Scorecard: Insurance

Written by City & State on . Posted in Banking/Insurance.

The Players

The New York Department of Financial Services Superintendent Benjamin Lawsky has taken steps to hold insurance companies accountable in the wake of Superstorm Sandy, while also targeting other insurance-related issues, such as reforms to force-placed insurance. In the state Legislature, state Sen. James Seward has focused on combating auto insurance fraud, among other issues, as chair of the Insurance Committee, while Assemblyman Kevin Cahill, who took over as Seward’s counterpart in the Assembly this year, has held a hearing and convened roundtable discussions on insurance coverage post-Sandy.

The Issues

Superstorm Sandy
The devastating natural disaster prompted the Cuomo administration and lawmakers to closely scrutinize the insurance industry, including claim settlement practices and the overall performance in paying out claims to victims. The state’s Department of Financial Services has taken the lead in prodding the industry to pay out claims promptly, while lawmakers have looked into why many buildings have yet to reopen or be rebuilt, as well as exploring how to streamline the claims process in the future.

Affordable Care Act
Some parts of President Barack Obama’s landmark health care reform law have already gone into effect, but 2014 is the deadline for much of the law to be implemented. Among the key requirements that must be met in fewer than eight months is that each state have a health care exchange in place. While some states delayed or deferred to the federal government to set up an exchange, New York agreed to set up one on its own. Gov. Andrew Cuomo issued an executive order in April 2012 establishing the state’s exchange, and in December the governor received conditional federal approval.

“While we won’t be satisfied until every single victim gets every single dollar to which they’re entitled, some banks have continued to lag especially far behind the rest, and it’s well past time for them to pick up the pace.”
—Gov. Andrew Cuomo, last month, on banks with the worst performance in terms of paying out insurance claims to Superstorm Sandy victims

Force-Placed Insurance
The Department of Financial Services in late 2011 launched an investigation into force-placed insurance, a type of insurance taken out by banks or other financial institutions whenever a borrower fails to obtain the insurance required for a mortgage. The Cuomo administration in March announced a $14 million settlement with Assurant, the country’s largest force-placed insurer, in its efforts to combat abuses, such as exorbitant premiums imposed on homeowners who are often already struggling financially.

Auto Insurance Fraud
The auto insurance market continues to be a target for fraud, from the staging of accidents to defrauding the no-fault insurance system to the registration of cars in other states to avoid higher auto rates. The insurance industry has called for a “zero tolerance” policy to crack down on fraud, and lawmakers are debating legislation that would increase penalties for some offenses and require heath providers to prove that medical treatment is needed when billing through the no-fault insurance system.

By the Numbers

Insurance Assurance
The landmark federal health care reform law will have a significant impact on New York’s uninsured population. According to the Urban Institute’s Health Policy Center, the state’s new health care exchange and the federal mandate to buy health insurance will increase by about 1 million the number of nonelderly New Yorkers who are insured.


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