S T A T E O F N E W Y O R K
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10275--A
I N A S S E M B L Y
March 16, 2010
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Introduced by M. of A. MORELLE -- read once and referred to the Commit-
tee on Insurance -- reported and referred to the Committee on Ways and
Means -- committee discharged, bill amended, ordered reprinted as
amended and recommitted to said committee
AN ACT to amend the insurance law, in relation to authorizing the issu-
ance of group policies for service providers listed in a commercial
directory
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The insurance law is amended by adding a new section 3453
to read as follows:
S 3453. GROUP POLICY FOR SERVICE PROVIDERS LISTED IN A COMMERCIAL
DIRECTORY. (A) FOR PURPOSES OF THIS SECTION, THE FOLLOWING DEFINITIONS
SHALL APPLY:
(1) "COMMERCIAL DIRECTORY" MEANS ANY LISTING OF BUSINESSES IN PRINT OR
ELECTRONIC FORM THAT IS ISSUED BY AN ENTITY THAT PUBLISHES BOTH WHITE
AND YELLOW PAGE DIRECTORIES.
(2) "GROUP MEMBER" MEANS A SERVICE PROVIDER THAT IS INSURED UNDER THE
GROUP POLICY.
(3) "GROUP POLICYHOLDER" MEANS AN ENTITY THAT PUBLISHES COMMERCIAL
DIRECTORIES.
(4) "SERVICE PROVIDER" MEANS ANY INDIVIDUAL OR BUSINESS ENTITY WHO IS
LISTED IN A COMMERCIAL DIRECTORY; PURCHASES ADVERTISING SERVICES FROM A
PUBLISHER OF A COMMERCIAL DIRECTORY; AND PROVIDES CERTAIN TYPES OF
SERVICES AS SPECIFIED BY THE PUBLISHER OF THE COMMERCIAL DIRECTORY.
(B) A GROUP POLICY MAY BE ISSUED OR ISSUED FOR DELIVERY IN THIS STATE
TO A GROUP POLICYHOLDER ONLY IN ACCORDANCE WITH THE PROVISIONS OF THIS
SECTION.
(C) COVERAGE UNDER A GROUP POLICY SHALL EXTEND ONLY TO SERVICE PROVID-
ERS, AND SHALL BE ASSOCIATED WITH THE PERFORMANCE OF CONTRACTS ENTERED
INTO BY SERVICE PROVIDERS.
(D) A GROUP POLICY MAY PROVIDE COVERAGE FOR THE KIND OF INSURANCE
AUTHORIZED BY PARAGRAPH SIXTEEN OF SUBSECTION (A) OF SECTION ONE THOU-
SAND ONE HUNDRED THIRTEEN OF THIS CHAPTER, AND THE AMOUNT OF COVERAGE
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD16197-02-0
A. 10275--A 2
SHALL NOT EXCEED FIVE THOUSAND DOLLARS FOR EACH CONTRACT GUARANTEED BY
THE COVERAGE.
(E) THE PREMIUM FOR THE GROUP POLICY, INCLUDING CERTIFICATES, MAY BE
PAID BY THE GROUP POLICYHOLDER FROM THE FUNDS CONTRIBUTED:
(1) WHOLLY BY THE GROUP POLICYHOLDER;
(2) WHOLLY BY THE GROUP MEMBERS; OR
(3) JOINTLY BY THE GROUP POLICYHOLDER AND THE GROUP MEMBERS.
(F)(1) A GROUP POLICY, INCLUDING CERTIFICATES, ON WHICH ALL OR PART OF
THE PREMIUM IS TO BE DERIVED FROM FUNDS CONTRIBUTED BY THE GROUP MEMBERS
SPECIFICALLY FOR THEIR INSURANCE MAY BE PLACED IN FORCE ONLY IF THE
GROUP POLICY INSURES NOT LESS THAN FIFTY PERCENT OF THE THEN ELIGIBLE
SERVICE PROVIDERS, OR, IF LESS, ONE HUNDRED OR MORE OF SUCH ELIGIBLE
SERVICE PROVIDERS EXCLUDING ANY AS TO WHOM EVIDENCE OF INDIVIDUAL INSUR-
ABILITY IS NOT SATISFACTORY TO THE INSURER. A GROUP POLICY, INCLUDING
CERTIFICATES, ON WHICH NO PART OF THE PREMIUM IS TO BE DERIVED FROM
FUNDS CONTRIBUTED BY THE GROUP MEMBERS SPECIFICALLY FOR THEIR INSURANCE
MUST INSURE ALL ELIGIBLE SERVICE PROVIDERS, EXCLUDING ANY AS TO WHOM
EVIDENCE OF INDIVIDUAL INSURABILITY IS NOT SATISFACTORY TO THE INSURER.
(2) THE GROUP POLICY SHALL INSURE AT LEAST ONE HUNDRED SERVICE PROVID-
ERS AT DATE OF ISSUE, EXCEPT THAT IF PART OF THE PREMIUM IS TO BE
DERIVED FROM FUNDS TO BE CONTRIBUTED BY THE GROUP MEMBERS SPECIFICALLY
FOR THEIR INSURANCE, THEN THE GROUP POLICY SHALL INSURE AT LEAST TWO
HUNDRED SERVICE PROVIDERS AT DATE OF ISSUE.
(G) (1) ANY POLICY DIVIDEND, RETROSPECTIVE PREMIUM CREDIT, OR RETRO-
SPECTIVE PREMIUM REFUND IN RESPECT OF PREMIUMS PAID BY THE GROUP POLICY-
HOLDER MAY:
(A) BE APPLIED TO REDUCE THE PREMIUM CONTRIBUTION OF THE GROUP POLICY-
HOLDER, BUT NOT IN EXCESS OF THE PROPORTION TO ITS CONTRIBUTION; OR
(B) BE RETAINED BY THE GROUP POLICYHOLDER.
(2) ANY POLICY DIVIDEND, RETROSPECTIVE PREMIUM CREDIT, OR RETROSPEC-
TIVE PREMIUM REFUND NOT DISTRIBUTED UNDER PARAGRAPH ONE OF THIS
SUBSECTION SHALL BE:
(A) APPLIED TO REDUCE FUTURE PREMIUMS AND, ACCORDINGLY, FUTURE
CONTRIBUTIONS, OF EXISTING OR FUTURE GROUP MEMBERS, OR BOTH; OR
(B) PAID OR REFUNDED TO THOSE GROUP MEMBERS INSURED ON THE DATE THE
PAYMENT OR REFUND IS MADE TO THE GROUP POLICYHOLDER, IF DISTRIBUTED BY
THE GROUP POLICYHOLDER, OR ON THE DATE OF MAILING, IF DISTRIBUTED
DIRECTLY BY THE INSURER, SUBJECT TO THE FOLLOWING REQUIREMENTS:
(I) THE INSURER SHALL BE RESPONSIBLE FOR DETERMINING THE ALLOCATION OF
THE PAYMENT OR REFUND TO THE GROUP MEMBERS;
(II) IF THE GROUP POLICYHOLDER DISTRIBUTES THE PAYMENT OR REFUND, THE
INSURER SHALL BE RESPONSIBLE FOR AUDIT TO ASCERTAIN THAT THE PAYMENT OR
REFUND IS ACTUALLY MADE IN ACCORDANCE WITH THE ALLOCATION PROCEDURE; AND
(III) IF THE GROUP POLICYHOLDER FAILS TO MAKE THE PAYMENT OR REFUND,
THE INSURER SHALL MAKE THE PAYMENT OR REFUND DIRECTLY OR USE THE METHOD
PROVIDED IN SUBPARAGRAPH (A) OF THIS PARAGRAPH.
(3) NOTWITHSTANDING PARAGRAPHS ONE AND TWO OF THIS SUBSECTION, IF A
DIVIDEND ACCRUES UPON TERMINATION OF COVERAGE UNDER A GROUP POLICY, THE
PREMIUM FOR WHICH WAS PAID OUT OF FUNDS CONTRIBUTED BY GROUP MEMBERS
SPECIFICALLY FOR THE COVERAGE, THEN THE DIVIDEND SHALL BE PAID OR
REFUNDED BY THE GROUP POLICYHOLDER TO THE GROUP MEMBERS INSURED ON THE
DATE THE PAYMENT OR REFUND IS MADE TO THE GROUP POLICYHOLDER NET OF
REASONABLE EXPENSES INCURRED BY THE GROUP POLICYHOLDER IN PAYING OR
REFUNDING THE DIVIDEND TO SUCH GROUP MEMBERS.
(4) FOR THE PURPOSES OF THIS SUBSECTION, "DIVIDEND" MEANS A RETURN BY
AN INSURER TO A GROUP POLICYHOLDER OF EXCESS PREMIUMS PAID BY THAT GROUP
A. 10275--A 3
POLICYHOLDER IN LIGHT OF FAVORABLE LOSS EXPERIENCE, INCLUDING RETROSPEC-
TIVE PREMIUM CREDITS OR RETROSPECTIVE PREMIUM REFUNDS. THE TERM "DIVI-
DEND" DOES NOT INCLUDE REIMBURSEMENTS OR FEES RECEIVED BY A GROUP POLI-
CYHOLDER IN CONNECTION WITH THE OPERATION OR ADMINISTRATION OF A GROUP
POLICY, INCLUDING ADMINISTRATIVE REIMBURSEMENTS, FEES FOR SERVICES
PROVIDED BY THE GROUP POLICYHOLDER, OR TRANSACTIONAL SERVICE FEES.
(H) THE INSURER MUST TREAT IN LIKE MANNER ALL ELIGIBLE GROUP MEMBERS
OF THE SAME CLASS AND STATUS.
(I) A GROUP POLICY OR CERTIFICATE SHALL NOT BE ELIGIBLE FOR PLACEMENT
BY AN EXCESS LINE BROKER LICENSED PURSUANT TO ARTICLE TWENTY-ONE OF THIS
CHAPTER.
(J)(1) THE INSURER SHALL BE RESPONSIBLE FOR THE MAILING OR DELIVERY OF
A CERTIFICATE OF INSURANCE TO EACH GROUP MEMBER. THE INSURER ALSO SHALL
BE RESPONSIBLE FOR THE MAILING OR DELIVERY TO EACH GROUP MEMBER OF AN
AMENDED CERTIFICATE OF INSURANCE, OR ENDORSEMENT TO THE CERTIFICATE,
WHENEVER THERE IS A CHANGE OF LIMITS; CHANGE IN TYPE OF COVERAGE; ADDI-
TION, REDUCTION, OR ELIMINATION OF COVERAGE; OR ADDITION OF EXCLUSION,
UNDER THE GROUP POLICY OR CERTIFICATE.
(2) THE CERTIFICATE SHALL CONTAIN IN SUBSTANCE ALL MATERIAL TERMS AND
CONDITIONS OF COVERAGE AFFORDED TO THE GROUP MEMBER, UNLESS THE GROUP
POLICY IS INCORPORATED BY REFERENCE AND A COPY OF THE GROUP POLICY
ACCOMPANIES THE CERTIFICATE.
(3) IF COVERAGE AFFORDED TO THE GROUP MEMBER IS IN EXCESS OF OTHER
APPLICABLE INSURANCE COVERAGE, THEN THE CERTIFICATE SHALL CONTAIN A
NOTICE ADVISING THE GROUP MEMBER THAT IF THE MEMBER HAS OTHER INSURANCE
COVERAGE, SPECIFIED COVERAGES UNDER THE GROUP POLICY WILL BE EXCESS OVER
THE OTHER INSURANCE.
(K) A GROUP POLICYHOLDER SHALL COMPLY WITH THE PROVISIONS OF SECTION
TWO THOUSAND ONE HUNDRED TWENTY-TWO OF THIS CHAPTER, IN THE SAME MANNER
AS AN AGENT OR BROKER, IN ANY ADVERTISEMENT, SIGN, PAMPHLET, CIRCULAR,
CARD, OR OTHER PUBLIC ANNOUNCEMENT REFERRING TO COVERAGE UNDER A GROUP
POLICY OR CERTIFICATE.
(L) A GROUP POLICY OR CERTIFICATE SHALL NOT BE SUBJECT TO SECTION
THREE THOUSAND FOUR HUNDRED TWENTY-FIVE OR SECTION THREE THOUSAND FOUR
HUNDRED TWENTY-SIX OF THIS ARTICLE. THE FOLLOWING REQUIREMENTS SHALL
APPLY IN REGARD TO TERMINATION OF COVERAGE:
(1)(A) AN INSURER MAY TERMINATE A GROUP POLICY OR CERTIFICATE ONLY IF
CANCELLATION IS BASED ON ONE OR MORE OF THE REASONS SET FORTH IN SUBPAR-
AGRAPHS (A) THROUGH (D) OR (F) THROUGH (H) OF PARAGRAPH ONE OF
SUBSECTION (C) OF SECTION THREE THOUSAND FOUR HUNDRED TWENTY-SIX OF THIS
ARTICLE; PROVIDED, HOWEVER, THAT AN ACT OR OMISSION BY A GROUP MEMBER
THAT WOULD CONSTITUTE THE BASIS FOR CANCELLATION OF AN INDIVIDUAL
CERTIFICATE SHALL NOT CONSTITUTE THE BASIS FOR CANCELLATION OF THE GROUP
POLICY.
(B) WHERE THE PREMIUM IS DERIVED WHOLLY FROM FUNDS CONTRIBUTED BY THE
GROUP POLICYHOLDER, AN INSURER MAY CANCEL AN INDIVIDUAL CERTIFICATE ONLY
IF CANCELLATION IS BASED ON ONE OR MORE OF THE REASONS SET FORTH IN
SUBPARAGRAPH (B), (C) OR (H) OF PARAGRAPH ONE OF SUBSECTION (C) OF
SECTION THREE THOUSAND FOUR HUNDRED TWENTY-SIX OF THIS ARTICLE.
(2)(A) AN INSURER'S CANCELLATION OF A GROUP POLICY, INCLUDING ALL
CERTIFICATES, SHALL NOT BECOME EFFECTIVE UNTIL FIFTEEN DAYS AFTER THE
INSURER MAILS OR DELIVERS WRITTEN NOTICE OF CANCELLATION TO THE GROUP
POLICYHOLDER AT THE MAILING ADDRESS SHOWN IN THE POLICY.
(I) WHERE ALL OR PART OF THE PREMIUM IS DERIVED FROM FUNDS CONTRIBUTED
BY THE GROUP MEMBER SPECIFICALLY FOR THE COVERAGE, THE INSURER ALSO
A. 10275--A 4
SHALL MAIL OR DELIVER WRITTEN NOTICE OF CANCELLATION OF THE GROUP POLICY
TO THE GROUP MEMBER AT THE GROUP MEMBER'S MAILING ADDRESS.
(II) WHERE NONE OF THE PREMIUM IS DERIVED FROM FUNDS CONTRIBUTED BY A
GROUP MEMBER SPECIFICALLY FOR THE COVERAGE, THE GROUP POLICYHOLDER SHALL
MAIL OR DELIVER WRITTEN NOTICE TO THE GROUP MEMBER ADVISING THE GROUP
MEMBER OF THE CANCELLATION OF THE ACCOUNT GROUP POLICY AND THE EFFECTIVE
DATE OF CANCELLATION. THE GROUP POLICYHOLDER SHALL MAIL OR DELIVER THE
WRITTEN NOTICE WITHIN NINETY DAYS AFTER RECEIVING NOTICE OF CANCELLATION
FROM THE INSURER.
(B) AN INSURER'S CANCELLATION OF AN INDIVIDUAL CERTIFICATE SHALL NOT
BECOME EFFECTIVE UNTIL FIFTEEN DAYS AFTER THE INSURER MAILS OR DELIVERS
WRITTEN NOTICE OF CANCELLATION TO THE GROUP MEMBER AT THE GROUP MEMBER'S
MAILING ADDRESS AND TO THE GROUP POLICYHOLDER AT THE MAILING ADDRESS
SHOWN IN THE GROUP POLICY.
(C)(I) A GROUP POLICYHOLDER MAY CANCEL A GROUP POLICY, INCLUDING ALL
CERTIFICATES, OR ANY INDIVIDUAL CERTIFICATE, FOR ANY REASON UPON THIRTY
DAYS WRITTEN NOTICE TO THE INSURER AND EACH GROUP MEMBER; AND
(II) THE GROUP POLICYHOLDER SHALL MAIL OR DELIVER WRITTEN NOTICE TO
EACH AFFECTED GROUP MEMBER OF THE GROUP POLICYHOLDER'S CANCELLATION OF
THE GROUP POLICY OR CERTIFICATE AND THE EFFECTIVE DATE OF CANCELLATION.
THE GROUP POLICYHOLDER SHALL MAIL OR DELIVER THE WRITTEN NOTICE TO THE
GROUP MEMBER'S MAILING ADDRESS AT LEAST THIRTY DAYS PRIOR TO THE EFFEC-
TIVE DATE OF CANCELLATION.
(3)(A) UNLESS A GROUP POLICY PROVIDES FOR A LONGER POLICY PERIOD, THE
POLICY AND ALL CERTIFICATES SHALL BE ISSUED OR RENEWED FOR A ONE-YEAR
POLICY PERIOD.
(B) THE GROUP POLICYHOLDER SHALL BE ENTITLED TO RENEW THE GROUP POLICY
AND ALL CERTIFICATES UPON TIMELY PAYMENT OF THE PREMIUM BILLED TO THE
GROUP POLICYHOLDER FOR THE RENEWAL, UNLESS:
(I) THE INSURER MAILS OR DELIVERS TO THE GROUP POLICYHOLDER AND ALL
GROUP MEMBERS WRITTEN NOTICE OF NONRENEWAL, OR CONDITIONAL RENEWAL; AND
(II) THE INSURER MAILS OR DELIVERS THE WRITTEN NOTICE AT LEAST THIRTY,
BUT NOT MORE THAN ONE HUNDRED TWENTY DAYS PRIOR TO THE EXPIRATION DATE
SPECIFIED IN THE POLICY OR, IF NO DATE IS SPECIFIED, THE NEXT ANNIVER-
SARY DATE OF THE POLICY.
(4) WHERE THE GROUP POLICYHOLDER NONRENEWS THE GROUP POLICY, THE GROUP
POLICYHOLDER SHALL MAIL OR DELIVER WRITTEN NOTICE TO EACH GROUP MEMBER
ADVISING THE GROUP MEMBER OF NONRENEWAL OF THE GROUP POLICY AND THE
EFFECTIVE DATE OF NONRENEWAL. THE GROUP POLICYHOLDER SHALL MAIL OR
DELIVER WRITTEN NOTICE AT LEAST THIRTY DAYS PRIOR TO THE NONRENEWAL.
(5) EVERY NOTICE OF CANCELLATION, NONRENEWAL, OR CONDITIONAL RENEWAL
SHALL SET FORTH THE SPECIFIC REASON OR REASONS FOR CANCELLATION, NONRE-
NEWAL, OR CONDITIONAL RENEWAL.
(6)(A) AN INSURER SHALL NOT BE REQUIRED UNDER THIS SUBSECTION TO GIVE
NOTICE TO A GROUP MEMBER IF THE INSURER HAS BEEN ADVISED BY EITHER THE
GROUP POLICYHOLDER OR ANOTHER INSURER THAT SUBSTANTIALLY SIMILAR COVER-
AGE HAS BEEN OBTAINED FROM THE OTHER INSURER WITHOUT LAPSE OF COVERAGE.
(B) A GROUP POLICYHOLDER SHALL NOT BE REQUIRED UNDER THIS SUBSECTION
TO GIVE NOTICE TO A GROUP MEMBER IF SUBSTANTIALLY SIMILAR COVERAGE HAS
BEEN OBTAINED FROM ANOTHER INSURER WITHOUT LAPSE OF COVERAGE.
(7)(A) IF, PRIOR TO THE EFFECTIVE DATE OF CANCELLATION, NONRENEWAL, OR
CONDITIONAL RENEWAL OF THE GROUP POLICY, OR A CERTIFICATE, WHETHER
INITIATED BY THE INSURER, GROUP POLICYHOLDER OR BY THE GROUP MEMBER IN
REGARD TO THE GROUP MEMBER'S CERTIFICATE, COVERAGE ATTACHES PURSUANT TO
THE TERMS OF A GROUP POLICY, THEN THE COVERAGE SHALL BE EFFECTIVE UNTIL
EXPIRATION OF THE APPLICABLE PERIOD OF COVERAGE PROVIDED IN THE GROUP
A. 10275--A 5
POLICY NOTWITHSTANDING THE CANCELLATION, NONRENEWAL OR CONDITIONAL
NONRENEWAL OF THE GROUP POLICY.
(B) NOTWITHSTANDING SUBPARAGRAPH (A) OF THIS PARAGRAPH, AN INSURER MAY
TERMINATE COVERAGE UNDER AN INDIVIDUAL CERTIFICATE ON THE EFFECTIVE DATE
OF CANCELLATION, IF THE CERTIFICATE IS CANCELLED IN ACCORDANCE WITH THE
PROVISIONS OF SUBPARAGRAPH (B) OF PARAGRAPH ONE OF THIS SUBSECTION.
(M) NOTWITHSTANDING ANY REGULATION TO THE CONTRARY, RATES AND FORMS
FOR ANY GROUP POLICY ISSUED OR ISSUED FOR DELIVERY IN THIS STATE PURSU-
ANT TO THIS SECTION SHALL BE FILED WITH THE SUPERINTENDENT IN ACCORDANCE
WITH ARTICLE TWENTY-THREE OF THIS CHAPTER.
S 2. This act shall take effect immediately.