OGC Op. No. 04-10-07

The Office of General Counsel issued the following opinion on October 7, 2004, representing the position of the New York State Insurance Department.

Re: Age Discrimination

Questions Presented:

1. What are the filing and approval requirements that apply to the insurance rates of authorized insurers that issue personal lines automobile, homeowners, and travel insurance policies?

2. May an insurer refuse to issue or renew such policies solely on the ground of the advanced age of the applicant or insured?

3. Do authorized insurers consider age in conjunction with other relevant factors (e.g., the health of the applicant or insured) when underwriting such policy risks?

4. If all relevant rating factors other than age are equal, would a seventy-year-old applicant for a particular insurance policy pay more or less than, or the same amount as, a forty-five-year-old applicant for the same insurance policy?

5. How may a member of the public access an authorized New York insurer’s rate filings and the information furnished in support of such filings?

Conclusions:

1. Please see analysis below.

2, 3. An insurer may not refuse to issue or renew a personal lines automobile or homeowners insurance policy solely on the ground of the advanced age of the applicant or insured. But such insurer may consider age in conjunction with other relevant factors (e.g., the health of the applicant or insured) when underwriting a particular risk. Regarding travel insurance policies, there is no equivalent prohibition against an insurer refusing to issue or renew such policies within the insurance law, but such underwriting decision must not be unfairly discriminatory, and must be based on sound actuarial principles or related to actual or reasonably anticipated experience.

4. As discussed above, whether the seventy-year-old applicant will pay more or less than, or the same amount as, a forty-five-year-old applicant for the same insurance policy depends on the rating classifications (which must be, inter alia, supported by and reflective of actuarially sound statistical data) of the insurer that is underwriting the risk.

5. A member of the public may access an authorized New York insurer’s rate filings, and the information furnished in support of such filings by requesting such records from the New York State Insurance Department pursuant to Article 6 of the New York Public Officers Law, which is commonly known as the Freedom of Information Law ("FOIL"). The Insurance Department’s web site contains a form and instructions for such purposes.

Facts:

No facts are provided.

Analysis:

Insurance rates for personal lines automobile, homeowners and the property/casualty components of travel insurance policies are subject to the requirements of Article 23 of the New York Insurance Law.¹ Specifically, Section 2303 of Article 23 provides that: "[r]ates shall not be excessive, inadequate, unfairly discriminatory, destructive of competition or detrimental to the solvency of insurers."²

Generally, in the voluntary market, personal lines automobile insurance rates, including all supporting rate information, must be filed with the Superintendent of Insurance and will not become effective unless either such filing has been approved by the Insurance Department or thirty days, which the superintendent may with cause extend, have elapsed and the filing has not been disapproved as failing to meet the requirements of Article 23, including the standard that rates be not otherwise unreasonable.³

Homeowners insurance rates must be filed with all pertinent supporting information, but such rates are not subject to prior approval by the Superintendent.⁴ Insurers who write personal lines automobile and homeowners insurance policies establish their rating rules and rating plans, but may not deviate from the rates, and rating rules and plans that they file with the Department. In addition, the Superintendent may disapprove the insurance rates of such policies if they are unfairly discriminatory or violative of public policy.⁵  

Travel insurance is a type of insurance that provides both property/casualty, and accident and health insurance coverage. As an unfiled class of inland marine insurance, the property/casualty rate components of travel insurance policies are generally not subject to any filing requirements under Article 23 of the New York Insurance Law, but are subject to the applicable rating standards of Article 23.⁶ The accident and health rate components of travel insurance policies are subject to various sections of Articles 32 and 42 of the New York Insurance Law.⁷ Generally, the accident and health rate components of initial personal lines travel insurance rates are subject to approval by the Superintendent.⁸ The Superintendent may withhold the approval of such rates if the Superintendent finds that such premiums are excessive, inadequate, or unfairly discriminatory.⁹   Rate increases or decreases for accident and health rate components of travel insurance are generally not subject to prior approval by the Superintendent, but must be filed with the Insurance Department in accordance with Articles 32 and 42 of the Insurance Law.¹⁰

With regard to an insurer refusing to issue or renew a personal lines automobile or homeowners insurance policy solely on the ground of the advanced age of the applicant or insured, N.Y. Ins. Law § 3425(i) (McKinney 2000) provides that: "[n]o insurer shall refuse to issue or renew a covered policy solely on the ground of the advanced age of the applicant or insured." Accordingly, an insurer may not refuse to issue or renew a personal lines automobile or homeowners insurance policy solely on the ground of the advanced age of the applicant or insured. But such insurer may, and many authorized insurers do, consider age in conjunction with other relevant factors (e.g., the health of the applicant or insured) when underwriting a particular risk. However, if an insurer uses age as a factor when establishing its personal lines automobile insurance rates, such rates must be filed and supported by and reflective of actuarially sound statistical data.¹¹

With regard to travel insurance policies, the age of an applicant or insured may constitute, with or without consideration of other relevant rating factors, the basis of an insurer’s underwriting decisions, including whether to issue or renew such policies, but such underwriting decisions must not be unfairly discriminatory,¹² and must be based on sound actuarial principles or related to actual or reasonably anticipated experience.¹³¹  

With regard to question number four, whether the seventy-year-old applicant will pay more or less than, or the same amount as, a forty-five-year-old applicant for the same insurance policy depends on the rating classifications (which must be, inter alia, supported by and reflective of actuarially sound statistical data) of the insurer that is underwriting the risk.¹⁴  

Lastly, a member of the public may access an authorized New York insurer’s rate filings, and the information furnished in support of such filings by requesting such records from the New York State Insurance Department pursuant to Article 6 of the New York Public Officers Law, which is commonly known as the Freedom of Information Law ("FOIL").¹⁵ The Insurance Department’s web site contains a form and instructions for such purpose.

For further information you may contact Senior Attorney Kristian Earl Lynch at the New York City Office.

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¹  N.Y. Ins. Law Art. 23 (McKinney 2000 & Supp. 2004).
²   N.Y. Ins. Law § 2303.
³   N.Y. Ins. Law § 2305 (McKinney Supp. 2004).
⁴   N.Y. Ins. Law § 2305 (McKinney Supp. 2004).
⁵  N.Y. Ins. Law § 2303.
⁶   Id.
⁷  N.Y. Ins. Law Arts. 32, 42 (McKinney 2000 & Supp. 2004).
⁸   N.Y. Ins. Law § 3231(d)
⁹  Id.
¹⁰  N.Y. Ins. Law Arts. 32, 42.
¹¹  N.Y. Ins. Law § 2331 (McKinney 2000).
¹²  N.Y. Ins. Law §§ 2307, 3231(d), 4224 (McKinney Supp. 2004).
¹³  N.Y. Ins. Law § 4224 (McKinney Supp. 2004).
¹⁴  N.Y. Ins. Law §§ 2304, 2307, 2331, 3231(d), 4224.
¹⁵  N.Y. Pub. Off. Law §§ 84-90 (McKinney 1988).