STATE OF NEW YORK
25 BEAVER STREET
NEW YORK, NEW YORK 10004
|Circular Letter No. 25 (2000)
August 11, 2000
|TO:||All Insurers Licensed to Write Motor Vehicle Insurance in New York State|
|RE:||Restriction of Installment Payment Plans and Financed Premiums|
In recent weeks several insurers have indicated their intentions to significantly curtail or eliminate installment payment programs for private passenger automobile insurance. The purpose of this circular letter is to bring to insurers attention several issues that are pertinent to this subject:
In addition, Article XII-B of the Banking Law provides for the licensing and operation of insurance premium financing entities in New York. Section 3428 of the Insurance Law provides for specific procedures relative to cancellation of insurance policies where the premium was advanced under a premium financing agreement, and provides further that insurers may retain a minimum earned premium in the event such policies are cancelled. As long as insurers offered their own installment payment alternatives, the Department took no position on an insurer's refusal to accept financed premiums. Such refusals to accept financed premiums, when viewed in the context of the issues discussed above, may be considered a violation of the statutes noted above.
The Department is monitoring insurers practices with respect to the methods of payment they accept. Any of the above actions could also constitute a violation of Article 24 of the Insurance Law.
You may direct questions concerning this circular letter to Alvin Kaufman, Senior Insurance Examiner, at the above address, or by phone at 212-480-5578.