Urgent Message for New York Policyholders Regarding COVID-19

DARIEN, Illinois (April 07, 2020) – On March 30, 2020, the New York Department of Financial Services (DFS) issued an emergency regulation requiring insurers to grant premium payment relief to New York consumers and small businesses experiencing financial hardship due to COVID-19.

A life insurer shall extend to 90 days the applicable grace periods for the payment of premiums and fees set forth in group life insurance policies and certificates, for any life policyholder who demonstrates financial hardship as a result of the COVID-19 pandemic. Insurers are required to accept a written attestation from a policyholder as proof of financial hardship as a result of COVID-19. The emergency regulation also provides that, with respect to any policyholder that did not timely pay premium and who attests to experiencing financial hardship due to COVID-19: insurers may not impose any late fees relating to such late premium payments; insurers may not report the policyholder to a credit reporting agency or refer the policyholder to a debt-collection agency with respect to such late premium payments; and insurers must permit affected policyholders who do not make a timely premium payment, and who attest to still experiencing financial hardship due to COVID-19, to pay such late premium over a 12-month period. A copy of section 405.6 of Part 405 of Title 3 of this order is presented below.

If you receive premium billing directly from your insurance company, you will receive a notice of the provisions of the emergency regulation and a toll-free number that you can call to discuss billing and make alternative payment arrangements for the duration of this emergency order. If you have any questions for Life Quotes, contact Policyholder Services at (630) 473-3915.

A new Section 405.6 is added to Title 3 as follows:

Section 405.6. No cancellation for financial hardship; prohibited practices

1. This section is promulgated pursuant to Executive Order 202.13 and for the duration specified therein, which may be extended.
   1. When a premium finance agreement contains a power of attorney or other authority enabling the premium finance agency to cancel any insurance contract or contracts listed in the agreement, and an insured does not make an installment payment, the premium finance agency shall not cancel the insurance contract or contracts for a period of at least 60 days, including any contractual grace period, for a property/casualty insurance contract or for a period of at least 90 days, including any contractual grace period, for an insurance contract providing life insurance, if the insured can demonstrate financial hardship as a result of the COVID-19 pandemic, and subject to the safety and soundness of the premium finance agency.
   2. With regard to an insured who does not make a timely installment payment to the premium finance agency and can demonstrate financial hardship as a result of the COVID-19 pandemic, a premium finance agency:
      1. shall extend the due date for such installment payment by at least 60 days for a property/casualty insurance contract and at least 90 days for an insurance contract providing life insurance, and shall not impose any late fees relating to such installment payment; and
      2. shall not report the insured to a credit reporting agency or refer the insured to a debt collection agency with respect to such installment payment.
   3. A premium finance agency shall, subject to the safety and soundness of the premium finance agency, permit an insured who did not make a timely installment payment to the premium finance agency due to financial hardship as a result of the COVID-19 pandemic, including an insured to whom the premium finance agency issued a non-payment cancellation notice prior to the effective date of the Executive Order, and who can still demonstrate financial hardship as a result of the COVID-19 pandemic, to pay such installment payment over a 12-month period. Within ten business days following the promulgation of this section, the premium finance agency shall mail or deliver a copy of the information contained in paragraph (1) of this subdivision to each insured for whom the premium finance agency holds a power of attorney or other authority, as described in paragraph (1) of this subdivision, in connection with a property/casualty insurance contract or insurance contract providing life insurance. A premium finance agency also shall:
      1. within ten business days following the promulgation of this section, provide notice with each installment payment bill of the provisions of this section and a toll-free number that the insured may call to discuss billing and make alternative payment arrangements; and
      2. notify insurance producers and any third-party administrators with whom or which the premium finance agency does business of the provisions of this section.
   4. A licensed insurance producer who services an in-force contract of insurance providing life insurance or who procured the property/casualty insurance contract for the insured, which contract is listed in a premium finance agreement, shall mail or deliver notice to the insured of the provisions of this section and Part 229 of Title 11 within ten business days following the promulgation of this section.
   5. In the case of a property/casualty insurance contract where the property insured does not make the first installment payment to the premium finance agency after the conclusion of the 60-day period described in paragraph (1) of this subdivision and the premium finance agency cancels the property/casualty insurance contract based on such nonpayment at any time prior to the next succeeding installment payment, the property/casualty insurer shall return to the premium finance agency for the benefit of the property insured, in accordance with the terms of the property/casualty insurance contract but no later than 60 days after the effective date of such cancellation, the gross unearned premiums that are due under the property/casualty insurance contract on a pro rata basis, calculated as if the property/casualty insurance contract had been canceled 60 days prior to the effective date of such cancellation.
2. Solely for the purposes of this section, a premium finance agency shall accept a written attestation from an insured as proof of financial hardship as a result of the COVID-19 pandemic.
3. Nothing shall prohibit an insured from exercising any right the insured has to voluntarily cancel an insurance contract.
4. This section shall not apply to a settled policy.
5. For the purpose of this section:
   1. Credit reporting agency means a reporting agency that regularly engages in the practice of assembling or evaluating and maintaining, for the purpose of furnishing credit reports to third parties bearing on a person’s credit worthiness, credit standing, or credit capacity, and credit account information from persons who furnish that information regularly and in the ordinary course of business.
   2. COVID-19 means the coronavirus disease 2019.
   3. Debt collection agency has the meaning set forth in General Business Law section 600.
   4. Executive Order means Executive Order 202.13.
   5. Insurance producer has the meaning set forth in Insurance Law section 2101(k).
   6. Insured means a life insured or a property insured.
   7. Insurer means a life insurer and an insurer that writes a property/casualty insurance contract, including an unauthorized insurer that sells insurance through a licensed excess lines broker and is subject to Insurance Law article 34.
   8. Late fee means a fee associated with an installment payment to a premium finance agency that is made at a time later than the installment payment due date, but prior to both insurance contract cancellation and the time in which a premium finance agency may reject the installment payment.
   9. Life insured means the person to whom a life insurance policy, annuity contract, or fraternal benefit society certificate is issued, including a certificate holder under a group insurance policy or annuity contract.
   10. Life insurer means an insurer authorized to write life insurance or annuities and an authorized fraternal benefit society.
   11. Person means an individual or business entity.
   12. Property/casualty insurance contract means an insurance contract that provides a kind of insurance set forth in Insurance Law section 1113(a)(16), (17), (20), (21), (24), (26), or (30) or that is subject to Insurance Law section 1116 or articles 34, 53, 54, or 55 or Workers’ Compensation Law section 54 or 226.
   13. Property insured means the individual or small business to whom a property/casualty insurance contract is issued, including a certificate holder under a group insurance contract.
   14. Settled policy has the meaning set forth in Insurance Law section 7802(t).
   15. Small business means any business that is resident in this State, is independently owned and operated, and employs 100 or fewer individuals.