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TABLE OF CONTENTS

• CITATION
• STATUS
• WHAT'S NEW
• ADOPTED TEXT

CITATION
Title 11 NYCRR Part 74 (Regulation 159)


STATUS
This regulation was assigned the status of Adopted Emergency Rule
 on 07/12/2007.

Agency: Insurance Department
StateNet Processing Date: 08/07/2007
StateNet Regulation ID: 2007 NY 19148


ADOPTED TEXT
    Homeowners Insurance Disclosure Information and Other Notices

    I.D. No. INS-21-07-00001-E

    Filing No. 708

    Filing date: July 12, 2007

    Effective date: July 12, 2007

    PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act,
NOTICE is hereby given of the following action:

    Action taken: Amendment of Part 74 (Regulation 159) of Title 11 NYCRR.

    Statutory authority: Insurance Law, sections 201, 301, 3425, 3445 and 5403

    Finding of necessity for emergency rule: Preservation of general welfare.

    Specific reasons underlying the finding of necessity: Chapter 162 of the
Laws of 2006, which went into effect on November 23, 2006, amended Section
3425(e) of the Insurance Law to require notices of cancellation, nonrenewal,
and conditional renewal to include certain minimum notification requirements
with respect to certain homeowners policies as defined in Section 2351(a) of
the Insurance Law where the property is located in an area served by a market
assistance program established by the Superintendent for the purpose of
facilitating placement of homeowners insurance. These notices shall advise a
policyholder of possible eligibility for coverage through a market assistance
program or through the New York Property Insurance Underwriting Association
(NYPIUA) when the policyholder receives a notice of cancellation, nonrenewal
or conditional renewal for a homeowners insurance. Chapter 162 also added a
new Section 5403(d), which directs NYPIUA to notify policyholders that may be
eligible of the availability of coverage in the market assistance program.

    Chapter 162 required the Superintendent to promulgate a regulation that
established the minimum standards for the notices required by Section 3425(e).
Insurers and NYPIUA were required to comply with the standards in the
regulation as of the effective date of the new law, November 23, 2006.  Given
the short period of time between the enactment of the legislation on July 26,
2006, and the effective date, and in order to afford insurers and NYPIUA
sufficient time to incorporate these notices, the regulation was promulgated
on an emergency basis on October 20, 2006. Until the Department receives
permission to take final regulatory action, this regulation must be kept
effective on an emergency basis.

    For the reasons cited above, this regulation is being promulgated on an
emergency basis for the preservation of the general welfare.

    Subject: Homeowners insurance disclosure information and other notices.
    Purpose: To set forth the minimum notification requirements.
    Text of emergency rule: The Title of Part 74 is hereby amended as follows:

     HOMEOWNER'S   HOMEOWNERS  INSURANCE DISCLOSURE INFORMATION
 AND OTHER NOTICES 

    Section 74.0 is amended to read as follows:

    Section 74.0 Introduction and purpose.

    (a)  (1)  Chapter 44 of the Laws of 1998 enacted a new section 3445
of the Insurance Law, requiring the Superintendent to establish by regulation
disclosure requirements with respect to the operation of any deductible in a
 homeowner's   homeowners  insurance policy or dwelling fire
personal lines policy  which   that  applies as the result of a
windstorm. Further, section 3445 requires such regulation to prescribe the
form of a notice to be provided by an insurer to an insured and provides that
the notice shall explain in clear and plain language the amount of the
deductible, the circumstances under which the deductible applies and any other
matters which the Superintendent, in his or her discretion, shall deem
necessary or appropriate.

     (b)   (2)   The purpose of this   This  Part 
is to set   sets  standards for the uniform display of windstorm
deductibles, which consist of hurricane and non-hurricane deductibles, in the
policy declarations; and  to provide  provides the minimum provisions to
be contained in the policyholder disclosure notice, which will explain the
purpose and operation of the hurricane deductible, and must accompany new and
renewal policies containing such deductibles.

     (b)(1) Chapter 162 of the Laws of 2006 amended section 3425(e) of the
Insurance Law to direct the Superintendent to establish by regulation
standards for notices of cancellation, nonrenewal, and conditional renewal for
certain homeowners policies as defined in section 2351(a) of the Insurance Law
where the property is located in an area served by a market assistance program
established by the Superintendent for the purpose of facilitating placement of
homeowners insurance. Chapter 162 also added a new section 5403(d), which
directs the New York Property Insurance Underwriting Association (NYPIUA) to
notify policyholders that may be eligible for coverage in the market
assistance program of the availability of coverage. 

     (2) This Part establishes the minimum requirements pertaining to the
notices required by Chapter 162. 

    New Sections 74.2 and 74.3 are added to read as follows:

     Section 74.2 Insurer cancellation, nonrenewal and conditional renewal
notices. 

     Every notice of cancellation, nonrenewal or conditional renewal issued
on or after November 23, 2006 for a homeowners insurance policy as defined in
section 2351(a) of the Insurance Law insuring property that may be eligible
for participation in a market assistance program established by the
Superintendent for the purpose of facilitating placement of homeowners
insurance shall advise the insured of the availability of the market
assistance program and the availability of coverage through NYPIUA for
insurance. The notice shall be conspicuous and provide sufficient information
on how to apply to the market assistance program and to NYPIUA, including the
name, address, telephone number and Web site address of the administrator of
the market assistance program and of NYPIUA. 

     Section 74.3 NYPIUA notices. 

     On and after November 23, 2006, with respect to a NYPIUA policyholder
whose insured property is located in an area served by a market assistance
program established by the Superintendent for the purposes of facilitating
placement of homeowners insurance, upon issuance or renewal of the policy,
NYPIUA shall provide the notice required by section 5403(d) of the Insurance
Law and this section. The notice shall be conspicuous and provide sufficient
information on how to apply to the market assistance program including the
name, address, telephone number and Web site address of the administrator of
the market assistance program. 
    This notice is intended to serve only as a notice of emergency adoption.
This agency does not intend to adopt the provisions of this emergency rule as
a permanent rule. The rule will expire September 9, 2007.

    Text of emergency rule and any required statements and analyses may be
obtained from: Andrew Mais, Insurance Department, 25 Beaver St., New York, NY
10004, (212) 480-2285, e-mail: amais@ins.state.ny.us

    Regulatory Impact Statement

    1. Statutory authority: Sections 201, 301, 3425, 3445, and 5403 of the
Insurance Law. Sections 201 and 301 authorize the Superintendent to prescribe
regulations interpreting the Insurance Law as well as effectuating any power
granted to the Superintendent under the Insurance Law and to prescribe forms
or otherwise make regulations.

    Section 3425 governs cancellation and renewal provisions of certain
property/casualty insurance policies.

    Section 3445 authorizes the Superintendent to prescribe regulations
regarding disclosure requirements for windstorm insurance.

    Section 5403 provides the procedures for the New York Property Insurance
Underwriting Association (NYPIUA).

    2. Legislative objectives: The Legislature, in enacting Chapter 162 of the
Laws of 2006, intended to improve public awareness of market assistance
programs, such as the Coastal Market Assistance Program (CMAP), that may be
available to homeowners in New York, and of NYPIUA. Chapter 162 requires that
when a policyholder receives a notice of cancellation, nonrenewal or
conditional renewal for a homeowners insurance policy as specified in Section
3425(e) of the Insurance Law, on property located in an area served by a
market assistance program established by the Superintendent for the purpose of
facilitating placement of homeowners insurance, that the policyholder is also
notified by the insurer of possible eligibility for coverage through the
market assistance program or through NYPIUA. In addition, Chapter 162 requires
NYPIUA to notify its policyholders whose properties are located in an area
served by a market assistance program to be notified of their possible
eligibility for coverage through the market assistance program. In the Senate
bill memorandum in support of Chapter 162, it was stated that many consumers
who were eligible for CMAP were unaware of its existence. By ensuring that
consumers who may be eligible for CMAP or other market assistance programs
that may be established are made aware of the availability of the program,
CMAP or other programs would be used to their fullest potential and more
insureds would have access to more complete coverage than that offered by
NYPIUA. In order to implement Chapter 162, the Legislature required the
Superintendent to promulgate regulations governing the notices required by
Chapter 162.

    3. Needs and benefits: The rule, which is required by Chapter 162, is
necessary to set forth certain minimum notification requirements to assure
that policyholders that may be eligible for a market assistance program or
NYPIUA are notified of this including information necessary to apply for
coverage. This notification would make information on how to apply for an
insurance policy from a market assistance program or from NYPIUA more readily
available to the policyholders.

    4. Costs: This rule imposes no compliance costs on state or local
governments. There will be no additional costs incurred by the Insurance
Department. The rule requires specific information to be included in notices
of cancellation, nonrenewal or conditional renewal issued for a homeowners
insurance policy as defined in Section 2351 of the Insurance Law. There will
be costs associated with the insurers adding the specific information onto the
homeowners notices specified in Section 3425(e) of the Insurance Law.
However, the notice requirement is mandated by Section 3425 and not by this
regulation, which implements the statutory requirement. These costs should be
minimal as the insurers are already issuing the cancellation, nonrenewal or
conditional renewal notices and the rule only requires that the insurance
companies add the specific information to the notices. Insurers are not
required to, nor should they need to, hire new personnel to comply with the
new notification requirements.

    In addition, NYIPUA is required to notify policyholders who may be
eligible, of the availability of coverage in a market assistance program.
There will be costs associated with NYIPIUA issuing these new notices.
However, the notice is required by Section 5403(d) and not by this regulation,
which implements the statutory requirement.

    5. Local government mandates: None.

    6. Paperwork: Insurers will incur additional paperwork associated with
adding the specific information required by the rule to the cancellation,
nonrenewal, and conditional renewal notices specified in Section 3425(e) of
the Insurance Law. However, the paperwork should be minimal as the insurers
are adding the required language to notices already being issued by the
company. Moreover, this notice is required by Section 3425 and not by this
regulation.

    NYPIUA will incur additional paperwork in notifying policyholders that may
be eligible of the availability of coverage in a market assistance program.
However, this notice is required by Section 5403(d) and not by this
regulation.

    7. Duplication: None.

    8. Alternatives: The Department considered requiring the names and contact
information of the insurers participating in market assistance programs to be
included in the notice. However, because a market assistance program is
voluntary, there could be additional market assistance programs established,
and the list of participating insurers could change frequently, it was
determined that this requirement should not be included in the rule.

    The Department did outreach with various trade organizations. One of the
trade organizations expressed concern that insurers may have problems
complying with the November 23, 2006 effective date. The Department has no
discretion in setting the date as it was set forth by Chapter 162 of the Laws
of 2006. In addition, as long as the information required by the rule is part
of the cancellation, nonrenewal, or conditional renewal notice and the
information is conspicuous, the information required by the rule may be on a
separate page of the notice.

    The trade organization requested that the Department consider exempting,
from the market assistance plan notice requirement, cancellation notices
issued for non payment of premium or issued at the request of the insured.
Chapter 162 does not provide exceptions to the notice requirements.

    9. Federal standards: None.

    10. Compliance schedule: The effective date of the enabling legislation,
Chapter 162 of the Laws of 2006, was November 23, 2006. The rule provided that
every notice of cancellation, nonrenewal or conditional renewal issued on or
after November 23, 2006 for a homeowners policy as specified in Section
3425(e) of the Insurance Law to be in compliance. On or after November 23,
2006, NYPIUA was required to provide the notice required by Section 5403(d) of
the Insurance Law upon issuance or renewal of a policy.

    Regulatory Flexibility Analysis

    The Insurance Department finds that this rule would not impose reporting,
recordkeeping or other requirements on small businesses. The rule is directed
at property/casualty insurers. The Insurance Department has reviewed or
monitored Reports on Examination and Annual Statements of property/casualty
insurers and believes that none of them fall within the definition of "small
business" contained in section 102(8) of the State Administrative Procedure
Act, because there are none which are independently owned and have under 100
employees.

    The Insurance Department finds that this rule will not impose reporting,
recordkeeping or other compliance requirements on local governments. The basis
for this finding is that this rule is directed at insurance companies, none of
which are local governments.

    Rural Area Flexibility Analysis

    The Insurance Department finds that this rule does not impose any
additional burden on persons located in rural areas, and the Insurance
Department finds that it will not have an adverse impact on rural areas. The
rule applies uniformly to parties that do business in both rural and nonrural
areas of New York State.

    Job Impact Statement

    This rule should not have any adverse impact on jobs and employment
opportunities in this state since the rule merely sets forth minimum
notification requirements pertaining to the notices required by Insurance Law
Sections 3425(e) and 5403(d). Insurers are not required to, nor should they
need to, hire new personnel to comply with the new notification requirements.

WHAT'S NEW
Description of Changes
There are no recorded changes for this document.

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