BILL NUMBER:S7603

TITLE OF BILL:
An act to amend the insurance law, in relation to prohibiting insurer
from cancelling or refusing to renew or condition its renewal of automo-
bile insurance policies in certain cases

PURPOSE:
To prohibit insurance companies from canceling the automobile policies
of policyholders solely as a result of a dispute or a complaint that may
have been filed against the carrier by the policyholder.

SUMMARY OF SPECIFIC PROVISIONS:
This bill amends section 3425 of the insurance law by adding a new
subsection (t) to require that no automobile insurance policy, except
for nonpayment of premium, shall be cancelled or a refusal to renew
issued while a claim filed by the insured against the insurer is pend-
ing, or within one year following the date of which a dispute was
settled or resolved. The superintendent however, after a hearing, may
determine that the cancellation or refusal to renew is unrelated or
independent of such complaint.

JUSTIFICATION:
Currently the law allows insurance companies to terminate two percent of
their policyholders each year. No questions asked, no explanation given,
they can simply refuse to renew any policy they choose. As a result,
              

many insurance companies are able to abuse this two percent provision by
using it to retaliate against policyholders who have had disputes, or
who have filed legitimate complaints against them. The purpose of the
two percent provision was to afford insurance companies some protection
from policyholders who may be considered as bad risks, and to allow for
some flexibility, particularly in high risk areas. This legislation will
help to protect consumers who have been policy holders for at least one
year and who have maintained good driving records with the company.
Consumers should not have to suppress or lose their right to openly and
appropriately protest arbitrary and unfair practices by insurance compa-
nies for fear of reprisal by losing their coverage.

PRIOR LEGISLATIVE HISTORY:
2009-2010 A.3348
2006-2008 A.5183
2005-2006 A.4053
2003-2004 A.5199
2001-2002 A.3666
1999-2000 A.818A
1997-1998 A.2682

FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
This act shall take effect immediately.