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

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following opinion on June 9, 2006 representing the position of the New York State Insurance Department.

RE: Interest payments on No-Fault claims: General Counsel Opinion 02-07-22

Question Presented

Has there been a change in the Insurance Department’s opinion pertaining to the automatic payment of interest at the time of a late payment in No-Fault claims?

Conclusion

The Insurance Department’s opinion as expressed in General Counsel Opinion 02-07-22 remains unchanged.

Facts

Having reviewed Office of General Counsel Opinion 02-07-22 entitled "Prompt Pay," the inquirer would like to learn whether the following statement in the opinion is still valid as the position of the Insurance Department: "The rate of interest paid by "no-fault" providers for violations of N.Y. Ins. Law § 5106 (McKinney 2000), ("No Fault," Fair Claims Settlement), is 2% per month as provided for by N.Y. Ins. Law § 5106 (a) (McKinney 2000) and N.Y. COMP. CODES R. & REGS. tit. 11, § 65-3.9(a) (2001). This interest should be paid automatically to the claimant at the time the late payment is made on the underlying claim. N.Y. COMP. CODES R. & REGS. tit. 11, § 65-3.9(a) (2001)."

Analysis

N.Y. Ins. Law § 5106(a) (McKinney’s Supp. 2006) addresses fair settlement of No-Fault claims and provides as follows:

Payments of first party benefits and additional first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within thirty days after the claimant supplies proof of the fact and amount of loss sustained. If proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid within thirty days after such proof is supplied. All overdue payments shall bear interest at the rate of two percent per month. If a valid claim or portion was overdue, the claimant shall also be entitled to recover his attorney's reasonable fee, for services necessarily performed in connection with securing payment of the overdue claim, subject to limitations promulgated by the superintendent in regulations.

N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.9(a) (2005) (Regulation 68-C) states:

All overdue mandatory and additional personal injury protection benefits due an applicant or assignee shall bear interest at a rate of two percent per month, calculated on a pro rata basis using a 30-day month. When payment is made on an overdue claim, any interest calculated to be due in an amount exceeding $5 shall be paid to the applicant or the applicant’s assignee without demand therefore (emphasis added).

General Counsel Opinion 02-07-22 states in pertinent part:

The rate of interest paid by "no-fault" providers for violations of N.Y. Ins. Law § 5106 (McKinney 2000), ("No Fault," Fair Claims Settlement), is 2% per month as provided for by N.Y. Ins. Law § 5106 (a) (McKinney 2000) and N.Y. COMP. CODES R. & REGS. tit. 11, § 65-3.9(a) (2001). This interest should be paid automatically to the claimant at the time the late payment is made on the underlying claim. N.Y. COMP. CODES R. & REGS. tit. 11, § 65-3.9(a) (2001).

No changes or amendments have been made to § 5106(a) or N.Y. Comp. Codes R. & Regs. tit. 11, § 65 (Regulation 68) that would affect the payment of interest automatically with the late payment of the claim; nor has there been any case law to interpret the statute or regulation differently. Thus, the opinion expressed in General Counsel Opinion 02-07-22 remains the Department’s position.

For further information one may contact Supervising Attorney Lawrence M. Fuchsberg at the New York City Office.