The New York State Department of Financial Services (DFS) recently issued an emergency regulation that—unless it is modified—will likely require action by every insurance agent holding a resident or nonresident license in that state.

In response to the COVID-19 outbreak, nearly 40 state insurance departments have issued some form of bulletin, rule, notice or other special guidance concerning the treatment of policyholders. The directives generally place restrictions or impose moratoriums on insurance policy cancellations and nonrenewals or provide temporary accommodations or leniency for those who might be challenged to make premium payments.

These state actions take many different forms, and the Big “I” has developed a comprehensive chart for members that outlines state-by-state regulatory responses to COVID-19. The chart provides access to each rule and highlights the lines and types of insureds affected, what is required, and the length of time the special accommodations apply.

New York is one of the states that has acted, and DFS promulgated an emergency rule last week requiring property-casualty insurers to provide relief to individual customers and small businesses—defined as independently owned and operated New York businesses with 100 or fewer employees—facing financial hardship due to the COVID-19 pandemic.

In such instances, the rule imposes a temporary moratorium on the cancellation or nonrenewal of a policy and establishes other requirements and restrictions for companies. The rule also applies similar obligations to the life insurance industry and requires premium finance companies to provide the same relief as insurers.  

The regulation imposes separate obligations on resident and nonresident producers and requires them to notify certain New York-based customers about the issuance of the emergency rule by this Monday, April 13.  DFS initially indicated that producers that have procured a p-c policy for an individual or small business and those that service in-force life policies or annuities would be required to notify those policyholders of the regulation by mail.  Big I New York, however, successfully convinced DFS to reconsider these requirements.

In response to a Big I New York request, DFS issued guidance late Thursday afternoon relieving producers of the obligation to contact policyholders by physical mail and clarifying that the notices may be delivered via electronic means.  Producers can now satisfy these requirements by emailing notices to the insureds for whom they have email addresses, regardless of whether those customers have consented to receiving such notices by email, and posting the notices on their websites (if any) as soon as possible and until the state of emergency is over. DFS has developed separate sample notices that can be used with life and p-c insureds. 

In recent days, DFS also clarified the applicability of the emergency regulation to excess lines policies. Regulators have indicated that the rule applies to personal lines coverage under an excess lines policy but that the moratorium and notice requirements do not apply to commercial lines policies or policyholders. In other words, producers are not required to send notices to customers with commercial excess lines policies. 

Given the complexity of these requirements and the quickly approaching deadline for compliance, producers holding New York licenses are encouraged to review the rule and related guidance.

Wes Bissett is Big “I” government affairs senior counsel.