Last week, in wake of anticipated losses from COVID-19 (coronavirus), the New York State Department of Financial Services (NYDFS) issued instructions mandating all property/casualty insurers "to provide certain information regarding the commercial property insurance it has written in New York and details on the business interruption coverage provided in the types of policies for which it has ongoing exposure." For purposes of the mandate, NYDFS considers commercial property insurance to include business owner policies, commercial multiple peril policies, and specialized multiple peril policies, along with substantially similar insurance. The information is due by this Wednesday, March 18, 2020.
Specifically, NYDFS requires affected insurers to:
- Provide NYDFS "the volume of business interruption coverage, civil authority coverage, contingent business interruption coverage and supply chain coverage the Insurer wrote that has not lapsed" as of March 10, 2020, including the amounts of direct premium, policy types and numbers of policies written of each type.
- Examine their policies "and explain the coverage each policy offers in regard to COVID-19 – both presently and as the situation could develop to change the policyholder's status (i.e., is there any potential for coverage as a result of COVID-19)."
- For each policy type, insurers should “prepare such information in a clear and concise explanation of benefits” suitable for policyholder review, and thereafter forward such information "to each of their policyholders of the applicable policy types."
- Send "copies of all such explanations to [NY]DFS, along with a representation that the explanations have been provided to the Insurer's policyholder."
An insurer that does not write commercial property insurance in New York need not comply. However, the insurer must certify to NYDFS that it does not write such insurance "in a statement signed by an officer or other authorized representative of the Insurer."
NYDFS’s requirement is not insignificant. In addition to the time pressure, insurers should be confident that what they say may be used against them. Further, other states may copycat this requirement, just as others have copied NYDFS’s Cyber Regulations. Attorneys at White and Williams are following this development.
[View source.]
