BILL NUMBER:A8798

TITLE  OF  BILL:   An act to amend the insurance law, in relation to the
arbitration of no-fault insurance claims

This is one in a series of measures being introduced at the  request  of
the Chief Administrative Judge on the recommendation of his Local Courts
Advisory Committee.

This  measure amends section 5106 of the Insurance Law to require manda-
tory arbitration of no-fault motor vehicle insurance claims and to lower
the interest rate on overdue insurance claims from two  percent  to  one
percent per month.

Section  5106(a)  of  the  Insurance  Law authorizes the commencement of
either an arbitration proceeding or a civil court action  to  recover  a
no-fault  personal injury claim not paid within 30 days of submission of
proof of the claim to an insurer, and authorizes  an  award  to  include
interest  of two percent per month on the amount of the claim as well as
attorney's fees incurred in securing the award.    Arbitration  proceed-
ings,which  are governed by the procedures set forth in 11 NYCRR §65.17,
are subject to limited review by the courts.  An  arbitration  award  is
binding on all parties to the arbitration, unless vacated or modified by
a  master  arbitrator.  The award of a master arbitrator in turn is also
binding on the parties to the proceeding, unless vacated or modified  by
a court on any of the grounds set forth in Article 75 of the Civil Prac-
              

tice  Law and Rules. Moreover, where the amount of the award of a master
arbitrator is $5,000 or more, exclusive of interest or attorney's  fees,
a claimant may obtain a de novo court review of his or her claim.

Despite  the  availability  of arbitration, and the fact that almost all
overdue payment claims fall far below $5,000, most claimants proceed  by
court action. As a result, the case dockets of courts where these claims
have  been  filed  has experienced a dramatic increase in size.  In. the
New York City Civil Court, for example, no-fault cases have been  prima-
rily responsible for the rise of the caseload of that court from 212,000
filings  in  2000  to 414,000 filings in 2004. The rise in the number of
case filings has placed  a  significant  administrative  burden  on  the
courts.

Amending the Insurance Law to provide for mandatory arbitration of over-
due  insurance  claims  will  assure  the competent disposition of these
claims by arbitrators, qualified to review issues involved  in  no-fault
insurance  disputes, while achieving the important objective of reducing
the administrative burden that these claims place  on  the  courts.  The
courts will continue to have the authority to review the award of master
arbitrators, in accordance with Article 75 of the Civil Practice Law and
Rules,  and conduct a de novo review of such awards in excess of $5,000.
Moreover, amending the Insurance Law to reduce the interest on an  over-
due  insurance  claim will make it less lucrative to file a large number
of such claims and reduce the burden on the arbitration panel.

This measure, which would have no fiscal impact  on  the  State  or  its
local  governments and would significantly improve court administration,
would take effect one year after it shall have become a law.

LEGISLATIVE HISTORY:
2005-2006 S6755 (Seward)
2005-2006 A10545 (M. of A. Grannis)
2007-2008 S5773 (Seward)

EFFECTIVE  DATE:  This act shall take effect on the two hundred seventi-
eth day after it shall have become a law and shall apply to  all  claims
made on or after such effective date