October 15, 1991
TO: MOTOR VEHICLE INSURERS AND SELF-INSURERS, WORKERS' COMPENSATION. INSURERS, AND INSURANCE PRODUCER ORGANIZATIONS
RE: 1991 LEGISLATION AFFECTING MOTOR VEHICLE INSURANCE
The purpose of this Circular Letter is to alert the insurance community about new statutory requirements enacted by the Legislature in 1991 -- already, or soon to become, effective -- that impact No-Fault insurance (Chapter 320 of the Laws of 1991) and rating of motor vehicle insurance policies (Chapters 156, 166 & 339 of the Laws of 1991). Copies of these new Chapters are annexed. Regulations to implement these statutory changes have just been, or will soon be, promulgated.
NO-FAULT COVERAGE CHANGES
Chapter 320 takes effect November' 12, 1991, and amends the No-Fault law by enhancing Personal Injury Protection (PIP) in two principal ways. First, it boosts the No-Fault wage loss benefit from a monthly maximum of $ 1,000 to $ 2,000. Given the legislative language, this change applies to all active claims for lost wages, incurred on and after November 12, 1991 regardless of accident date.
Insurer claims personnel should be prepared to implement this change with the first payment for loss of earnings incurred on and after November 12. There may be claim files where no wage loss payments have been made because statutory offsets, particularly workers' compensation benefits, exceeded the $ 1,000 No-Fault wage loss benefit.
Since a workers' compensation claimant may 'now be entitled to lost wages under the No-Fault coverage as a result of Chapter 320, workers' compensation insurers should advise those injured in motor vehicle accidents that they may be entitled to No-Fault wage loss benefits from their motor vehicle insurer.
The second change enacted into law by Chapter 320 creates a new coverage -- Optional Basic Economic Loss (OBEL). By purchasing OBEL, the insured may obtain another $ 25,000 of Basic Economic Loss coverage to protect eligible injured persons, which could include the insured, the insured's family, passengers or pedestrians. If OBEL is purchased, the injured party may elect one of four options specifying how OBEL coverage will be applied, in the event that the first $ 50,000 of basic No-Fault coverage is exhausted. The OBEL election is made by the injured party, following the auto accident, after the dimensions of the injury have become apparent. This new OBEL coverage must be offered, on and after November 12, 1991, to all new applicants and, upon first renewal, to policyholders.
Intensive work by Department staff, meeting with an industry advisory committee and other interested parties, has resulted in the development of new endorsements, claim rules and notices to advise policyholders of this new coverage option. The result of this work is embodied in the 22nd Amendment to Regulation 68 (11 NYCRR 65), promulgated on an emergency basis and to he effective upon filing with the Secretary of State. In addition to key transition provisions, the 22nd Amendment contains new prescribed Mandatory PIP and OBEL Endorsements, policyholder letters, and notification forms. Please note that the new Mandatory PIP endorsements make certain other changes involving the "eligible injured person" exclusion and proof of claim requirements, which become evident only upon close comparison with the existing endorsements.
Motor vehicle insurers will need to file new rates, rules and forms and to institute procedures, to offer OBEL coverage. Pursuant to the 22nd Amendment, OBEL coverage rates, rules and forms must be filed on or before November 2, 1991.
In light of the elevated No-Fault wage loss benefit and the new OBEL coverage, every insurer should review forms, rates and rules currently on file with this Department, for both Mandatory and Additional PIP coverages and submit filings with appropriate adjustments. Filings to adjust Additional PIP rates, rules and forms, and Mandatory PIP rules and forms, should he made promptly. Separate filings maybe made or such revisions may accompany OBEL filings to be Made on or before November 2,, I991. Mandatory PIP rate adjustments to reflect the elevated No-Fault wage loss benefit can be included with the insurer's next annual rate filing. Additional PIP coverage is excess over the amount of Basic Economic Loss purchased by the policyholder, including OBEL. Therefore, if an insured buys $ 50.000 in Additional PIP coverage No-Fault coverage would total $ 100,000 or $ 125.060 per eligible injured person, depending on whether or not OBEL is purchased.
MERIT RATING PLAN SURCHARGES
Chapter 156 adds a new Section 2345 to the Insurance Law. For all policies issued or renewed on or after November 27, 1991, this new section requires insurers that surcharge for accidents or violations to identify, at least once a year, those surcharges in a dollar amount on the premium billing or on the declarations page of the policy. The 2nd Amendment to Regulation 100 (Noncommercial Private Passenger Automobile insurance Merit Rating. Plans II NYCRR 169) will soon be issued. It is anticipated that the 2nd Amendment will require insurers to list dates of convictions for violations and dates of chargeable accidents, which account for the surcharged premium, on the premium billing or on the declarations page.
Chapter 166 amends Section 605(a)(1) of the Vehicle and Traffic Law. Effective for all accidents on and after August 1, 1991, the monetary threshold, for accidents that must be reported to the Department of Motor Vehicles (DMV) has been raised, from $ 600 to $ 1,000. Under Regulation 100. this DMV reporting threshold serves as the basis for surcharging the auto insurance premium for a motor vehicle accident, and this change will also be reflected in the 2nd Amendment.
A motor vehicle insurer may surcharge a policyholder when aggregate property damage resulting from an accident exceeds the DMV reporting threshold and the circumstances surrounding the accident are surchargeable in accordance with the insurer's filed and approved merit rating plan and the requirements of Regulation 100. Therefore. every insurer that utilizes the DMV reporting threshold should file an appropriate merit rating plan amendment.
In addition to 1991 legislative-changes, insurers should be aware that Chapter 747 of the Laws of 1990 added a new subsection (d) to section 2335 of the Insurance Law. Effective October 20. 1990, this new subsection prohibits the application of private passenger automobile merit rating plan surcharges for any accident that occurs "while operating a commercial vehicle in the course of employment and in the discharge of the employee's duties at the time of the accident, unless the accident is determined to have been caused by the intentional action or gross negligence of the insured." The 2nd Amendment to Regulation 100 will also incorporate this change and insurers should file an appropriate merit rating plan adjustment.
ACCIDENT PREVENTION COURSE DISCOUNT
Effective immediately upon its enactment on July 15, Chapter 339 of the Laws of 1991 amended Section 2336 of the Insurance Law to provide that discounts for completion of approved accident prevention courses must be applied upon the insured's presentation of a certificate of completion.
The discount must be given as of the date of presentation,. unless the certificate is presented within forty-five days of policy renewal date. If the certificate is presented within the forty-five day period, the insurer may apply the discount upon renewal. In either event, the discount must he applied for the full three-year period required by the law. It necessary insurers should file rating Manual amendments to conform to this new law.
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A motor vehicle insurer's underwriting officer, and a workers' compensation insurer's claims officer should acknowledge in writing receipt of this Circular Letter, no later than October 31, 1991. The acknowledgement should be sent to Joseph Smeragliuolo. Associate Examiner. Property & Casualty insurance Bureau at the above address. All filings should, be directed to the Property & Casualty Insurance Bureau at the above address. Please direct any questions concerning this Circular Letter to Mr. Smeragliuolo.(212-602-0338).
Very truly yours.
SALVATORE R. CURIALE
SUPERINTENDENT OF INSURANCE