The Office of General Counsel issued the following opinion on July 7, 2005, representing the position of the New York State Insurance Department.
Re: General Inquiry Regarding An Authorized Insurer That Issues An Insurance Policy On An Unapproved Policy Form
(1) If an authorized insurer issues an insurance policy on an unapproved policy form, is the policy invalidated?
(2) Must an insurer that is not an authorized insurer file policy forms with the Insurance Department?
(1) If the unapproved policy is in compliance with the Insurance Law, then the policy is in force without change. However, if the policy is not in compliance with the Insurance Law then, pursuant to N.Y. Ins. Law § 3103(a) (McKinney 2000), the policy would be enforceable as if it conformed with any requirements or prohibitions provided in the Insurance Law. In either event, an authorized insurer of such policies would be subject to discipline by the Insurance Department.
(2) No. An insurer that is not an authorized insurer is generally not required to file policy forms with the Insurance Department.
No facts were provided. An inquiry was made asking whether a policy would be valid if the Superintendent did not approve the policy form. The inquiry related to both authorized and unauthorized insurers.
There are numerous policy form approval requirements that apply to authorized insurers in the Insurance Law. Since the inquiry did not specify the kind of insurance being inquired about, our response herein is general in nature.
An authorized insurer's use of an unapproved policy form, where the Insurance Law requires the Superintendent's prior approval of the policy form, does not invalidate the policy. However, N.Y. Ins. Law § 3103(a) (McKinney 2000) states:
(a) Except as otherwise specifically provided in this chapter, any policy of insurance or contract of annuity delivered or issued for delivery in this state in violation of any of the provisions of this chapter shall be valid and binding upon the insurer issuing the same, but in all respects in which its provisions are in violation of the requirements or prohibitions of this chapter it shall be enforceable as if it conformed with such requirements or prohibitions.
An authorized insurer that issues a policy on an unapproved policy form, where the Insurance Law requires the Superintendent's prior approval of the policy form, violates the Insurance Law and is subject to discipline. Since the specific type of authorized insurer was not specified, we can only refer generally to N.Y. Ins. Law § 109 (McKinney 2000) ("Penalties; civil actions").
As to the second question, an insurer that is not authorized is generally not required to file policy forms with the Insurance Department. An unauthorized insurer may issue policies in New York State under certain circumstances, such as through excess line placements. We refer to N.Y. Ins. Law §§ 2105 and 2118 (McKinney Supp. 2005) and N.Y. Comp. Codes R. & Regs. tit. 11, Part 27 (2004) (Regulation 41), which are applicable to excess line placements of policies from unauthorized insurers. Any such policy would also be subject to the non-conforming provisions of N.Y. Ins. Law § 3103(a) (McKinney 2000).
For further information you may contact Senior Attorney Robert Freedman at the New York City Office.