The Office of General Counsel issued the following opinion on June 17, 2004, representing the position of the New York State Insurance Department.
Re: Premium payment installment plans for commercial policies subject to Section 3426
Must an insurer of a commercial policy subject to N.Y. Ins. Law § 3426 (McKinney Supp. 2004) provide any advance notice if upon renewal the insurer wishes to require the full annual premium in a context where the insured has been permitted to pay the premium in four installments during the previous required policy periods?
No. An insurer would not be required to provide any advance notice, including a conditional notice upon renewal.
No facts were provided other than those encompassed in the question.
N.Y. Ins. Law § 3426(e)(1)(B) (McKinney Supp. 2004), which is the conditional renewal provision of Section 3426, states:
(e)(1) A covered policy shall remain in full force and effect pursuant to the same terms, conditions and rates unless written notice is mailed or delivered by the insurer to the first-named insured, at the address shown on the policy, and to such insured's authorized agent or broker, indicating the insurer's intention: . . .
(B) to condition its renewal upon change of limits, change in type of coverage, reduction of coverage, increased deductible or addition of exclusion, or upon increased premiums in excess of ten percent (exclusive of any premium increase generated as a result of increased exposure units, pursuant to subsection (d) of this section, or as a result of experience rating, loss rating, retrospective rating or audit), except that with respect to an excess liability policy, the insurer may also, consistent with regulations promulgated by the superintendent, condition its renewal upon requirements relating to the underlying coverage, in which event the conditional renewal notice shall be treated as an effective notice of nonrenewal if such requirements are not satisfied as of the later of the expiration date of the policy or sixty days after mailing or delivery of such notice. . . .
Section 3426(e)(1)(B) does not require that an insurer of a commercial policy subject to Section 3426 provide a conditional notice if the insurer would change the payment of premium from installments to an annual premium upon renewal. There are no other provisions of the Insurance Law or Insurance Department Regulations that require an insurer of a commercial policy to provide advance notice if the insurer wishes to change the payment of premium from installments to an annual premium upon renewal. Note that this opinion does not address an insurer of a commercial policy subject to Section 3426 that changes the payment of premium from installments to an annual premium prior to the policy's renewal--i.e., "mid-term".
For further information you may contact Senior Attorney Robert Freedman at the New York City Office.