risks do not 

involve New York residents. Thus, business that could otherwise be transacted in New York 

must take place outside of the state. By forcing these companies beyond the State's borders, the 

existing law drives jobs and the benefits related thereto out of the State. 

This legislation would allow these entities which are part of the holding company system of a 

domestic insurer and the unauthorized insurer, along with the employees that support them, to 

come into the State and set up office facilities within its borders. It would allow such entities to 

operate from an office in the State so that it may provide those services necessary to support an 

unauthorized insurer's overseas operations. Such services would include underwriting, 

negotiating contract terms and quoting premiums with respect to non-New York residents. This 

legislation would allow these entities to undertake those support functions necessary to operate 

their business, from within the State, without affecting New York policyholders. The protections 

afforded New York policyholders will be unimpaired by the proposed legislation. 

Importantly, this will allow jobs to be established in New York related to the conduct of business 

in New York that has no nexus to citizens of the State and will not affect the regulation of 

insurance as it relates to New York residents. 

18

S4869B/ Passed Senate Only/ Breslin 

In general, interstate compacts are used to establish the framework for cooperative solutions to 

multi-state challenges. There are over two hundred interstate compacts currently in existence 

covering a wide variety of subjects. Every state belongs to at least fourteen such compacts. 

This bill is based on the NAIC Model Act. 

The bill provides for a single point of product and rate filings subject to uniform national 

standards, which provides the following benefits: 

a. Regulatory efficiency/effectiveness: more effective use of limited regulatory resources. 

b. Single high-quality review of increasingly complex products. 

c. Leverage collective expertise of states in setting uniform standards. 

d. opportunity to redirect resources to other areas of consumer protection. 

e. Meet industry's need for single point of filing. 

f. Meet industry's need to get products to market in a more timely manner. 

g. Permit industry to compete more effectively with financial institutions such as banks and 

security firms. 

h. Provide consumers with a broader choice of products in a more timely manner. 

States would still retain control over the insurance regulatory process even if a state elects to join 

the compact. If a state disagrees with a product standard developed by the Commission, it may 

opt-out of the uniform standard either by regulation or legislation. The bill would also allow 

companies to continue to file products in the individual states through the existing form filing 

process. 


Commercial policyholders do not require the same level of regulatory protection as is warranted 

for personal lines insurance. Commercial policyholders often have risk management 

professionals on staff and possess a higher level of knowledge and sophistication relative to 

insurance options. Rather, commercial insureds need flexibility so that policies can be tailored to 

their particular needs. Commercial insureds also need to be able to respond rapidly to 

competitive forces, economic conditions and the needs of their customers. The current system in 

New York can hinder the ability of insurers to respond to the needs of their commercial 

customers, which has led many commercial insureds to utilize alternate insurance mechanisms to 

satisfy their insurance needs. These alternate insurance mechanisms are often unregulated or 

subject to minimal regulation, leaving commercial insureds utilizing such mechanisms without 

the protection of the guarantee funds, adequate solvency regulation, or other valuable regulatory 

protections. 

The attached legislation would modernize the regulation of commercial insurance in New York 

and would help make New York a more attractive place for insurers to do business. This 

legislation would also facilitate operations and reduce costs for commercial policyholders 

because it would promote competition among carriers which would drive down premiums. In 

19

addition, this legislation would allow the Insurance Department to focus its resources on 

solvency and personal lines regulation which will, in turn, speed approvals in those areas. 


Existing law prohibits domestic mutual insurance companies (except those organized before 

January 1, 1940 to do only marine protection and indemnity insurance) from entering into an 

agreement with any of the company's officers or directors, or with any firm or corporation in 

which any such officer or director is pecuniarily interested directly or indirectly, whereby the 

insurance corporation agrees to pay, for the acquisition of business, any commission or other 

compensation which under the agreement is increased or diminished by the amount of such 

business or by the insurance corporation's earnings on such business. 

The Insurance Department has interpreted this law as prohibiting a mutual insurance company 

from entering into a profit sharing commission agreement with an insurance agency simply 

because one of the insurance company's officers also served as a director of a corporation that 

owned the insurance agency. The Insurance Department found that the insurance company 

officer had an "indirect" pecuniary interest in the insurance agency. 

The existing prohibition is an outdated and overly restrictive limitation put in place nearly a 

century ago. It serves no legitimate purpose today and is no longer practical in today's business 

environment. In today's business community, many directors and officers of insurance 

companies also serve on the board of directors of various other, non-insurance business 

corporations. Today, many corporations are part of a larger holding company structure, and it is 

quite possible that a corporation where an insurance company officer serves as director, would 

have affiliates or subsidiaries that engage in insurance activities. This provision unnecessarily 

prohibits a mutual insurance company from entering into certain compensation agreements with 

these insurance agency affiliates and discourages mutual insurance company officers and 

directors from sharing their talents and serving as directors and officers of various other 

corporations. 

This bill permits domestic mutual insurance corporations to enter into certain compensation 

agreements with firms and corporations in which an officer or director has only an "indirect" 

pecuniary interest. 

S5110/ Chapter 389 / Breslin 

One of the fundamental insurance coverages that all municipalities need is full faith and credit 

bonds for their public officers. This is a required coverage by virtue of Public Officers law, § 11 

and 30, and parallel provisions of the Town, Village and General City laws. Failure to acquire 

such coverage for municipal officials who handle financial transactions of a municipality results 

in the office being vacated by operation of law. 

Current law puts NYMIR and the local brokers and agents in a very difficult position when 

trying to place these coverages. Elected officials need this coverage in order to qualify for office. 

They have only 30 days from the commencement of their term to acquire it, or they are deemed 

20

to have vacated the office to which they were just elected. Yet even markets that continue to 

offer this essential coverage are now requiring credit checks and in some cases declining to 

extend coverage if a satisfactory credit history is not forthcoming. As the largest underwriter of 

local government risk in the State, this is exactly the reason NYMIR was formed, to insure that 

New York's local governments will be able to acquire the insurance protections that their 

taxpayers require. 

This bill authorizes municipal reciprocal insurers the ability to offer full faith and credit surety 

bonds for public officers. 


This legislation reinserts into section 6106 the language previously existing in the prerecodification 

section 415, referring to reciprocals having a corporate attorney in fact wholly 

owned by the subscribers of the reciprocal. 

In addition, the proposed bill includes a new provision in insurance law section 6107 to avoid 

transition difficulties that would otherwise ensue for insurers who have attorneys-in-fact wholly 

owned by their subscribers, but who currently are not expressly authorized to issue renewal 

insurance policies with the notice that the acceptance of the policy with the subscribers' 

agreement attached constitutes the signing of the subscribers agreement. 

The new procedure allows such reciprocals (and reciprocals authorized to issue non-assessable 

policies) to transmit to the subscribers changes to the subscribers’ agreement together with the 

entire subscribers’ agreement in force. In addition, the proposed change must be submitted to the 

subscribers with a notice stating that the failure to object to the amendment within sixty days 

constitutes the acceptance of the agreement as amended. 

All reciprocal insurer subscribers' agreement amendments must be approved by the 

Superintendent pursuant to subdivision (b) of section 6107 of the insurance law, and by the 

advisory committee of the reciprocal pursuant to subdivision (d) of section 6107. Therefore, the 

new procedure provides essentially the same safeguards and efficiencies recognized in the 

procedures authorized by prior sections 415 and 416 of the insurance law before the 1984 

recodification 

S6954C/ Chapter 470 / Breslin 

The Board of Fire Underwriters (the "Board") was created at the request of the insurance 

industry in the late 1800's, to assist them in protecting insured's property in the City of New 

York. To attain this goal, the Board created the Fire Patrol, the purpose of which was to respond 

to fires at or near an insured's location and attempt to remove, preserve or otherwise protect 

property contained therein from such fire, or other harmful effects such as smoke or water 

damage. The Fire Patrol was funded by self-assessments on Board members. 

21

However, over time the Board found that the Fire Patrol was unable to adequately protect 

property from fires or related damage (e.g. modern electronics, prevalent throughout residences 

and offices, are often damaged beyond use despite Patrol efforts). As such, the effectiveness 

and use of the Fire Patrol diminished to the point where it was determined by the Board that it 

was no longer necessary and the self-assessments were burdening member companies with 

unnecessary costs that only increased the eventual cost to the consumer. The result was that the 

Fire Patrol was disbanded in 2006. 

Given that the original purpose of the Board is no longer relevant, it is appropriate to provide for 

its dissolution. 

S6949A/ Chapter 210 / Breslin 

This legislation is necessary in order to allow the SuperGuarantee Program, or programs similar 

to it, to continue to operate in New York State. Through the SuperGuarantee Program, if a 

consumer (1) uses a service provider identified as a SuperGuarantee service provider in the 

yellow page directory and (2) registers for the program on the SuperGuarantee website, then in 

the event that the consumer encounters a problem with the service of such provider, the yellow 

pages publisher would initiate a dispute resolution process between the consumer and the 

provider. If the consumer is not satisfied with the outcome of that process, the yellow pages 

publisher would provide payment to the consumer. Payment would be for the lowest estimate of 

two other service providers to correct the problem or the amount charged under the contract 

between the consumer and the original SuperGuarantee service provider, not to exceed $500. 

There is no cost to the consumer for participating in the Program. 

The Insurance Department has made the determination that the SuperGuarantee Program 

constitutes the business of insurance under New York law. Enactment of this legislation is 

necessary in order for the Program to continue operating in New York. The SuperGuarantee 

Program provides a legitimate benefit to the consumer at no extra cost. At a time 

when both the time and finances of many New Yorkers are limited, the SuperGuarantee Program 

can help to ensure that New York consumers are able to resolve disputes with service providers 

satisfactorily, while minimizing the time and hassle involved. 


Independent workers such as part-time workers, temps, freelancers and independent contractors 

have a particularly difficult time finding affordable health insurance because they cannot get 

coverage on a group basis through their employer. To address this problem, the legislature 

enacted A.7949-A (Silver)/S.4602A (Breslin) that creates special demonstration authority for the 

Insurance Department to permit a health insurer owned by a tax-exempt association of 

independent workers to offer coverage solely to the association's members, without having to 

serve the employer-based group health insurance market. A health insurer participating in this 

program is required to follow all insurance law, including benefit mandates, and report to the 

Insurance Department which will analyze the impact of the program. 

22

An administrator of this health insurance plan is permitted to charge a reasonable fixed fee for 

assessing an applicant’s eligibility for coverage. This fee is necessary to ensure that the 

administrator can process the applications and will only be assessed when an application is 

submitted. 

This bill amends Insurance Law §1123, to clarify the definition of "independent worker" to 

include (1) individuals who work full-time for a single employer on a temporary basis and (2) 

domestic workers such as nannies. This would insure that all independent workers have access to 

uninterrupted and affordable health insurance. 


Prohibits insurers from imposing a surcharge for accidents where the property damage does not 

exceed two thousand dollars and where no physical injury resulted. 

This legislation amends Section 2335 of the insurance law by adding a new subsection (a), 

raising from one thousand to two thousand dollars the amount of property damage which, if 

exceeded in a motor vehicle accident, would allow an insurer to impose a policy premium 

surcharge. 

New York is always in danger of becoming the highest cost state in the nation for auto insurance. 

This legislation would help contain premium costs by preventing auto insurance surcharges for 

minor accidents. 

The amount of property damage for which insurers may impose a premium surcharge is currently 

based on the amount ($1,000) set in V&T section 605, which requires accident reporting to the 

Department of Motor Vehicles(See 11 NYCRR 169.1(a)). Changes in accident costs since 1991, 

when the current reporting threshold was enacted, mean that the most minor accidents now result 

in an insurance surcharge. Sometimes, the amount paid in surcharges over three years can equal 

or exceed the amount of the original insurance benefit. This is unfair to consumers and leads 

many to pay out-of-pocket for claims which they could legitimately collect from insurers. 

This bill prohibits insurer surcharges for accidents with property damage less than $2,000. (All 

accidents causing any type of injury would remain surchargeable.) The accident reporting 

threshold was last raised effective August 1, 1991, to $1,000 from $600. This bill, as amended, 

would still require minor accidents to be reported so statistics can be kept, but would adjust the 

insurance premium surcharge threshold to a fairer and more reasonable amount. 

S4651/ Chapter 322 / Sampson 

There have been instances of insurers steering their customers with rental vehicle reimbursement 

coverage to use one particular rental vehicle company. Oftentimes, these customers are unaware 

of the availability of other rental vehicle companies, some of which may offer less expensive 

rentals than the company favored by the insurer. Consumers should not be forced to use one 

particular rental vehicle company or be in any way limited in their ability to utilize the coverage 

they purchased. When insurers recommend only one rental vehicle company without telling the 

23

consumer they have the option to use any company, consumers (many of whom are distressed 

from suffering an accident) often hastily agree to rent from the recommended company, 

regardless of the fact that other, possibly less expensive and more convenient, options are 

available. This bill would ensure that consumers are afforded the opportunity to make an 

informed decision. 

This bill is based on Insurance Law section 2610, which prohibits insurers providing collision or 

comprehensive coverage from requiring an insured to utilize a particular repair shop, or, in 

processing any such claim, recommending or suggesting that the insured utilize a particular 

repair shop. 


New York's current Employer Sponsored Group Personal Excess law (section 3445*2) permits 

the sale of group personal excess insurance but only to designated employees of an employer that 

sponsors the group. This bill: 

(1) Permits officers and directors to be members of an employer sponsored groups in addition to 

just employees, as well as the spouses and immediate family members and household members 

of employees. 

(2) Allows other types of groups, clubs or associations (not just employers) to sponsor a group 

insurance program. Examples include groups like stamp or coin collectors club sponsoring a 

group insurance program for personal property floaters covering valuable stamp or coin 

collections a vintage auto enthusiast club sponsoring programs for antique auto insurance, etc. 

Additionally, banks and other financial institutions that own large portfolios of residential 

properties (e.g., foreclosed homes), that are renting out such properties, could sponsor a program 

for renters insurance for their tenants. 

(3) Consistent with the examples outlined above, permit group insurance for a few new types of 

insurance in addition to group personal excess. specifically group personal property floaters (as 

in our stamp/coin collection example), group vintage vehicle insurance (as in our antique 

auto enthusiast club example) and group renters insurance (as in our foreclosed properties 

example). 

(4) Set standards for groups that can sponsor group programs. The standards in our proposed 

draft are similar to standards found in other state laws or regulations -- e.g.. a sponsor group 

cannot be a fictitious group, cannot have been formed for the purpose of buying or selling 

insurance, must involve members engaged in a common pursuit or enterprise, must have 25 or 

more members, have been in existence for at least three years, have adopted by-laws and a 

method to enroll or register members. 

(5) Adopt consumer safeguards with respect to the cancellation or nonrenewal of a group policy 

and with regard to premium payments collected by the sponsor group acting on behalf of the 

insurer. 

24

The rest of the law remains unchanged -- in particular, the law still clearly states that no member 

of a group is ever obligated to buy any insurance. 

These types of group insurance programs can be beneficial to the public in a number of ways. 

With respect to valuable collections, such as coins. stamps and other collectibles, we believe that 

many collectors are under-insured. There are sub limits in typical homeowners’ policies 

applicable to such items. So, group programs for collectors could increase their awareness of this 

coverage and, by grouping such homogeneous collectors, make such insurance products more 

affordable, too. Similarly, group programs can raise the awareness of renters insurance 

among tenants. 

The market for antique and collectible auto insurance is dominated by a few Managing General 

Agents. Permitting group antique auto programs could inject some additional competition into 

this market. And, members of antique auto clubs also have homogeneous risk characteristics - 

e.g., vehicles typically are garaged, driven very little, often towed to shows instead of being 

driven, kept in mint condition, and clubs often are formed around owning a specific type or 

model of car. 


Under the Public Health Law and the federal Emergency Medical Treatment and Active Labor 

Act, health services providers are required to provide emergency medical services to persons in 

need of such care. The Insurance Law, however, permits no-fault insurers to deny coverage 

where the insured person is injured while operating a vehicle in an intoxicated state. As a result, 

health services providers are sometimes not compensated for services they are required to render 

to stabilize their patients in emergency situations. This is both inequitable to doctors and, by 

leading doctors to avoid blood alcohol and other tests for intoxication or drug use for fear they 

will lead to denial of compensation, undermines medically appropriate screening procedures. 

In 2008, a bill was introduced to address this situation (A.10000/S.8294-A), but it was vetoed by 

Governor Paterson because it was not limited to emergency care, but rather would have required 

no-fault carriers to have reimbursed providers for virtually all health services given to 

intoxicated individuals. By permitting reimbursement for necessary related medical screenings, 

such as blood alcohol and drug tests, more screenings will occur, underlying drug or alcohol 

problems will be more frequently identified and addressed, and ultimately fewer drug or alcoholrelated 

injuries will occur. 


Self-service storage companies require that renters of storage space have insurance coverage to 

protect their stored personal property as a condition of renting storage space. While some 

consumers have a homeowner's or renter's policy that will provide coverage for their stored 

property, many others lack the required insurance coverage. If self-service storage companies are 

permitted to obtain a limited license to offer personal effects insurance to renters of storage 

space, consumers will have the opportunity to obtain the required coverage to protect their 

valuable property. 

25

Personal effects insurance would cover the loss of, or damage to a renters stored personal 

property for events beyond the self-service storage company's control. A number of other states 

currently permit the issuance of limited insurance licenses to self-service storage companies 

authorizing them to offer personal effects insurance in connection with the rental of storage 

space. Existing insurance law currently provides for the issuance of a limited license to rental 

vehicle companies and wireless communications equipment vendors. A limited license 

authorizes these entities to offer certain types of insurance only in connection with the rental of 

motor vehicles or the sale of wireless communications equipment. 

This bill permits the Superintendent to issue a limited license to a self-service storage company 

that would permit it to offer personal effects insurance only in connection with the rental of 

storage space at a storage facility. Just as rental vehicle companies and wireless communications 

equipment vendors are currently required to do when offering insurance, self-service storage 

companies would be required to provide brochures and other written materials to prospective 

renters that: summarize the insurance already provided by a renter's/homeowner's insurance 

policy or other source of coverage, state that the purchase of insurance is not required 

to rent storage space, describe the process for filing a claim if insurance is purchased, contain the 

price, deductible, benefits, exclusions and conditions of the policy; and state that the customer 

may cancel the insurance at any time and any unearned premium will be refunded in accordance 

with applicable law. 

Self-service storage companies also would be required to conduct training programs for their 

employees and sale representatives offering insurance pursuant to the limited license that must 

meet the minimum standards that currently apply to training programs required by rental vehicle 

companies and wireless communications equipment vendors that offer insurance pursuant to a 

limited license. These training programs also must be approved by the Superintendent. 

Senator Breslin at the medical 

malpractice reform public hearing 

Judith Ursitti from Autism Speaks at the press 

conference for senate bill 7000B 

26

HEALTH INSURANCE 

The Senate Insurance Committee studied, reported, and made recommendations on health care 

provisions, regulations, insurance, liability, licensing, and delivery of services. In so doing, the 

Committee endeavored to ensure that New York State as provider, financier, and regulator 

adopts the most cost-effective means of delivery of health care services so that the greatest 

number of New Yorker’s receive quality health care. 

The Senate Insurance Committee also focused on assisting consumers to make informed 

decisions when selecting a health care plan and on identifying issues, trends and problems that 

may require executive, regulatory, or legislative intervention. 

In 2009, Chapter 240, sponsored by Senator Breslin, sought to address the problem of numerous 

uninsured young adults between the ages of 19 through 29 who represented 31 percent of New 

York State's total uninsured population. The goal of this legislation was to extend and make an 

available option to young adults who often are unable to afford individual direct payment 

insurance and frequently choose to go uninsured. 

As healthcare costs skyrocketed and wages remained stagnant, the Senate Insurance Chairman 

ensured enactment of Prior Approval legislation (S.8088/ Chapter 107). By requiring prior 

approval, DOI is able to use objective criteria to review many premium rates before they are 

increased and no longer has to rely on self-interested insurers to police themselves. By ensuring 

that rates are fair and correct before they are increased, consumers and insurers are able to plan 

for the future, ending scenarios where individuals drop their insurance coverage because they are 

being charged too much. Prior approval ends inappropriately excessive rate increases and helps 

avoid dropped coverage and out-of-control premiums. 

These significant pieces of legislation serve as the foundation to the future as New York 

continues to endeavor to increase access to health insurance for all New Yorkers. 

2009 



S5471/ Breslin 236 Relates to extending state continuation benefits from 

eighteen to thirty-six months. 

S5472A/ Breslin 237 Provides enhanced consumer and provider protections. 

S6030/ Breslin 240 Provides for the extension of health insurance coverage 

to the unmarried child of an insured through the age of 

29 years. 

S66006/ Breslin 498 Establishes a special enrollment period for employees 

and members with expired health coverage who wish to 

utilize state continuation benefits. 

S3068/ Breslin 7 Relates to a special enrollment period; authorizes an 

27

individual who does not have an election of 

continuation of coverage in effect on the effective date 

of the American Recovery and Reinvestment Act of 

2009, but who would be an assistance eligible 

individual under Title III of such act if such election 

were in effect, may elect continuation of coverage. 



S4463A/ Breslin 

Title 

Requires the NYS health foundation and state insurance fund to file 

annual audited financial statements with the office of the state 

comptroller. 


New York's unemployment rate was close to eight percent as of February 2009, up from six 

percent in November 2008, and climbing at a rate that exceeds the national average. An 

increasing number of workers are experiencing extended periods of job loss or being forced to 

work part-time. All of these factors contribute to a loss of group health insurance coverage. 

Also, as companies downsize, older workers are often offered early retirement options as an 

alternative to lay-offs. These individuals may not have retiree health benefits, and can be years 

away from Medicare. This bill extended a more affordable private health insurance option, at 

no direct cost to the State or employers. The bill allows workers, regardless of the size of their 

employer, to extend their health insurance continuation benefit from 18 months to 36 months. 


This bill enhanced consumer and provider protections by instituting a series of managed care 

reforms, including: (1) requiring that a provider be given notice of an adverse reimbursement 

change to a provider contract and an opportunity to cancel the contract; (2) requiring insurers 

who offer comprehensive policies to offer the same grievance procedures and provide the same 

access to care that is required for health maintenance organizations (HMOs); (3) requiring 

insurers and HMOs to pay electronic claims promptly and limiting their ability to respond 

to claims by sending a coordination of benefits questionnaire; (4) extending. overpayment 

recovery protections to all health care providers and permitting them to challenge such 

recoveries; (5) requiring insurers and HMOs who fail to meet a loss-ratio requirement to make 

efforts to locate and pay dividends or credits to former policy holders; (6) prohibiting insurers 

and HMOs from treating a participating provider as a non-participating provider; (7) permitting 

newly licensed providers and providers moving to New York to be provisionally credentialed 

until the final credentialing determination is made by the insurer or HMO; (8) shortening 

utilization review timeframes for determinations involving post-hospital home health care 

services; (9) allowing providers to appeal concurrent adverse determinations through the external 

appeal process; and (10) establishing a new external appeal standard for rare disease treatments. 

The bill also enhanced efficiencies by authorizing the Superintendent of Insurance to require 

that mandated submissions be filed electronically. 

28


This bill expanded access to health insurance through a COBRA-like benefit for young adults by 

requiring commercial insurers, non-profit corporations and HMOs to offer an option to continue 

coverage for unmarried young adults through age 29, regardless of financial dependence, under a 

parent's group health insurance policy. 

This bill also extended a make available option to individuals, employers and other group health 

insurance consumers to permit them to buy family coverage which includes coverage for 

dependents through age 29 subject to certain criteria. Insurers must now extend the option to 

purchase at policy inception and, for group policies, upon each anniversary date. 


This bill helped provide continued access to group health insurance by ensuring that all people 

eligible for federal COBRA or state continuation coverage receive up to 36 months of coverage, 

regardless of when the group health insurance contract or policy is renewed, modified, altered or 

amended. 


Expands access to the nine-month federal stimulus subsidy of 65 percent of continuation 

premiums available to employees that have been involuntarily terminated from their jobs 

between September 1, 2008 and December 31, 2009. 


The Bureau of Financial Reporting has concluded that the Government Accounting Standards 

Board considers the State Insurance Fund and the New York State Health Foundation component 

units of the State of New York reporting entity and requires their audited financial information to 

be discretely presented in the New York State Comprehensive Annual Financial Report. These 

entities are not required by statute to file audited financial reports with the Office of the State 

Comptroller. This bill proposed to amend existing state laws to require that these entities file 

annual audited financial statements with the Office of the State Comptroller. 

2010 



S5111/ Breslin 71 Relates to provisions of law which permit health 

services and insurance for volunteer firefighters and 

ambulance companies through public corporations. 

S5456/ Diaz 49 Requires third-party notification prior to termination of 

long-term care and health insurance for persons 65 and 

29

older. 

S6014B/ Breslin 515 Relates to group life and group accident and health 

insurance policies. 

S6263C/ 

Schneiderman 

398 Enacts Ian's Law, which provides enhanced consumer 

protections in the event of an insurer's discontinuance 

of coverage. 

S8088/ Rules 107 Relates to prior approval of health insurance premium 

rates. 

S8358A/ Breslin 453 Relates to the definition of an independent worker for 

purposes of the health insurance demonstration 

program for independent workers. 

LEGISLATION VETOED 

Bill No./ 

Sponsor 

S7000B/ 

Breslin 

Veto Message No. 

Title 

6832 Requires that accident and health 

insurance policies shall provide 

coverage for screening, diagnosis and 

treatment of autism spectrum disorder. 


S4463A/ Breslin 


Title 

Requires the NYS health foundation and state insurance fund to file 

annual audited financial statements with the office of the state 

comptroller. 

Requires coverage of orally administered chemotherapy treatments. 

S5864/ Hassel- 

Thompson 

S6309B/ Johnson C 

Relates to coverage for prenatal vitamins. 

S7001B/ Saland 

Relates to coverage for refills of prescription eye drops. 

S7977/ Squadron Authorizes reimbursement for testing for familial dysautonomia, 

Canavan's disease and Tay-Sachs. 


This bill allowed volunteer firefighters and ambulance workers to apply for municipal health 

insurance benefits, with the total cost of participation borne by the volunteer and his or her 

family. This program is modeled after a similar provision in the General Municipal Law that 

allows for volunteer school board members to purchase health benefits from the plan offered by 

their school district. 

30

S5456/ Chapter 49/ Diaz 

This bill required insurance companies to authorize their senior citizen clients to designate a third 

party for written notification in the event such companies forward notifications concerning the 

impending cancellation of the senior citizen clients' long-term care and health insurance policies. 

Thereby assisting those elderly individuals who are incapable of comprehending the cancellation 

of their accident and health insurance policies. 


This bill removed impediments and created the ability for insurers to tailor more attractive and 

available group coverage for employers and employees in New York. It allowed insurers to offer 

group coverage to employees of any employer who elects to take part in a group life, disability 

income, long term care, vision or dental policy by removing the current restriction that the group 

must be of a sufficient size in order to qualify for group coverage. 

The law will permit be issued in the group setting and, consequently, more state residents to have 

such coverage. The more people who have group life, disability income and long term care 

insurance, the fewer who may need public assistance in times of hardship. 

S6263C/ Chapter 398/ Schneiderman 

Existing law protected consumers by banning insurance companies from dropping policyholders 

due to their claims experience or health status. However, there was a loophole which allowed 

insurance companies to drop coverage for an entire class of policyholders due to one high cost 

individual. 

Ian Pearl was a victim of that loophole. Mr. Pearl required 24-hour nursing care due to muscular 

dystrophy - a benefit that had been covered by his insurance company, issued in the state of New 

York as part of a small group policy. His insurance company allegedly took the claims history of 

Mr. Pearl and other severely ill and disabled policyholders into account when deciding which 

class of policies to terminate. 

This bill among other things, added a strong consumer protection mechanism for the previous 

law that states that no one with a serious medical condition who is covered under an insurance 

policy shall lose their coverage of benefits they have utilized in the last 12 months related to their 

serious medical condition when their insurance company discontinues their class of policies. 

S8088/ Chapter 107/ Rules 

This bill established a process and timeframe for the Insurance Department to prior approve 

changes in health insurance premiums for many insures before they become effective. The 

process includes public notification of requested premium rate adjustments, the opportunity for 

public comment and public notification of the final premium determination. 

Under the provisions of the bill, the Superintendent of Insurance is required to render a final 

determination on a proposed health insurance premium adjustment within 60 days or it is deemed 

31

effective. In instances where the Superintendent requires additional information to render his 

final decision, the bill provides a maximum of 20 additional days for a final determination to be 

made. 

The bill also increased the minimum medical loss ratio (MLR), the amount of premiums required 

to pay health claims, to 82 percent. 


This bill amended Insurance Law §1123, to clarify the definition of "independent worker" to 

include (1) individuals who work full-time for a single employer on a temporary basis and (2) 

domestic workers such as nannies. This legislation insured that all independent workers have 

access to uninterrupted and affordable health insurance. 

S7000B/ Veto Message No. 6832/ Breslin 

This legislation would have closed a significant gap in insurance coverage for individuals with 

autism. The Centers for Disease Control (CDC) has estimated that the number of children with 

autism is 1 in 110 nationwide. (Prior CDC estimates had been 1 in 150). Existing state law 

requires that insurance coverage for autism "not exclude" the diagnosis and treatment of autism 

spectrum disorder. Current law does not provide clarity to consumers or insurers as to the scope 

of required coverage and does not establish a regulatory process whereby the Commissioner of 

Health is authorized to promulgate rules which identify treatment and therapy options. 

This bill would have affirmatively required policies to provide such coverage for individuals 

with autism spectrum disorder throughout their entire life span. The bill also provided for an 

updated definition of the term "autism spectrum disorder". The bill would amend existing 

provisions of the insurance law to require coverage under health insurance policies issued 

by indemnity and nonprofit insurers, as well as health maintenance organizations. Coverage 

would specifically be required for the group of neurological conditions know as "autism 

spectrum disorder", limited only by whatever restrictions are otherwise contained in the policy. 

Coverage would have also been subject to utilization review, medical necessity determinations 

and appropriate case management. 

The Commissioner of Health, in consultation with the Insurance Superintendent and the 

Commissioners of Mental Health and Mental Retardation and Developmental Disabilities, would 

have been charged with responsibility for promulgating regulations identifying treatment and 

therapy options. The legislation would have ensured that only those treatments and therapies 

which have been determined by recognized medical authority as evidence-based and clinically 

proven would be covered. 

Veto Message No. 6832 

My time as the 55th Governor of New York State has been shaped by extraordinary fiscal 

and revenue crises. It has been a continual challenge to work for the betterment of the State's 

residents without unnecessarily creating a gap between revenues and expenditures. A number of 

32

ills sent to my desk were clearly borne of compassion and good intentions, and would 

have been approved were it not for the unbudgeted costs associated with such legislation. One 

such example was a bill to cap the rent of individuals with HIV or AIDS who receive shelter 

assistance or an emergency shelter allowance, which I recently and reluctantly vetoed (Veto No. 

6818 of 2010). I am required to ask: What is it that I am saying that the Legislature is not 

hearing? Worthy matters deserve funding, but without making specific funding available, the 

Legislature gives me only heartache and the most unpleasant alternative. 

Autism Spectrum Disorder (ASD) encompasses conditions that range along a spectrum, 

including Asperger's Syndrome, Pervasive Developmental Disorder and Autistic Disorder. It 

is characterized by impaired social interaction, impaired communication and restricted or 

repetitive patterns of behavior. Although estimates of prevalence vary, it appears that ASD 

occurs in approximately one in every 110 children, is four times more likely to occur in boys 

than girls, and occurs in all racial, ethnic and social groups. The cause of autism is unknown and 

there is no cure, but early detection of ASD, when followed by the right interventions, can 

lead to better outcomes in functioning. Caring for a child or adult with ASD can require 

extraordinary emotional efforts, and impose significant financial burdens. 

New York State offers services and supports to individuals with ASD, and to those with other 

developmental disabilities, through a variety of State programs, including the Early Intervention 

Program, special education services for children of preschool and school age, and other 

services and supports through the Office for Persons with Developmental Disabilities 

(OPWDD). Significant State resources, along with federal dollars, support these programs each 

year. Nevertheless, countless families have told me of their struggles to access the services that 

will help their loved ones with ASD attain their full potential. 

This bill would require State-regulated health insurers to provide coverage for treatment and 

therapy options for ASD, in accordance with regulations promulgated by the Department of 

Health, in consultation with the State Insurance Department, OPWDD and the Office of 

Mental Health. The treatment and therapy options for which coverage would be mandated 

must be "evidence-based, peer-reviewed and clinically proven." The regulations would have to 

be promulgated within 12 months of the bill's enactment and would have to be updated on a 

regular basis, and the coverage mandate would take effect once the regulations are promulgated 

and apply to policies issued or renewed after that date. 

The agencies would require additional resources in order to carry out this function over the 

course of the next year, demands which were not accommodated in the 2010-11 budget. 

Moreover, health insurance premiums would rise as a result of this bill, beginning January 2012. 

While it is difficult to estimate the amount of the increase for a number of reasons, 

including the variance of needs among individuals along the autism spectrum and the fact that 

a person's needs my change over the course of his or her lifetime, it appears clear that both the 

State and local governments, which pay varying proportions of the health insurance premiums 

for their employees and retirees, would face significant costs as a result of the bill. In addition, 

the State pays the premiums for Child Health Plus, which also would increase. I believe these 

increased costs collectively to the State and localities would be a least $70 million annually. I 

cannot impose such an unfunded mandate on the next Governor and local governments 

throughout the State. 

33

Premiums for commercial insurance also would rise if the bill were enacted, the effect of 

which likely could be that some New Yorkers might lose their insurance coverage, at least 

until the federal Patient Protection and Affordable Care Act is fully implemented. Making 

sure that all New Yorkers have access to affordable health insurance is one of the objectives of 

my administration, and we must carefully consider the impact of extending coverage to 

additional persons if it results in the loss of coverage to others. 

It is clear that providing effective treatments, including certain intensive therapeutic 

treatments, to individuals with ASD has the potential to improve their functioning significantly, 

meaning that they would require fewer services, or less intensive services, in the future. In 

addition, the bill could shift the cost of some services that are now funded by Medicaid or other 

State programs to private insurance. However, it is almost impossible to quantify such savings, 

and they would not occur in the years the initial associated costs would be incurred. 

I am extremely sympathetic to the very real struggles faced by the families of individuals with 

ASD. ASD is a disabling disorder that is a priority for society to address. It will be a subject of 

my continued advocacy as a private citizen. But now I am Governor, and I cannot sign a bill 

that would impose costs that the Legislature does not fund. I implore the Legislature to make 

the necessary decisions to cause this bill to be funded adequately. If it does so and sends it to 

me in my remaining days as Governor, I will sign it immediately. But, I cannot agree to enact 

a bill that would present significant costs to the State and local governments that have not 

been accounted for in the State Financial Plan and that should not be approved outside of the 

budget. 


The Bureau of Financial Reporting has concluded that the Government Accounting Standards 

Board considers the State Insurance Fund and the New York State Health Foundation component 

units of the State of New York reporting entity and requires their audited financial information to 

be discretely presented in the New York State Comprehensive Annual Financial Report. These 

entities are not required by statute to file audited financial reports with the Office of the State 

Comptroller. This bill proposed to amend existing state laws to require that these entities file 

annual audited financial statements with the Office of the State Comptroller. 

S5864A/ Passed Senate Only/ Hassell-Thompson 

Medical advances over the years have led to many beneficial medical treatments. One of these 

medical advances has been the development of an oral chemotherapy treatment. With this 

treatment, a patient is able to undergo chemotherapy by taking a pill in the comfort of their own 

home. This means that the patient does not have to go to the hospital for the traditional 

intravenous or injectable form of chemotherapy that is most commonly thought of when 

chemotherapy is discussed. In addition to being able to do the treatment in their own home, the 

patient also receives the added benefit of possibly not having the traditionally chemotherapy 

side effects such as hair loss. The patient also sleeps through the treatment as the pill is 

administered at bedtime, meaning that the patient sleeps while the drugs do their work. This 

medical advance is significant. 

34

However, due to a classification by insurance companies, many patients cannot reap the benefits 

of this advance. As this chemotherapy treatment comes in the form of a pill, insurance 

companies are classifying this treatment as a prescription drug treatment. This means that the 

patient does not get the treatment covered as a traditional chemotherapy treatment and must pay 

for the drug as though it were an average prescription drug. As this is not an average prescription 

drug, the co-pay and coverage for this drug are limited. Most patients must pay out of pocket in 

the highest drug price category. This means that for the majority of patients, the pill form of 

chemotherapy will cost tens of thousands of dollars. This is cost prohibitive for healthy patients 

nd limits patient access to a viable and desirable alternative to traditional chemotherapy 

treatment. 

Traditional chemotherapy treatment is covered as a major medical benefits under insurance 

policies, and once any deductible is met, the treatment is 100% covered. This amendment 

to the New York State Insurance Law would have corrected this discrepancy and ensured that 

chemotherapy treatment, no matter how administered, are covered equally by insurance 

companies. 

S6309B/ Passed Senate Only/ Johnson C 

Prenatal vitamins are vitamin supplements taken before and during pregnancy with the intention 

of providing women with nutrients that promotes a healthy pregnancy. This legislation would 

have ensured women across New York State have access to quality prenatal vitamins without 

having to shoulder a massive financial burden. Prenatal maternity care is a vital healthcare 

service that needs to provided to people of all socioeconomic backgrounds. 

S7001B/ Passed Senate Only/ Saland 

This bill proposed to amend certain sections of the insurance law to allow for the refill of 

prescription eye drops when the refill is requested prior to the expiration of the period of 

suggested use. 

S7977/ Passed Senate Only/ Squadron 

Familial Dysautonomia, Canavan's disease and Tay-Sachs are genetic diseases which cause 

degeneration of the nervous system, and result in death. No treatment is currently available for 

any of these diseases; however, an infant can only be afflicted with the disease if both the 

mother and father are carriers. There is currently a testing system in place which screens 

individuals before marriage to determine if they are carriers. This legislation would have insured 

that individuals are able to receive reimbursement for medical screening for these diseases 

through their insurance carrier. 

35

LIFE INSURANCE 

The Senate Insurance Committee, focused on the existing and changing relationships among 

insureds, annuitants, contract owners, beneficiaries, agents, brokers and life insurance 

companies. The Committee examined the contracts and laws affecting those relationships as well 

as the external developments that impact them and employment retirement plans. 

The goal of this Committee is to foster legislation which decreases the cost of providing life 

insurance in the State, protects consumers from improper/ fraudulent sales techniques, 

encourages investments by life insurers, and advances education. 

2009 



S4602A/ Breslin 447 Authorizes superintendent of insurance to approve a 

demonstration program where an eligible insurer issues 

group health insurance policies to eligible associations. 

S66009/ Breslin 499 Relates to the licensure of life settlement brokers; 

creates certain crimes relating to life settlement fraud; 

relates to premium finance agreement; repealer. 

4602A/ Chapter 447/ Breslin 

This bill authorized the superintendent of Insurance to permit a health insurance company 

primarily owned or controlled by a tax exempt association of independent workers to provide 

group health insurance coverage exclusively to the association's members. 


During the AIDS epidemic, many seriously ill individuals with life insurance policies sold their 

policies to pay for medical care, experimental medical treatments or other essential needs. 

Article 78 of the Insurance Law was enacted to regulate such transactions, where an insured with 

a catastrophic or life-threatening illness or condition sells his or her life insurance policy. These 

transactions - known as viatical settlements are carried out by viatical settlement companies and 

viatical settlement brokers regulated by the Department under Article 78. 

A life settlement market developed, wherein owners of life insurance policies where the insureds 

do not have a catastrophic or life-threatening illness or condition are selling their policies. The 

insured individuals generally are senior citizens who may no longer want or need their policy 

and who are able to obtain a monetary benefit greater than the cash surrender value but less than 

the death benefit of the policy by selling their policy to a life settlement provider. These 

36

transactions fell outside the scope of the previously existing Article 78 and regulatory oversight 

of these transactions was needed. 

This bill therefore established a comprehensive statutory framework that regulated all such 

transactions whether or not the insured has a catastrophic or life threatening illness or condition. 

The bill used the term life settlements to describe both types of situations. The bill also regulated 

an additional participant that plays a role in the life settlement market today called a life 

settlement intermediary, that is subject to registration and other requirements set forth in the bill. 

The bill permitted a life settlement provider to transfer ownership of a settled policy only to 

certain specified persons. It also permitted the transfer of a settled policy to persons other than 

those specified if no personally identifying information about the policy owner or the insured is 

provided to such persons. 

Under the bill the life settlement broker owes a fiduciary duty to the owner of the policy. In 

addition, the bill provided for penalties and civil remedies for certain violations. This bill also 

provided for a transparent and fair marketplace by requiring disclosure to the policy owner of a 

full and complete description of all offers, counter-offers, acceptances and rejections related to 

the proposed life settlement, a complete reconciliation of the amount of each life settlement 

provider's gross offer to the net amount of proceeds to be received by the policy owner, the 

identity of the life settlement broker receiving any compensation with respect to the life 

settlement contract and the amount and terms of any compensation paid to the life settlement 

broker and any other person. 

The bill also established standards of conduct and prohibits anti-competitive behavior. Other 

required disclosures provide significant consumer protections. For example, the bill required 

disclosures advising the consumer of: (1) the life settlement broker's fiduciary duty to the owner 

of the policy; (2) certain tax consequences that may result from receipt of the life settlement 

proceeds; (3) the owner's right to rescind the life settlement contract; (4) the possible adverse 

impact on the insured's insurable capacity; (5) certain medical, financial or personal information 

that may be disclosed; and (6) the fact that the insured may be contacted at certain delineated 

times to determine health status, as well as other disclosures. 

The bill also afforded significant privacy protections with respect to the identity of the insured 

and the policy owner. The protection of the safety and privacy of the insured was a paramount 

purpose of this bill. 

The bill limited and specified the parties to whom and the circumstances under which such 

information may be disclosed. Only a licensed life settlement provider can purchase a policy 

from the policy owner. A life settlement provider may sell, assign or transfer ownership of a 

settled policy only to another licensed life settlement provider, an accredited investor, qualified 

institutional buyer, financing entity, special purpose entity or related provider trust. 

The bill also provided that any person who obtains or may obtain a settled policy shall comply 

with the provisions of the Insurance Law and regulations and all other applicable laws governing 

the protection of the identity and privacy of the insured or policy owner. In addition, a life 

settlement provider may sell, assign or transfer a beneficial interest in a settled policy to someone 

37

other than the listed persons if the provider continues to administer the settled policy and the 

policy owner's and insured's personally identifying information is not disclosed to such 

purchasers. This structure permits both the listed persons and other persons to participate fully in 

the marketplace while the privacy of consumers is still protected. 

The bill included a provision entitled Stranger Originated Life Insurance (known as STOLI) that 

prohibited life settlement providers (who purchase the life insurance policies from the original 

policy owners), life settlement brokers (who broker the life settlement transaction between the 

original owner of the policy and the life settlement provider) or their representatives from 

engaging in any activity that would facilitate the issuance of a policy for the intended benefit of a 

person who has no insurable interest in the life of the person insured under the policy. 

Insurance Law § 3205 requires that, at the time a policy is purchased, the beneficiary must have 

an insurable interest in the life of the person insured. The concept of insurable interest has long 

been affirmed in case law and codified in statute pertaining to life insurance in order to prevent 

the moral hazards that arise with speculation on human life. An insurable interest is a substantial 

interest in the continued life of the person insured rather than an interest that would arise only 

by a financial interest in the death of the person insured. 

Insurable interest is defined in section 3205 as either a substantial interest engendered by love 

and affection or a substantial economic interest in the continued life of the insured. 

The following is an example of a STOLI situation: A life insurance policy is initially purchased 

by an individual for the primary purpose of transferring it to a third party stranger and 

arrangements are made so that the policy owner does not pay or is effectively reimbursed for any 

policy premiums paid, the third party has no insurable interest in the life of the insured, and the 

policy is transferred to the third party. 

If it can be shown that there was a prior plan or arrangement for the individual to purchase the 

policy for the purpose of selling it to the third party, it may be determined that there was no 

insurable interest at the inception of the policy. 

The bill included "any beneficial interest in a trust or other entity that owns the policy where a 

primary purpose of the transaction is to acquire the policy" in the definition of life settlement 

contract. This ensured that various scenarios involving these entities will be subject to the 

requirements of the bill. An example of such a scenario is where a policy is purchased by a trust 

and the beneficial interest, i.e. the right to the death benefit, is sold to a third party stranger but 

the trust remains the owner of the policy. This addresses a significant concern of the Department 

and the life insurance industry. The bill included a provision setting forth limitations on the 

proceeds, fees or other consideration that persons involved in the business of premium 

financing can receive with respect to premium financing transactions. Premium financing is a 

legitimate type of loan transaction that, for example, may be used to pay large initial premiums 

on large policies used for certain business transactions or estate planning. The purpose of this 

provision was to ensure that premium financing is not used as a mechanism to effectuate a 

STOLI transaction by limiting the amounts that may be received by such persons to principal, 

interest and any reasonable costs or expenses incurred in the transaction. The provision also 

38

equired that any amounts received over and above the amounts listed must be remitted back to 

the original policy owner. 

2010 



S4767B/ Breslin 441 Provides that an approved policy form that has been 

revised may continue to be delivered or issued for 

delivery in New York state without further approval. 

S6014B/ Breslin 515 Relates to group life and group accident and health 

insurance policies. 

LEGISLATION WHICH PASSED THE SENATE & ASSEMBLY 


S7196A/ Klein 

Title 

Prohibits accelerated payment of death benefits or special surrender 

value pursuant to a life insurance policy because of residency in a 

nursing home. 


This bill amended the insurance law to permit the Superintendent of Insurance to waive the reapproval 

of an amended policy form when the amendment is due to a revision to a separate 

account, so long as the revision has already been approved by the Insurance Department as part 

of the separate account plan of operation. Under those circumstances, such amended policy form 

would need to be filed on an informational basis with the Insurance Department, within sixty 

days after approval of the amended separate account plan. This amendment also gave the 

Superintendent the discretion to waive other approvals of amended policy forms. 


In recent years, employee benefits have changed significantly. There was a time when employers 

paid a substantial portion or even all of the cost of employee benefits. Many corporations still do 

but, due to the increasing burden of insurance costs, employers of all sizes have also been forced 

to reduce their contributions to the benefit plans offered to their employees, in order to continue 

to afford such employee coverage. Employees have increasingly been asked to share these costs 

with their employer. Today, 25% of the group life insurance market is fully voluntary, in that the 

employee elects coverage and may pay some or all of the premiums for such coverage. By 

offering these voluntary products through an employer group, the employer can offer their 

employees the advantages of payroll deduction, limited underwriting and other efficiencies in 

administration that can oftentimes lead to cheaper insurance premiums for the employee. 

39

In looking at how best to meet the demands of the marketplace, it was determined that certain 

restrictions in the group laws of several states, including New York, created an impediment to a 

number of otherwise common group offerings. These provisions, written many years ago for a 

purpose that no longer exists (to protect insurers from adverse selection in the underwriting 

process), restrict employee access to voluntary coverage. Given the realities of today's employer 

group market, these outdated laws are ill-suited to protect and benefit consumers. 

This bill removed these impediments and created the ability for insurers to tailor more attractive 

and available group coverage for employers and employees in New York. It allowed insurers to 

offer group coverage to employees of any employer who elected to take part in a group life, 

disability income, long term care, vision or dental policy by removing the current restriction that 

the group must be of a sufficient size in order to qualify for group coverage. 

By doing this, the law will enable more coverage of this type to be issued in the group setting 

and, consequently, more state residents to have such coverage. The more people who have group 

life, disability income and long term care insurance, the fewer who may need public assistance in 

times of hardship. 

S7196A/ Passed Senate Only/ Klein 

As the general population becomes older, more and more individuals are looking for affordable 

ways to pay for the financing of their nursing home care. This bill would have expanded the 

definition of "life insurance" so that policies can be written in New York that provide financing 

for those who have been in nursing home care for at least three months, with the expectation that 

such persons will remain in a nursing home until death. Currently, 49 other states offer life 

insurers the ability to write this type of coverage in the United States, but not New York. This 

bill would address this discrepancy. 

Senator Breslin at the press conference for 

senate bill 7000B 

Senator Breslin, Senator Seward, and 

committee counsel Kate Powers at 

committee meeting 

40


Public Hearing on 

The Role of Health Insurance in the Diagnosis and Treatment of 

Autism Spectrum Disorder 

Meeting Rooms 2 and 3 

Empire State Plaza, Concourse Level 

Albany, New York 

October 23, 2009 

Before: 



Senate Standing Committee on Mental Health and Developmental Disabilities. 

Present: 

Senator Neil D. Breslin 

Chair, Senate Standing Committee on Insurance 

Senator Roy J. McDonald 

Senator Craig Johnson 

______________________________________________________________________________ 

The purpose of this hearing was to (1) explore the health care needs of individuals with autism 

spectrum disorder and their families; (2) explore what health insurers, the federal government, 

state and local governments and educational institutions are doing to meet those needs; and (3) 

explore whether health insurers should be mandated to provide coverage for the screening, 

diagnosis and treatment of autism spectrum disorder. 

Autism spectrum disorder (ASD), which includes autistic disorder, asperger disorder and 

pervasive developmental disorder – not otherwise specified, is one of the fastest growing 

neurodevelopmental disabilities in America. According to a recent U.S. Centers for Disease 

Control and Prevention (CDC) study, autism spectrum disorder affects as many as 1 in 150 

American children. In New York State, it is estimated that 33,000 children and youth from birth 

to age 17 have autism. 

As with other neurodevelopmental disabilities, ASD is generally not curable. However, 

numerous studies have concluded that children who receive intensive treatment early in life will 

be more functional and less likely to need lifelong services. The Autism Society of America 

estimates that the lifetime cost of caring for an individual with autism ranges from $3.5 to $5 

41

million. Therefore, the financial and societal costs of failing to provide intensive treatment early 

in life to children with ASD are notable. 

Individuals with ASD experience a wide range of medical issues. Consequently, treatment for 

autism spectrum disorders can include, among other things, psychiatric care, psychological care, 

habilitative or rehabilitative care, pediatric and developmental pediatric care, gastroenterologic 

care, endocrinological care, and behavioral, social skills, speech, occupational and physical 

therapies. 

State and local governments and educational institutions currently play a large role in the 

diagnosis and treatment of autism. For example, young children diagnosed with autism are 

eligible for New York State’s Early Intervention Program. Some families who have a child with 

autism qualify for a “Medicaid waiver” under which the parents’ income is waived when 

determining eligibility for Medicaid. Medicaid would then cover certain medical and nonmedical 

expenses associated with autism. In addition, school-aged children with autism receive 

various services during the school day. 

However, children often need intensive therapy and other health services beyond what state or 

local governments or schools are able to provide. It has been reported from numerous sources 

that most health plans in New York do not cover or cover a very small amount of the expenses of 

individuals with ASD. In addition, the New York State Department of Health (DOH) reports 

that private health insurance pays only about 3% of the expenses of children with ASD in the 

Early Intervention Program. In the absence of private health coverage, families of those with 

ASD pay a significant portion of the cost of diagnosing and treating ASD. Such costs, which can 

be as high as $2,000 to $4,000 per month, place a significant financial strain on families. 

Historically, autism was considered a psychiatric disability and excluded from coverage by 

health insurers. In 2006, the New York State Insurance Law was amended to prohibit insurers 

from excluding coverage for medical conditions solely because the treatment is provided to 

diagnose or treat ASD. In addition, Timothy’s Law, which was enacted in 2006, provides 

coverage for the treatment of autism spectrum disorders so long as the coverage is provided by a 

large group employer (51+ members), or, for children only, at the option of a small group 

employer (50 or less), or, in some instances, the health plan. While this coverage is available, 

reimbursement is often denied on grounds that the service is educational, the treatment is 

experimental or the treatment is not medically necessary. However, New York law currently 

does not mandate that health insurers cover specific ASD treatments or services. 

Several other states have laws requiring health insurers to cover treatment for ASD. A dozen 

other states are considering such legislation. In addition, earlier this year, the Autism Treatment 

Acceleration Act of 2009 (Senate Bill No. 819) was introduced in the U.S. Senate. This 

legislation would require, among other things, health insurers to cover the diagnosis and 

treatment of autism spectrum disorders. 

The Committees would like to hear from individuals with ASD, family members of individuals 

with ASD, treatment providers, health care experts and policy makers in order to evaluate the 

role of health insurers in the diagnosis and treatment of ASD. Specifically, witnesses may direct 

their testimony to the following issues: 

42

1) What are the health care needs of children, young adults and older adults with ASD and their 

families? 

2) What are health insurers doing to meet the needs of individuals with ASD and their families? 

3) What obstacles to treatment are individuals with ASD and their families encountering? 

4) What services, programs and resources do New York state and local government entities 

and schools have in place to address the needs of individuals with ASD? 

5) What is the federal government doing to meet the health care needs of individuals with ASD 

and their families? 

6) Should health insurers be mandated to provide coverage for the screening, diagnosis and 

treatment of ASD? If so: 

a) Which treatments and services for individuals with ASD and their families should 

health insurers be required to cover? 

b) What should the process be for determining which treatments and services must be 

covered? Should insurers only be required to cover treatments for ASD that have been 

determined necessary based upon a review of evidence-based research (e.g., the New 

York State Department of Health’s Clinical Practice Guidelines for ASD for children 

under the age of three)? 

c) What should the process be for determining reimbursement rates to providers? 

d) Should there be age limits, limits on the number of visits or monetary caps on 

mandated treatments or services for ASD? 

e) What impact would this mandate have on health insurance premium rates? 

f) How would existing service systems that New York has in place be impacted by an 

insurance mandate? 

g) Should the mandate be reflected in a new law or should an existing law be amended? 

h) Do the laws of other states that mandate coverage for ASD contain age limits, limits 

on the number of visits or monetary caps on mandated treatments or services? 

7) Within the context of responding to any of the above questions, witnesses may provide 

comments on S.2366/A.6001 and S.6123/A.6888-B which are currently pending in the New 

York State Legislature as well as S.819/H.R. 2413 which are currently pending in the U.S. 

Congress. 

43

Witness List 

Panel 1 

Marcia Roth, Parent, Budget and Policy Analyst, Autism United Coalition 

Heather Walters, Parent, Co-Founder, Upstate New York Autism Awareness 

Michael P. Smith, Chairman, Foundation for Autism Information and Research 

Panel 2 

Troy J. Oechsner, Deputy Superintendent for Health, New York State Insurance Department 

Abby Nash, Senior Insurance Attorney, Health Bureau, New York State Insurance Department 

Gary Lind, Deputy Commissioner, New York State Office of Mental Retardation & 

Developmental Disabilities, Division of Policy & Enterprise Solutions 

Rebecca H. Cort, Ed.D., Deputy Commissioner, New York State Education Department’s Office 

of Vocational and Educational Services for Individuals with Disabilities 

Bradley Hutton, Director, Bureau of Early Intervention, New York State Department of Health 

Panel 3 

The Honorable Craig M. Johnson, Member of Senate 

Lorri Unumb, J.D., Senior Policy Advisor & Counsel, Autism Speaks 

Diane Cahill, Volunteer New York State Community Advocacy Chair, Autism Speaks 

Sean Shortell, Office of Congressman Paul Tonko 

Panel 4 

Andrew Baumann, President & Chief Executive Officer, New York Families for Autistic 

Children, Inc. 

Patrick Dollard, Chief Executive Officer, Center for Discovery, Inc. 

Fredrick W. Erlich, Chief Executive Officer, Living Resources 

Stephen E. Freeman, LCSW, Chief operating Officer, YAI Network/ National Institute for 

People with Disabilities 

Judith Lucas, M.D., Medical Society of New York 

Panel 5 

Paul F. Macielak, President & Chief Executive Officer, New York State Health Plan Association 

Judith A. Langer, J.D., Public Policy Director, Wellpoint, Inc. 

Panel 6 

Eric London, M.D., Director of Treatment Research, New York State Institute for Basic 

Research in Developmental Disorders, Staten Island, New York 

John C. Pomeroy, M.D., Associate Professor of Pediatrics and Psychiatry and Director The 

Cody Center, State University of New York, Stony Brook 

Alison D. Curley, Ph.D., Pediatric Neuropsychologist, Niskayuna, New York 

44

Stephen Sulkes, M.D., Professor of Pediatrics, Strong Center for Developmental Disabilities, 

Rochester, New York 

Panel 7 

Shelly Nortz, Deputy Executive Director for Policy, Coalition for the Homeless 

Paige Pierce, Executive Director, Families Together in New York 

Michael John Carley, The Global and Regional Asperger Syndrome Partnership, Inc. 

Jan Campito, M.S., M.Phil., Executive Board Member, Autism Society of America, Albany 

Chapter 

Overview 

The goal of the hearing was to explore the health care needs of individuals with autism spectrum 

disorder (ASD), explore what government was doing to meet those needs, including hearing 

about legislation on the federal level to address the issue and explore where gaps in coverage 

exist and what role health insurance should play in those gaps. It became apparent from the 

hearing, as present rates of identification of ASD increase, there is an imperative to examine and 

reform the reimbursement of health care. 

It should be noted, the purpose of the hearing was not to endorse legislation. The committees 

were not taking a position on any of the bills discussed. The purpose was to recognize that there 

is a need out there and to address gaps in coverage. The hearing provided a forum to address the 

costs and benefits and fully consider the impact that adding services will have on premiums (i.e.: 

how many people would lose coverage). 

The Committees expressed a desire to work in collaboration with other state agencies to ensure 

that applicable programs, services, and treatments are available and covered by insurance 

companies, and that these services reflect effective practices. 

Following the Hearing, Senator Neil D. Breslin, Chair, Senate Standing Committee on Insurance, 

sponsored Senate Bill 7000B. The bill would have amended the insurance law and the public 

health law, in relation to coverage for the screening, diagnosis and treatment of autism spectrum 

disorder. S.7000/ A.10372A unanimously passed both the Senate and Assembly, but was vetoed 

by Governor Paterson citing fiscal hardship. 

45

Hearing Room A 

Legislative Office Building 

Albany, NY 12247 

December 1 st , 2009 

Before: 


Public Hearing on Medical Malpractice Reform 



Senate Standing Committee on Codes 

Participants: 


Senator James L. Seward 

Senator Thomas K. Duane 



Chair, Senate Standing Committee on Health 

Senator Eric T. Schneiderman Chair, Senate Standing Committee on Codes 

______________________________________________________________________________ 

The purpose of this hearing was to (1) identify the fundamental causes of high medical 

malpractice costs; (2) explore potential solutions to help create a medical malpractice system that 

encourages quality, accessible medical care; (3) promote patient safety; (4) treat victims of 

malpractice fairly; (5) sets reasonable insurance costs for health providers; and (6) promotes a 

healthy marketplace for medical liability insurers. 

46

Witness List 

Panel 1 

David T. Hannan, M.D., Medical Society of the State of New York 

Donna Montalto, MPP, Executive Director, The American College of Obstetricians and 

Gynecologists, District II 

Ronald Uva, M.D., FACOG, Legislative Committee Chair, The American College of 

Obstetricians and Gynecologists, District II 

Wendy Fried, M.D., Practicing OBGYN 

Lee Goldman, M.D., Executive Vice President and Dean, Columbia University Medical Center 

Panel 2 

Robert S. Lagasse, M.D., Immediate Past President, New York Society of Anesthesiologists 

William Doscher, M.D., FACS, NY Chapter of The American College of Surgeons 

Samuel F. Bosco, M.D., FACEP, Co-Chair, New York ACEP Government Affairs Committee, 

New York American College of Emergency Physicians 

Panel 3 

Mark Thomas, General Counsel, Healthcare Association of New York State 

Gary Fitzgerald, President, Iroquois Health Alliance 

Susan Waltman, General Counsel, Greater New York Hospital Association 

Panel 4 

John K. Powers, Esq, New York State Academy of Trial Lawyers 

Richard S. Binko, President, New York State Trial Lawyers Association 

Panel 5 

Anthony J. Bonomo, CEO, Physicians’ Reciprocal Insurers 

Lisa Kramer, President and CEO, Hospitals Insurance Company 

Mark Morris, President and CEO, Healthcare Professionals Insurance Association 

Robert Menotti, M.D. President, Medical Liability Mutual Insurance Company 

Martin Kern, Esq, Executive Director, Academic Health Professionals Insurance Association 

Panel 6 

The Honorable Judge Douglas McKeon, Presiding Justice of Appellate Term of the Supreme 

Court for the First Judicial Department 

Panel 7 

Ken Adams, President and CEO, The Business Council of New York State 

Mark Kriss, New Yorkers for Lawsuit Reform 

47

Panel 8 

Blair Horner, New York Public Interest Research Group 

Arthur Levin, Center for Medical Consumers 

Overview 

New York is home to one of the nation’s best health care systems. Despite past successes in 

making health care more affordable and available to New Yorkers, long-term reform of the 

medical malpractice structure has not yet been achieved. Considering that health care costs are 

impacted by medical malpractice rates, it is imperative that we have a medical liability structure 

in place which ensures that medical malpractice rates remain stable and appropriate, while also 

guaranteeing that malpractice victims are adequately compensated, and doctors adequately 

protected. 

In 1973 the medical malpractice insurance market was largely divided between two companies: 

Employers Insurance Company of Wausau and the Professional Insurance Company. In the fall 

of 1973 Professional was placed in liquidation. In December of 1973, Employer - which had 

increased its premiums by 1,000% during the preceding seven year - announced it was 

terminating its medical malpractice insurance program. 

It became apparent to the New York State Insurance Department (SID) that if no action was 

taken, most of the State’s physicians and surgeons would be without insurance creating a statewide 

health care crisis. 

SID and the New York State Medical Society drafted legislation to establish a joint underwriting 

association (JUA) comprised of all insurance companies writing liability insurance in New York. 

The JUA would be required to provide coverage to any licensed New York doctor. While the 

bill was pending, the Medical Society was able to secure an agreement with the Argonaut 

Insurance Company to insure its members at a rate 93.5% higher than Employers. Within 

months they sought to raise those rates an additional 196.8%. SID blocked the increase and 

Argonaut left the marketplace. 

These events occurred against the backdrop of a rising number of judgments against medical 

providers in malpractice cases. No insurance company would take on the business, leaving 

physicians and their dependents vulnerable. 

MLMIC (Medical Liability Mutual Insurance Company) was created under the sponsorship of 

the Medical Society and licensed by NYS on May 28 th , 1975 and began operations on July 1 st , 

1975. By the end of 1976 MLMIC covered 16,000 physicians and MMIA insured another 4,000. 

Chapter 109 of the laws of 1975 created Medical Malpractice Insurance Association (MMIA) in 

order to provide a market for medical malpractice insurance to both doctors and hospitals. 

MMIA was a JUA consisting of all insurers writing personal injury liability insurance in New 

York State. Also in 1975, the Superintendent was empowered to prior approve all medical 

malpractice insurance rates in order to provide closer oversight. 

48

Once the crisis of 1975 was averted several other insurers entered the marketplace: Hospital 

Underwriters Mutual Insurance Company; Group Council Mutual Insurance Company; 

Physicians Reciprocal Insurers (PRI); Frontier Insurance Company; and Academic Health 

Professional Insurance Association. 

Physicians were no longer faced with the problem of availability that had existed in the mid- 

1970’s. Price and affordability subsequently became the central issues. 

By 1985, New York State faced a second crisis. Rate levels had begun to increase by more than 

15% each year since 1974. By 1985, rates were more than five times greater than those in 1974. 

Physicians were also concerned that the policies they were purchasing, although covering up to 

$1 million per claim with an aggregate claim limit of $3 million per year, were still insufficient 

with the increasing number of multi-million dollar verdicts and settlements. In 1985 most 

actuaries believed that many medical malpractice insurers were either insolvent or on the brink 

of insolvency. 

Also in 1985, the Legislature enacted Judiciary Law §474-a which established the fee structure 

for attorneys in medical malpractice cases. It is a sliding scale which still exists today: 30% for 

the first $250,000; 25% for the next $250,000; 20% for the next $500,000, 15% for the next 

$250,000, and 10% for any recovery over $1.25 million. 

After years of financial instability in the late 1980’s, the market stabilized and MMIA’s surplus 

grew considerably in the 1990’s. 

MMIA saw its market share dwindle in the 1990’s as the marketplace became more competitive 

and the experience of the voluntary market improved. As of 1997, approximately 600 (2%) of 

New York State’s 30,000 insured physician’s purchased primary coverage through MMIA. 

As previously mentioned, prior to 2000, MMIA provided medical malpractice insurance in New 

York pursuant to Article 55 of the Insurance Law. Chapter 147 of the Laws of 2000 amended 

Insurance Law §5502 (c) and dissolved MMIA transferring its fund’s balance of approximately 

$800 million to the State. At the same time, NY Insurance Law §5502 (c) (2) (D) mandated the 

Superintendent to prescribe a plan for the equitable distribution of insured’s who are unable to 

secure coverage in the voluntary market to authorized medical malpractice insurers. 

Accordingly, the Superintendent promulgated Part 430 of New York Comp. Codes R. & Reg., 

tit. 11 (Regulation 170) on June 30 th , 2000 on an emergency basis and later adopted on a 

permanent basis effective March 7 th , 2001, and established the Medical Malpractice Insurance 

Plan (MMIP) as an assigned risk mechanism for providing medical malpractice insurance to all 

eligible health care providers who are unable to secure coverage in the private market. 

However, the regulation also authorized the Superintendent to approve an alternative mechanism 

for allocating such risks, which the insurers opted for. As a result, all authorized stock, mutual 

and reciprocal insurers that write medical liability risks in New York, obtained the 

Superintendent’s approval to participate in the pool as an alternative to receiving direct 

assignments of eligible health care providers through MMIP. The pool itself issues the policies, 

49

and each member shares the liability on a several basis in proportion to the direct written 

premium the insurers has in the medical malpractice market. 

The major difference between MMIA and MMIP is that MMIA included all liability insurers in 

New York State while MMIP includes only medical liability insurers, a significantly narrower 

base. In fact, only 3 companies write approximately 90% of the medical malpractice business in 

New York State, thereby assuming the amount of risk commensurate with their market share. 

This accounts for a dollar for dollar reduction in a company’s surplus. 

New York State now has a medical malpractice marketplace that is in severe distress. Medical 

liability rates have been frozen each of the past two years and the few remaining insurers in the 

marketplace are thinly capitalized. This has the potential to limit the ability of providers to 

purchase affordable medical liability coverage and could leave victims of medical malpractice 

with little or no recourse. 

Honorable Judge Douglas McKeon at the 

medical malpractice reform public hearing 

Senator Duane, chair senate health committee 

and Senator Breslin at the medical malpractice 

public hearing 

50

Hearing Room A 

Legislative Office Bldg. 

Albany, NY 

February 4, 2010 

Before: 


Participants: 


Public Hearing on No-Fault Fraud 


Senator James L. Seward 



Senator Craig Johnson 

______________________________________________________________________________ 

The purpose of this hearing was to (1) identify the fundamental causes of no-fault fraud; (2) 

determine why there has been an apparent increase in no-fault fraud in recent years; (3) better 

understand how no-fault fraud is perpetrated; and (4) to explore potential solutions to reduce the 

incidences of no-fault fraud in New York State. 

The costs of fraud and abuse of the state’s no-fault system is ultimately borne by New York’s 

honest policyholders. During the past five years New York’s auto insurers have seen a 56 percent 

increase in the average cost of no-fault claims, which according to many experts is the result of 

fraud and abuse of the no-fault system in New York. According to the Insurance Information 

Institute, New York’s auto insurers saw their typical no-fault payment for the medical care of 

accident victims rise from approximately $5,615 per claim in 2004 to approximately $8,748 per 

claim in 2009. It is estimated that a significant percentage of each individuals automobile 

insurance premium can be contributed to insurance fraud. 

51

Witness List: 

Panel 1 

Steve Nachman, Esq, Deputy Superintendent for Frauds and Consumer Services, New York 

State Insurance Department 

Panel 2 

Howard Goldblatt, Director of Government Affairs, Coalition Against Insurance Fraud 

Robert C. Passmore, CPCU, Senior Director - Personal Lines, Property Casualty Insurance 

Association of America 

Robert Hartwig, President and Economist, Insurance Information Institute 

Thomas Lehmann, Area Director of Operations, National Insurance Crime Bureau 

Judith Fitzgerald, Vice President for Government Affairs, National Insurance Crime Bureau 

Panel 3 

Ellen Melchionni, President, New York Insurance Association 

Gary Henning, Assistant Vice President, American Insurance Association 

Paul C. Blume, Jr. Senior Vice President for State Government Affairs, Property Casualty 

Insurance Association of America 

Panel 4 

Edmond Valente, Attorney, State Farm, Dewey & Leboeuf 

Frank Carrigan, Plan Manager, New York Automobile Insurance Plan 

Jack Houston, Special Investigations Unit Manager, New York Automobile Insurance Plan 

Patrick O’Malley, New York Product Manager, Progressive Insurance 

Panel 5 

James Potts, Vice President for Special Investigations, New York Central Mutual Insurance 

Company 

Joe Persaud, Director – No Fault Department, American Transit Insurance Company 

Pat Shea, Director SIU, American Transit Insurance Company 

Panel 6 

Richard Binko,Esq, President, New York State Trial Lawyers Association 

James T. Snyder, Esq., Greene and Reid PLLC, New York State Academy of Trial Lawyers 

Skip Short, Attorney, Short and Billy, P.C. 

Panel 7 

Kevin Ryan, President, Professional Insurance Agents of NY 

Matthew Guilbault, Director of Government Affairs, Professional Insurance Agents of NY 

52

Overview 

The intention of the no-fault system is designed to be beneficial to both parties involved, 

however, over time corrupt individuals have learned how to manipulate and abuse the system. 

The outcome of this abuse is ultimately borne by the consumer with high automobile insurance 

costs. For this reason, the Senate Insurance Committee convened this public hearing to hear 

testimony from government representatives, the insurance industry, and advocates to determine 

what changes, if any, needed to be made to the no-fault system in New York. 

There was a clear consensus from the participants at the public hearing that the no-fault 

automobile insurance system needed to be further examined. Following the hearing the Senate 

and Assembly formed a no-fault working group, chaired by Senator Neil Breslin and 

Assemblyman Joseph Morelle, Chair of the Assembly Standing Committee on Insurance. The 

working group discussed the following issues: 

• Arbitration 

• Exceptions to preclusion 

• Serious injury/ verbal threshold 

• Provider decertification 

• 30 day preclusion rule 

• Serious injury threshold 

• Treatment guidelines 

The public hearing and the working group provided us with sufficient information from all 

interested stakeholders to develop a comprehensive no-fault reform bill. Senate Bill 8414 “The 

Automobile Fraud Prevention Act of 2010” was introduced in the Senate and the Assembly. 

Senator Breslin, 

committee 

director Evan 

Schneider, and 

Howard Goldblatt 

at the no-fault 

fraud public 

hearing 

Steve Nachman 

from the New York 

State Insurance 

Department, at the 

no-fault fraud 


Paul Blume from 

Property Casualty 

Insurance 

Association of 

America at the 

no-fault fraud 


53

new york state 

senator Neil D. Breslin 

46th Senate District 

District Office: 502 State Capitol Bldg., Albany, NY 12247 

Tel: (518) 455-2225 

E-Mail: breslin@nysenate.gov 

Website: breslin.nysenate.gov

Insurance comm annual report.indd - New York State Senate

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