New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on March 27, 2002, representing the position of the New York State Insurance Department.

Re: Personal Automobile Proposed Underwriting Restriction

Question Presented:

May an authorized property/casualty insurer that issues personal automobile insurance policies in New York restrict its new and renewal policy writings to applicants who are directors, officers or employees (and their dependents) of a non-affiliated corporation and its subsidiaries?

Conclusion:

Yes, provided that: (i) the new underwriting requirement is included in underwriting guidelines; and (ii) the provisions pertaining to protected classes and the limitations on cancellation and non-renewal of personal automobile contained in N.Y. Ins. Law § 3425 (McKinney 2000 & Supp. 2001-2002) are complied with.

Facts:

An authorized property/casualty insurer (the "Company") that issues personal automobile insurance policies in New York proposes to restrict its new and renewal policy writings to applicants who are directors, officers or employees (and their dependents) of a corporation and its subsidiaries (collectively the "Corporation"). The Corporation is not affiliated with the insurer. The Company would continue to use its current underwriting guidelines but add a new underwriting requirement – the applicant must be a director, officer or employee (or a dependent) of the Corporation (the "Proposed Underwriting Restriction"). There will be no change in the policy forms or the rates. Eventually, the Company’s policyholders will all be directors, officers or employees and their dependents of the Corporation.

Analysis:

The inquirer recognized, in his letter, that the N.Y. Ins. Law (McKinney 2000 & Supp. 2001-2002) protects certain classes of persons from discrimination by prohibiting insurers from refusing to issue or renew policies to (or renew policies of) persons included in certain protected classes. Among the protected classes are:

race, color, creed, national origin or disability - N.Y. Ins. Law § 2606 (McKinney 2000);

                    sex or marital status - N.Y. Ins. Law § 2607 (McKinney 2000);

                    treatment for a mental disability, - N.Y. Ins. Law § 2608 (McKinney 2000);

                    victims of domestic violence - N.Y. Ins. § 2612 (McKinney 2000);

                    geographical location of the risk - N.Y. Ins. Law § 3429 (McKinney 2000);

refusal to issue a motor vehicle policy to a person with a disability - N.Y. Ins. Law § 3434 (McKinney 2000); and

refusal to issue a motor vehicle policy to a person with a New York State license for 39 months - N.Y. Ins. Law § 3435-a (McKinney 2000).

As noted, the Proposed Underwriting Restriction does not come within any of the protected classes.

Additionally, the inquirer recognizes that the Company, in moving toward having only directors, officers or employees and their dependents of the Corporation as its policyholders, may cancel or non-renew policies only in accordance with N.Y. Ins. Law § 3425 (McKinney 2000 & Supp. 2001-2002). The so-called "2% rule" found in N.Y. Ins. Law § 3425(f) and related provisions (McKinney 2000 & Supp. 2001-2002) apply to policies written prior to August 2, 2001 and renewals thereof. N.Y. Ins. Law § 3425(m)(2) (McKinney 2000 & Supp. 2001-2002) applies to policies newly written on or after August 2, 2001.

Accordingly, under the facts presented, the insurer may limit its underwriting to a particular group provided that it does not discriminate against a protected class and complies with the cancellation and non-renewal provisions in reaching its objective of having only directors, officers or employees and their dependents of the Corporation as its policyholders.

 

For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.