Compliance News | April 10, 2020
In response to hardships related to the ongoing coronavirus (COVID-19) public health emergency, states have begun to issue notices about new insurance requirements that are of interest to policyholders experiencing financial hardship due to COVID-19. This page summarizes actions recently taken by Louisiana and New York, which provide relief to organizations and individuals.
Segal anticipates other states may follow with similar requirements.
On March 27, 2020, Commissioner of Insurance James J. Donelon issued Emergency Rule 40 (Rule), which imposes a moratorium on policy cancellations and non-renewals for policyholders in Louisiana during the COVID-19 outbreak. The Rule, effective March 12, 2020 through May 12, 2020, applies to all insurers and types of insurance. The Rule does not apply to new policies issued after the effective date.
A consumer may still cancel a policy for fraud and material misrepresentations or upon written request by the consumer. In those cases, policyholders remain obligated to pay all premiums.
On March 30, 2020, Governor Andrew Cuomo issued an Executive Order (Order) that, in part, requires insurance companies to provide premium relief for policyholders of certain coverage that have been financially impacted by the COVID-19 pandemic. This Order relates to property and casualty, life, annuity and workers’ compensation policies, and is effective March 30, 2020 through April 28, 2020.
First, under the Order, for 60 days, property and casualty insurers and premium finance agencies and, for 90 days, issuers of life insurance and annuity contracts are required to suspend:
Second, insurers must also allow policyholders that are facing financial hardship due to the COVID-19 pandemic to pay any overdue premiums over a 12-month period. In addition, if a policy premium is currently financed, the policyholder has a 60-day grace period (90 days for life insurance) to make a payment before the finance company requests cancellation of the policy.
To take advantage of these extensions, a policyholder must give the insurer or finance company a written statement of financial hardship attributable to the COVID-19 pandemic.
On April 2, 2020, the New York State Department of Financial Services directed licensed insurance providers to advise clients about these changes related to COVID-19. The notification of the new nonpayment rules must be provided by April 13, 2020, either by regular mail or by email.
For additional information on state insurance issues related to COVID-19, visit the National Association of Insurance Commissioners’ NAIC Coronavirus Resource Center.
For insights and analysis on how to navigate the HR and employee benefit issues arising from the COVID-19 crisis, please visit our dedicated COVID-19 webpage.
This information is for informational purposes only and does not constitute legal or tax advice. Plan sponsors are encouraged to discuss the issues raised here with their legal, tax and other advisors before determining how they apply to their specific situation. On all issues involving the interpretation or application of laws and regulations, you should rely solely on your legal counsel for legal advice.
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