NY State Senate Bill 2025-S166A

Current Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 15, 2025	print number 166a
May 15, 2025	amend and recommit to insurance
Jan 08, 2025	referred to insurance

Bill Amendments

Original

A (Active)

co-Sponsors

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2025-S166 - Details

See Assembly Version of this Bill:: A6010
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §2601-a, amd §3425, Ins L
Versions Introduced in Other Legislative Sessions:: 2021-2022: S6813, A7285
2023-2024: S1797, A7139

2025-S166 - Summary

Relates to claim settlement practices when an insurer refuses to pay or is delaying payment of a settlement; provides a policyholder a private right of action against such insurer doing business in the state who has refused or delayed payment of an insurance claim.

2025-S166 - Sponsor Memo

                                 
BILL NUMBER: S166

SPONSOR: RAMOS
 
TITLE OF BILL:

An act to amend the insurance law, in relation to unfair claim settle-
ment practices

 
PURPOSE:

To allow insurance policy holders and injured people to recover damages
when an insurance company's refusal to pay or unreasonable delay in
paying a claim was not substantially justified.

 
SUMMARY OF PROVISIONS:

Section 1 creates a new Insurance Law section 2601-grants insurance
policy claimants a private right of action to seek damages if the insur-
er unreasonably refuses to pay or unreasonably delays payment without
substantial justification. An insurer would not be substantially justi-
fied in refusing to pay or in unreasonably delaying payment when it:

1. Fails to provide the claimant with accurate information regarding
policy provisions relating to the coverage at issue; or,

2. Fails to effectuate in good faith a prompt, fair and equitable
settlement of a claim or portion of a claim and where the insurer failed
to reasonably accord at least equal or more favorable consideration to
its insured's interests as it did to its own interests, and thereby
exposed the insured to a judgment in excess of the policy limits or
caused other damage to a claimant; or

3. Fails to provide a timely written denial of a claimant's claim, or
portion thereof, with a full and complete explanation of such denial,
including references to specific policy provisions wherever possible; or

4. Fails to act in good faith by compelling such claimant to initiate a
lawsuit to recover under the policy by offering substantially less than
the amounts ultimately recovered in such suit; or

5. Fails to timely provide, on request of the policy holder or the poli-
cy holder's representative, all reports or other documentation arising
from the investigation of a claim; or

6. Refuses to pay a claim without conducting a reasonable investigation
prior to such refusal.

Any policyholder who establishes liability shall be entitled to recover
amounts due under the policy, costs and disbursements, consequential
damages, reasonable attorney's fees, interest from the time of the loss
or failure to offer a fair and reasonable settlement and punitive
damages.

The bill also includes procedural rules to ensure a fair hearing for all
parties. including evidentiary issues, notice to the insurer, opportu-
nity to cure, discovery and the right to trial.



Finally, in the event an insurer is found liable under this section, the
bill would prevent insurers from passing on the costs to consumers in
the form of higher premiums.

Section 2 amends Insurance Law section 3425 to prohibit insurers from
refusing to issue or renew a policy because a consumer has brought an
action under section 1.

Section 3 amends Insurance Law section 2601 to update fair claims
settlement practices.

Section 4 is the effective date.

 
JUSTIFICATION:

Insurance companies have an overwhelming advantage in the handling of a
claim, with the power and financial incentive to deny or delay coverage
and otherwise avoid fair payment of legitimate claims. Under current
law, there is no consequence to the insurer when a denial or delay of
coverage is unfounded, or when the insurer offers an unreasonably low
settlement. The importance of this issue became increasingly apparent in
the aftermath of Superstorm Sandy, when tens of thousands of New Yorkers
making claims to insurers experienced unfair claims practices. More
recently, COVID-19 claims denials have left many victims without even a
settlement offer in the absence of the threat of a trial and many small
businesses in danger of shuttering after insurers refused to pay for
losses due to mandated closures.

Currently § 2601 of the insurance law regulates the conduct of insurers,
prohibiting 5 specific actions that constitute unfair claims practices.
However, only the Superintendent of the Department of Financial Services
can enforce these provisions. Furthermore, § 2601 does not go far enough
in regulating the types of unfair claims practices we have seen across
the state in the wake of recent natural disasters. Under existing stat-
utes and case law, an insurer can simply refuse to pay a claim with
impunity or offer an amount well below the value of the loss. Even if
the claimant sues and wins the full amount of the claim, they will still
not receive the benefits to which they should be entitled under the
policy because of the costs associated with bringing the successful
action. This gives insurers an unfair advantage in negotiating a settle-
ment of any claim - insurers are able to bear the costs of litigation,
but most ordinary New Yorkers cannot afford to do so. In addition, an
insurer's bad faith conduct may leave a policyholder exposed to a
liability judgment in excess of the policy limit.

New Yorkers who pay insurance premiums should expect insurers to live up
to their obligation to deal in good faith with regard to claims submit-
ted under the policy. When insurers do not meet this obligation. It is
important that the consumer has a viable and effective means of seeking
redress. This hill gives consumers the legal means to achieve this goal.

 
LEGISLATIVE HISTORY:

2023-24: S1797 (Ramos) Referred to Insurance / A7139 (Weinstein)
referred to codes

2021-22: S6813A (Ramos) Referred to Insurance / A7285A (Weinstein)
advanced to third reading cal. 603
 
FISCAL IMPACT:

TBD

 
EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date on which it shall have become a law and shall apply to all acts and
omissions by insurers occurring on or after such effective date.

2025-S166 - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    166
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 8, 2025
                                ___________
 
 Introduced  by  Sens.  RAMOS,  COMRIE, HARCKHAM, HOYLMAN-SIGAL, KRUEGER,
   PALUMBO, RIVERA, SALAZAR, SERRANO, STAVISKY -- read twice and  ordered
   printed,  and  when printed to be committed to the Committee on Insur-
   ance
 
 AN ACT to amend the insurance law, in relation to unfair  claim  settle-
   ment practices
 
   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 2601-a
 to read as follows:
   § 2601-A. UNFAIR CLAIM SETTLEMENT PRACTICES;  CIVIL  REMEDY.  (A)  THE
 HOLDER  OF A POLICY ISSUED OR RENEWED PURSUANT TO ARTICLE THIRTY-FOUR OF
 THIS CHAPTER OR INJURED PERSON SHALL HAVE  A  PRIVATE  RIGHT  OF  ACTION
 AGAINST ANY INSURER DOING BUSINESS IN THIS STATE FOR DAMAGES AS PROVIDED
 IN  THIS SECTION UPON PROOF BY A PREPONDERANCE OF THE EVIDENCE THAT SUCH
 INSURER'S REFUSAL TO PAY OR UNREASONABLY DELAY PAYMENT  TO  THE  POLICY-
 HOLDER  OR INJURED PERSON OF AMOUNTS CLAIMED TO BE DUE UNDER A POLICY IS
 NOT REASONABLY JUSTIFIED. AN INSURER  IS  NOT  REASONABLY  JUSTIFIED  IN
 REFUSING TO PAY OR IS UNREASONABLY DELAYING PAYMENT WHEN THE INSURER:
   (1)  FAILS  TO  PROVIDE  THE  POLICYHOLDER  WITH  ACCURATE INFORMATION
 CONCERNING POLICY PROVISIONS RELATING TO THE COVERAGE AT ISSUE;
   (2) FAILS TO EFFECTUATE A PROMPT AND FAIR SETTLEMENT OF A CLAIM OR ANY
 PORTION THEREOF, IN THAT THE INSURER (I) FAILS TO REASONABLY  ACCORD  AT
 LEAST  EQUAL  OR MORE FAVORABLE CONSIDERATION TO ITS INSURED'S INTERESTS
 AS IT DID TO ITS OWN INTERESTS, AND THEREBY EXPOSES  THE  INSURED  TO  A
 JUDGMENT  IN  EXCESS  OF THE POLICY LIMITS, OR (II) REFUSES TO SETTLE IN
 RESPONSE TO A FAIR AND REASONABLE SETTLEMENT  OFFER  WITHIN  THE  POLICY
 LIMITS FROM AN INJURED PARTY;

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD00680-01-5
 S. 166                              2

 
   (3) FAILS TO PROVIDE A TIMELY WRITTEN DENIAL OF A POLICYHOLDER'S CLAIM
 WITH  A  FULL  AND COMPLETE EXPLANATION OF SUCH DENIAL, INCLUDING REFER-
 ENCES TO SPECIFIC POLICY PROVISIONS WHEREVER POSSIBLE;
   (4) FAILS TO MAKE A FINAL DETERMINATION AND NOTIFY THE POLICYHOLDER IN
 WRITING  OF  ITS  POSITION ON BOTH LIABILITY FOR AND THE INSURER'S VALU-
 ATION OF A CLAIM WITHIN A REASONABLE TIME NOT TO EXCEED  SIX  MONTHS  OF
 THE  DATE ON WHICH IT RECEIVED ACTUAL OR CONSTRUCTIVE NOTICE OF THE LOSS
 UPON WHICH THE CLAIM IS BASED;
   (5) FAILS TO ACT IN GOOD FAITH BY COMPELLING A POLICYHOLDER TO  INSTI-
 TUTE SUIT OR COMPEL APPRAISAL TO RECOVER AMOUNTS DUE UNDER ITS POLICY BY
 OFFERING  SUBSTANTIALLY  LESS  THAN  THE AMOUNTS ULTIMATELY RECOVERED IN
 SUIT OR BY APPRAISAL;
   (6) FAILS TO ADVISE A POLICYHOLDER THAT  A  CLAIM  MAY  EXCEED  POLICY
 LIMITS,  THAT  COUNSEL  ASSIGNED  BY  THE  INSURER  MAY  BE SUBJECT TO A
 CONFLICT OF INTEREST, OR THAT THE POLICYHOLDER  MAY  RETAIN  INDEPENDENT
 COUNSEL;
   (7)  FAILS  TO PROVIDE, ON REQUEST OF THE POLICYHOLDER OR THEIR REPRE-
 SENTATIVE, ALL REPORTS, LETTERS OR OTHER DOCUMENTATION ARISING FROM  THE
 INVESTIGATION  OF  A  CLAIM AND EVALUATING LIABILITY FOR OR VALUATION OF
 SUCH CLAIM;
   (8) REFUSES TO PAY A CLAIM WITHOUT CONDUCTING  A  REASONABLE  INVESTI-
 GATION;
   (9)  NEGOTIATES  OR SETTLES A CLAIM DIRECTLY WITH A POLICYHOLDER KNOWN
 TO BE REPRESENTED BY AN ATTORNEY WITHOUT  THE  ATTORNEY'S  KNOWLEDGE  OR
 CONSENT. THE PROVISIONS OF THIS PARAGRAPH SHALL NOT BE DEEMED TO PROHIB-
 IT  ROUTINE INQUIRIES TO A POLICYHOLDER TO OBTAIN DETAILS CONCERNING THE
 CLAIM;
   (10) NEGOTIATES OR SETTLES A CLAIM DIRECTLY WITH A POLICYHOLDER  KNOWN
 TO BE REPRESENTED BY A LICENSED PUBLIC ADJUSTER;
   (11) NEGOTIATES OR SETTLES A CLAIM DIRECTLY WITH A CONTRACTOR OR UNLI-
 CENSED PUBLIC ADJUSTER;
   (12)  REQUIRES  A  POLICYHOLDER  TO  SUBMIT  DUPLICATIVE OR REPETITIVE
 INFORMATION ALREADY SUBMITTED BY A POLICYHOLDER OR AN INJURED PARTY; OR
   (13) ACTS IN VIOLATION OF SECTION TWO THOUSAND SIX HUNDRED ONE OF THIS
 ARTICLE OR ANY REGULATION PROMULGATED PURSUANT THERETO.
   (B) ANY POLICYHOLDER WHO ESTABLISHES LIABILITY PURSUANT TO  SUBSECTION
 (A) OF THIS SECTION SHALL BE ENTITLED TO RECOVER, IN ADDITION TO AMOUNTS
 DUE  UNDER  THE  POLICY, COSTS AND DISBURSEMENTS, CONSEQUENTIAL DAMAGES,
 REASONABLE ATTORNEYS' FEES INCURRED BY THE POLICYHOLDER,  INTEREST  FROM
 THE  DATE  OF THE LOSS, AND PUNITIVE DAMAGES AS DETERMINED BY THE FINDER
 OF FACT.
   (C) ANY POLICYHOLDER MAY RECOVER DAMAGES FROM AN INSURER  DOING  BUSI-
 NESS  IN THIS STATE PURSUANT TO THIS SECTION EITHER AS PART OF AN ACTION
 TO RECOVER UNDER THE TERMS OF AN  INSURANCE  POLICY  OR  IN  A  SEPARATE
 ACTION.
   (D)  IN  ANY  TRIAL  OF  A CAUSE OF ACTION ASSERTED AGAINST AN INSURER
 PURSUANT TO THIS SECTION, EVIDENCE OF SETTLEMENT DISCUSSIONS WRITTEN AND
 VERBAL OFFERS TO COMPROMISE AND OTHER EVIDENCE RELATING  TO  THE  CLAIMS
 PROCESS  SHALL  BE ADMISSIBLE. IF CAUSES OF ACTION RELATING TO LIABILITY
 OF THE INSURER UNDER THE POLICY AND UNDER THIS SECTION  ARE  ALLEGED  IN
 THE  SAME  ACTION,  THE COURT MAY BIFURCATE THE TRIAL OF ISSUES SO AS TO
 AVOID PREJUDICE TO THE INSURER ON THE ISSUE OF LIABILITY UNDER THE POLI-
 CY AND FACILITATE ADMISSIBILITY OF EVIDENCE  ON  THE  CAUSES  OF  ACTION
 ASSERTED PURSUANT TO THIS SECTION.
   (E)  ALL  AMOUNTS  RECOVERED FROM AN INSURER AS DAMAGES AND REASONABLE
 ATTORNEYS' FEES IN ANY  ACTION  AUTHORIZED  IN  THIS  SECTION  SHALL  BE
 S. 166                              3
 
 EXCLUDED  BY  THE  INSURER IN ITS DETERMINATIONS OF THE PREMIUMS IT WILL
 CHARGE ALL POLICYHOLDERS ON ALL POLICIES ISSUED BY IT.
   (F)  AN  ACTION MAY ALSO BE MAINTAINED BY ANY INJURED PERSON OR REPRE-
 SENTATIVE THEREOF INCLUDING, BUT NOT LIMITED TO, A GUARDIAN, ADMINISTRA-
 TOR, EXECUTOR, INDIVIDUAL WITH A POWER OF ATTORNEY OR ANY OTHER PERSONAL
 REPRESENTATIVE AGAINST AN INSURER TO RECOVER DAMAGES INCLUDING COSTS AND
 DISBURSEMENTS, CONSEQUENTIAL DAMAGES, REASONABLE ATTORNEY'S FEES, INTER-
 EST FROM THE TIME OF FAILURE TO OFFER A FAIR AND  REASONABLE  SETTLEMENT
 IN  ACCORDANCE  WITH THIS SECTION, AND PUNITIVE DAMAGES AS DETERMINED BY
 THE FINDER OF FACT OR COURT, NOT LIMITED TO THE POLICY LIMITS,  WHERE  A
 PREPONDERANCE  OF  THE  EVIDENCE  ESTABLISHES  THAT THE INSURER FAILS TO
 EFFECTUATE A PROMPT AND FAIR SETTLEMENT OF A CLAIM OR ANY PORTION THERE-
 OF, IN THAT UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES RELATED TO
 THE CLAIM, THE INSURER FAILS TO REASONABLY ACCORD AT LEAST EQUAL OR MORE
 FAVORABLE CONSIDERATION TO ITS INSURED'S INTERESTS AS IT DID TO ITS  OWN
 INTERESTS.
   (G) AT LEAST THIRTY DAYS PRIOR TO THE FILING OF ANY ACTION PURSUANT TO
 THIS  SECTION, A WRITTEN DEMAND FOR RELIEF, IDENTIFYING THE CLAIMANT AND
 REASONABLY DESCRIBING THE UNFAIR CLAIM SETTLEMENT ACT  OR  PRACTICE  AND
 THE  INJURY  SUFFERED, SHALL BE MAILED OR DELIVERED TO ANY INSURER DOING
 BUSINESS IN THIS STATE. ANY INSURER DOING BUSINESS IN THIS STATE RECEIV-
 ING SUCH A DEMAND FOR RELIEF WHO, WITHIN THIRTY DAYS OF THE  MAILING  OR
 DELIVERY  OF THE DEMAND FOR RELIEF, MAKES A WRITTEN TENDER OF SETTLEMENT
 WHICH IS REJECTED BY THE CLAIMANT MAY, IN ANY  SUBSEQUENT  ACTION,  FILE
 THE WRITTEN TENDER AND AN AFFIDAVIT CONCERNING ITS REJECTION AND THEREBY
 LIMIT  ANY  RECOVERY  TO THE RELIEF TENDERED IF THE FINDER OF FACT FINDS
 THAT THE RELIEF TENDERED WAS REASONABLE IN RELATION TO THE INJURY  ACTU-
 ALLY SUFFERED BY THE CLAIMANT. IN ALL OTHER CASES, IF THE FINDER OF FACT
 FINDS  FOR  THE  CLAIMANT,  RECOVERY  SHALL  BE  IN THE AMOUNT OF ACTUAL
 DAMAGES; OR UP TO THREE BUT NOT LESS THAN TWO TIMES SUCH AMOUNT  IF  THE
 FINDER  OF  FACT  FINDS THAT THE UNFAIR CLAIM SETTLEMENT ACT OR PRACTICE
 WAS A WILLFUL OR KNOWING VIOLATION OF SUBSECTION  (A)  OR  (F)  OF  THIS
 SECTION  OR THAT THE REFUSAL TO GRANT RELIEF UPON DEMAND WAS NOT REASON-
 ABLY JUSTIFIED WITH KNOWLEDGE OR REASON TO KNOW THAT THE ACT OR PRACTICE
 COMPLAINED OF VIOLATED SUBSECTION (A) OR (F) OF THIS  SECTION.  FOR  THE
 PURPOSES  OF THIS CHAPTER, THE AMOUNT OF ACTUAL DAMAGES TO BE MULTIPLIED
 BY THE FINDER OF FACT SHALL BE THE AMOUNT OF THE DAMAGES  AS  DETERMINED
 BY THE FINDER OF FACT ON ALL CLAIMS ARISING OUT OF THE SAME AND UNDERLY-
 ING  TRANSACTION OR OCCURRENCE, REGARDLESS OF THE EXISTENCE OR NONEXIST-
 ENCE OF INSURANCE COVERAGE AVAILABLE IN PAYMENT OF THE CLAIM.  IN  ADDI-
 TION,  THE  COURT  SHALL AWARD SUCH OTHER EQUITABLE RELIEF, INCLUDING AN
 INJUNCTION, AS IT DEEMS TO BE NECESSARY AND PROPER.  THE DEMAND REQUIRE-
 MENTS OF THIS SUBSECTION SHALL NOT APPLY IF THE CLAIM IS ASSERTED BY WAY
 OF COUNTERCLAIM OR CROSS-CLAIM.
   (H) THE RIGHTS ENUMERATED IN THIS SECTION ARE NOT THE EXCLUSIVE  REME-
 DIES  AVAILABLE  TO THE POLICYHOLDER OR INJURED PERSON OR REPRESENTATIVE
 THEREOF INCLUDING, BUT NOT LIMITED TO, A GUARDIAN, ADMINISTRATOR, EXECU-
 TOR, INDIVIDUAL WITH POWER OF ATTORNEY OR ANY OTHER  PERSONAL  REPRESEN-
 TATIVE  AND  DO  NOT  PRECLUDE  ANY COMMON LAW CLAIMS OR OTHER STATUTORY
 CLAIMS THAT MAY EXIST OR ARISE.
   (I) UPON DEMAND OF A CLAIMANT POLICYHOLDER OR INJURED PERSON  PURSUANT
 TO  THIS  SECTION,  AN  INSURER  SHALL MAKE AVAILABLE TO THE CLAIMANT OR
 INJURED PERSON THE ENTIRE CLAIM FILE WITHIN THIRTY DAYS.
   (J) A POLICYHOLDER OR INJURED PERSON SHALL HAVE THE RIGHT TO  A  TRIAL
 BY  JURY. NO MANDATORY ARBITRATION AGREEMENT WITHIN OR PART OF ANY WRIT-
 S. 166                              4
 
 TEN CONTRACT FOR INSURANCE SHALL PROHIBIT AN  ACTION  PURSUANT  TO  THIS
 SECTION.
   §  2.  Section  3425  of  the insurance law is amended by adding a new
 subsection (t) to read as follows:
   (T) NO INSURER SHALL REFUSE TO ISSUE OR RENEW A COVERED POLICY  SOLELY
 ON  THE  GROUNDS THAT THE POLICYHOLDER HAS BROUGHT AN ACTION PURSUANT TO
 SECTION TWO THOUSAND SIX HUNDRED ONE-A OF THIS CHAPTER.
   § 3. Paragraph 4 of subsection (a) of section 2601  of  the  insurance
 law,  as  amended by chapter 547 of the laws of 1997, is amended to read
 as follows:
   (4) [not attempting in good faith] WHERE THE INSURER FAILS to effectu-
 ate A prompt[,] AND  fair  [and  equitable  settlements]  SETTLEMENT  of
 [claims  submitted  in  which  liability  has become reasonably clear] A
 CLAIM OR ANY PORTION THEREOF, IN THAT THE INSURER  FAILS  TO  REASONABLY
 ACCORD  AT  LEAST EQUAL OR MORE FAVORABLE CONSIDERATION TO ITS INSURED'S
 INTERESTS AS IT DID TO  ITS  OWN  INTERESTS,  AND  THEREBY  EXPOSES  THE
 INSURED TO A JUDGMENT IN EXCESS OF THE POLICY LIMITS, except where there
 is  a  reasonable  basis supported by specific information available for
 review by the department that the claimant has caused the loss to  occur
 by arson. After receiving a properly executed proof of loss, the insurer
 shall  advise  the  claimant of acceptance or denial of the claim within
 thirty working days;
   § 4. This act shall take effect on the first of January next  succeed-
 ing  the date on which it shall have become a law and shall apply to all
 acts and omissions by insurers occurring  on  or  after  such  effective
 date.

co-Sponsors

View additional co-sponsors

2025-S166A (ACTIVE) - Details

See Assembly Version of this Bill:: A6010
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §2601-a, amd §3425, Ins L
Versions Introduced in Other Legislative Sessions:: 2021-2022: S6813, A7285
2023-2024: S1797, A7139

2025-S166A (ACTIVE) - Summary

2025-S166A (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S166A

SPONSOR: RAMOS
 
TITLE OF BILL:

An act to amend the insurance law, in relation to unfair claim settle-
ment practices

 
PURPOSE:

The bill would define what constitutes an unlawful unfair claims settle-
ment practice by an insurance company, and create a private right of
action to enforce these provisions.

 
SUMMARY OF PROVISIONS:

Section one of the bill entitles the legislation the fair insurance
settlement practice act (FISPA).

Section two of the bill creates a new section 2601-a of the insurance
law setting forth acts and omissions that shall constitute an unlawful
unfair claims settlement practice. It also creates a private right of

action for victims of such unlawful practices, with a requirement that
victims notify insurers and ask for relief prior to filing such an
action. The section allows double damages and attorneys fees to be
imposed on defendants who violate the act willfully and with intent to
defraud.

Section two further states that no contract for insurance issued or
delivered in New York can require an insured to waive the right to a
jury trial to adjudicate a dispute arising from a violation of the new
section 2601-a of the insurance law.

Section three of the bill creates a new subsection (t) of section 3425
of the insurance law stating that no insurer shall refuse to issue or
renew a covered policy solely on the grounds that the policyholder has
brought an action alleging an unfair settlement claim practice.

Section four of the bill states that the act shall take effect ninety
days after it shall have become a law, and shall apply to any act or
omission occurring on or after such effective date; provided that the
provision prohibiting waiver of a jury trial shall only apply to insur-
ance contracts entered into after the effective date of this legis-
lation.

 
JUSTIFICATION:

New York law currently imposes a common law requirement on liability
insurers to act in "good faith" when negotiating, paying, and settling
claims. This requires liability insurers to give equal or more favorable
consideration to the interests of its policyholders as it does to its
own financial interests.

However, New York's bad faith laws are outdated and lack an effective
enforcement mechanism Unlike many other states, New York has failed to
enact modern bad-faith insurance measures adopting common sense measures
that: (1) statutorily delineate and proscribe common bad-faith disclo-
sure and litigation practices by insurance companies that would, today,
give rise to a bad-faith cause of action; and (2) allow accident victims
to bring a bad faith suit against an insurance company without needing
the permission of the wrongdoer (the policyholder). The absence of these
measures prevents legitimate allegations of bad-faith practices from
being filed. The result is that insurers flout their legal duties with-
out being held accountable or deterred. This harms accident and disaster
victims and their families who are forced to litigate or accept settle-
ments less than the law allows and less than their needs require. It
also harms policyholders, since an insurer's bad faith refusal to settle
a case for a policy's maximum coverage puts the policyholder's assets at
risk for the excess amount a jury ultimately awards. And it also harms
taxpayers, who often have to pay for health care or disaster aid when
insurers, in bad faith, do not pay claims.

This bill rectifies these problems by enacting a modern unfair claim
settlement practices statute, creating a private right of action for
victims, and by ensuring that victims alleging bad faith insurance prac-
tices have the option of a jury trial.

This bill also protects insurers' interests by requiring potential
claimants to notify them of an allegation of bad faith prior to filing
suit, thus allowing insurers to rectify any issues and/or clear up any
misunderstanding.

 
LEGISLATIVE HISTORY:

2023-24: S1797 (Ramos) Referred to Insurance / A7139 (Weinstein)
referred to codes

2021-22: S6813A (Ramos) Referred to Insurance / A7285A (Weinstein)
advanced to third reading cal. 603

 
FISCAL IMPACT:

TBD

 
EFFECTIVE DATE:
Shall take effect on the ninetieth days after it shall have become a law
and shall apply to any act or omission occurring on or after such effec-
tive date; provided that paragraph (4) of subsection b of section 2601-a
of the insurance law shall only apply to insurance contracts entered
into after the effective date of the legislation.

2025-S166A (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  166--A
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 8, 2025
                                ___________
 
 Introduced  by  Sens.  RAMOS,  COMRIE, HARCKHAM, HOYLMAN-SIGAL, KRUEGER,
   PALUMBO, RIVERA, SALAZAR, SERRANO, STAVISKY -- read twice and  ordered
   printed,  and  when printed to be committed to the Committee on Insur-
   ance -- committee  discharged,  bill  amended,  ordered  reprinted  as
   amended and recommitted to said committee
 
 AN  ACT  to amend the insurance law, in relation to unfair claim settle-
   ment practices
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  This  act  shall  be  known and may be cited as the "fair
 insurance settlement practice act (FISPA)".
   § 2. The insurance law is amended by adding a new  section  2601-a  to
 read as follows:
   § 2601-A. UNFAIR CLAIM SETTLEMENT PRACTICES.  (A) UNFAIR CLAIM SETTLE-
 MENT  PRACTICES.  FOR  THE  PURPOSES  OF  THIS SECTION, AN UNFAIR CLAIMS
 SETTLEMENT PRACTICE SHALL CONSIST OF ANY OF THE FOLLOWING ACTS OR  OMIS-
 SIONS:
   (1)  MISREPRESENTING  OR  OMITTING PERTINENT FACTS OR INSURANCE POLICY
 PROVISIONS RELATING TO THE COVERAGE AT ISSUE, INCLUDING BUT NOT  LIMITED
 TO,  IN  CONNECTION  WITH  LITIGATION, FAILING TO DISCLOSE ALL AVAILABLE
 COVERAGE AMOUNTS IN COMPLIANCE WITH SUBDIVISION (F)  OF  SECTION  THIRTY
 ONE HUNDRED ONE OF THE CIVIL PRACTICE LAW AND RULES;
   (2)  FAILING  TO ACKNOWLEDGE AND ACT REASONABLY PROMPTLY UPON COMMUNI-
 CATIONS WITH RESPECT TO CLAIMS ARISING UNDER INSURANCE POLICIES;
   (3) FAILING TO ADOPT AND IMPLEMENT REASONABLE STANDARDS FOR THE PROMPT
 INVESTIGATION OF CLAIMS ARISING UNDER INSURANCE POLICIES;
   (4) REFUSING TO PAY CLAIMS WITHOUT CONDUCTING  A  REASONABLE  INVESTI-
 GATION BASED UPON ALL AVAILABLE INFORMATION;
   (5)  FAILING  TO AFFIRM OR DENY COVERAGE OF CLAIMS WITHIN A REASONABLE
 TIME AFTER PROOF OF LOSS STATEMENTS HAVE BEEN COMPLETED;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD00680-02-5
 S. 166--A                           2
 
   (6) FAILING TO EFFECTUATE PROMPT, FAIR AND  EQUITABLE  SETTLEMENTS  OF
 CLAIMS IN WHICH LIABILITY HAS BECOME REASONABLY CLEAR;
   (7) COMPELLING INSUREDS TO INSTITUTE LITIGATION TO RECOVER AMOUNTS DUE
 UNDER  AN  INSURANCE  POLICY  BY  OFFERING  SUBSTANTIALLY  LESS THAN THE
 AMOUNTS ULTIMATELY RECOVERED IN ACTIONS BROUGHT BY SUCH INSUREDS;
   (8) ATTEMPTING TO SETTLE A CLAIM FOR LESS THAN THE AMOUNT TO  WHICH  A
 REASONABLE PERSON WOULD HAVE BELIEVED THEY WERE ENTITLED BY REFERENCE TO
 WRITTEN  OR PRINTED ADVERTISING MATERIAL ACCOMPANYING OR MADE PART OF AN
 APPLICATION;
   (9) ATTEMPTING TO SETTLE CLAIMS ON THE BASIS OF AN  APPLICATION  WHICH
 WAS ALTERED WITHOUT NOTICE TO, OR KNOWLEDGE OR CONSENT OF, THE INSURED;
   (10)  MAKING  CLAIMS PAYMENTS TO INSURED OR BENEFICIARIES NOT ACCOMPA-
 NIED BY A STATEMENT SETTING FORTH THE COVERAGE UNDER WHICH PAYMENTS  ARE
 BEING MADE;
   (11)  MAKING  KNOWN TO INSURED OR CLAIMANTS A POLICY OF APPEALING FROM
 ARBITRATION AWARDS IN FAVOR OF INSUREDS OR CLAIMANTS FOR THE PURPOSE  OF
 COMPELLING  THEM  TO  ACCEPT  SETTLEMENTS  OF  COMPROMISES LESS THAN THE
 AMOUNT AWARDED IN ARBITRATION;
   (12) DELAYING THE INVESTIGATION OR PAYMENT OF CLAIMS BY REQUIRING THAT
 AN INSURED OR CLAIMANT, OR THE PHYSICIAN OF EITHER, SUBMIT A PRELIMINARY
 CLAIM REPORT AND THEN REQUIRING  THE  SUBSEQUENT  SUBMISSION  OF  FORMAL
 PROOF OF LOSS FORMS, BOTH OF WHICH SUBMISSIONS CONTAIN SUBSTANTIALLY THE
 SAME INFORMATION;
   (13)  FAILING  TO  SETTLE  CLAIMS PROMPTLY, WHERE LIABILITY HAS BECOME
 REASONABLY CLEAR, UNDER ONE PORTION OF THE INSURANCE POLICY COVERAGE  IN
 ORDER  TO  INFLUENCE  SETTLEMENTS  UNDER OTHER PORTIONS OF THE INSURANCE
 POLICY COVERAGE; OR
   (14) FAILING TO PROMPTLY PROVIDE A REASONABLE EXPLANATION OF THE BASIS
 IN THE INSURANCE POLICY IN RELATION TO THE FACTS OR APPLICABLE  LAW  FOR
 DENIAL OF A CLAIM OR FOR THE OFFER OF A COMPROMISE SETTLEMENT.
   (B)  ENFORCEMENT.  (1) ANY PERSON WHO HAS BEEN INJURED OR WHOSE RIGHTS
 ARE AFFECTED BY THE USE OR EMPLOYMENT BY AN INSURER OF ANY  METHOD,  ACT
 OR PRACTICE DECLARED TO BE UNLAWFUL BY THIS SECTION, MAY, IN ADDITION TO
 ANY  OTHER CAUSE OF ACTION AUTHORIZED BY LAW, BRING AN ACTION IN SUPREME
 COURT FOR DAMAGES AND EQUITABLE RELIEF, INCLUDING AN INJUNCTION, OR  ANY
 OTHER  REMEDY AS THE COURT DEEMS TO BE NECESSARY AND PROPER. SUCH ACTION
 MAY ALSO BE FILED OR MAINTAINED BY A REPRESENTATIVE OF SUCH PERSON.
   (2) AT LEAST THIRTY DAYS PRIOR TO THE FILING OF ANY SUCH ACTION PURSU-
 ANT TO PARAGRAPH ONE OF THIS SUBSECTION, A WRITTEN  DEMAND  FOR  RELIEF,
 IDENTIFYING  THE CLAIMANT AND REASONABLY DESCRIBING THE UNFAIR OR DECEP-
 TIVE ACT OR PRACTICE RELIED UPON  AND  THE  INJURY  SUFFERED,  SHALL  BE
 MAILED  OR  DELIVERED  BY  THE  CLAIMANT TO THE APPROPRIATE PERSON AT AN
 APPLICABLE INSURER. AN INSURER RECEIVING SUCH A DEMAND FOR  RELIEF  WHO,
 WITHIN THIRTY DAYS OF THE DELIVERY OF THE DEMAND, MAKES A WRITTEN TENDER
 OF  SETTLEMENT  WHICH IS REJECTED BY THE CLAIMANT MAY, IN ANY SUBSEQUENT
 ACTION, FILE  SUCH  WRITTEN  TENDER  AND  AN  AFFIDAVIT  CONCERNING  THE
 REJECTION  OF  SUCH WRITTEN TENDER AND THEREBY LIMIT ANY RECOVERY TO THE
 RELIEF TENDERED IF THE COURT FINDS THAT THE RELIEF TENDERED WAS  REASON-
 ABLE IN RELATION TO THE INJURY ACTUALLY SUFFERED BY THE PETITIONER.
   (3)  IF  THE  COURT  FINDS  THAT  ANY PRACTICE DEEMED UNLAWFUL BY THIS
 SECTION HAS BEEN COMMITTED WILLFULLY AND  WITH  INTENT  TO  DEFRAUD  ANY
 PERSON  THEN  THE  COURT  SHALL AWARD TWO TIMES THE DAMAGES SUSTAINED BY
 SUCH PERSON, PLUS COSTS AND ATTORNEYS' FEES TO THE  PERSON  BRINGING  AN
 ACTION UNDER THIS SECTION.
 S. 166--A                           3
 
   (4)  NO  CONTRACT  FOR  INSURANCE ISSUED OR DELIVERED IN THE STATE MAY
 REQUIRE AN INSURED TO WAIVE THE RIGHT TO A JURY TRIAL  TO  ADJUDICATE  A
 DISPUTE ARISING FROM A VIOLATION OF THIS SECTION.
   §  3.  Section  3425  of  the insurance law is amended by adding a new
 subsection (t) to read as follows:
   (T) NO INSURER SHALL REFUSE TO ISSUE OR RENEW A COVERED POLICY  SOLELY
 ON  THE  GROUNDS THAT THE POLICYHOLDER HAS BROUGHT AN ACTION PURSUANT TO
 SECTION TWO THOUSAND SIX HUNDRED ONE-A OF THIS CHAPTER.
   § 4. This act shall take effect on the ninetieth day  after  it  shall
 have  become a law and shall apply to all acts and omissions by insurers
 occurring on or after such effective date; provided, however, that para-
 graph (4) of subsection b of section 2601-a  of  the  insurance  law  as
 added by section one of this act shall only apply to insurance contracts
 entered into after such effective date.

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Senate Bill S166A

Sponsored By

Current Bill Status - In Senate Committee Insurance Committee

Bill Amendments

co-Sponsors

2025-S166 - Details

2025-S166 - Summary

2025-S166 - Sponsor Memo

2025-S166 - Bill Text download pdf

co-Sponsors

2025-S166A (ACTIVE) - Details

2025-S166A (ACTIVE) - Summary

2025-S166A (ACTIVE) - Sponsor Memo

2025-S166A (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S166A

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Sponsored By

Current Bill Status - In Senate Committee Insurance Committee

Bill Amendments

co-Sponsors

2025-S166 - Details

2025-S166 - Summary

2025-S166 - Sponsor Memo

2025-S166 - Bill Text download pdf

co-Sponsors

2025-S166A (ACTIVE) - Details

2025-S166A (ACTIVE) - Summary

2025-S166A (ACTIVE) - Sponsor Memo

2025-S166A (ACTIVE) - Bill Text download pdf

Comments