The Office of General Counsel issued the following opinion on October 27, 2003 representing the position of the New York State Insurance Department.

Re: Personal Automobile Insurance – Proposed Underwriting Rule

Question Presented

May an authorized property/casualty insurer (the "Company") that issues directly written personal automobile insurance policies in New York only to applicants who are directors, officers or employees (and their dependents) of a non-affiliated corporation and its subsidiaries (collectively the "Corporation Applicants") expand its writing to include customers of its licensed non-resident and resident agents (collectively the "Non-Corporation Applicants")?

Conclusion

Yes. The proposal, however, must be implemented in accordance with the Company’s filed and approved mass merchandising plan.

Facts

In 2002 the Company’s proposal to restrict its new policy writings to applicants who are directors, officers or employees (and their dependents) of an unaffiliated corporation and its subsidiaries (collectively the "Corporation") was approved. The Company continued to use its underwriting guidelines but added a new underwriting requirement – the applicant must be a director, officer or employee (or a dependent) of the Corporation. It was anticipated that eventually, the Company’s policyholders would all be directors, officers or employees and their dependents of the Corporation. These applicants are referred to as Corporation Applicants and all of their policies are directly written.1

The Company is now proposing to expand its underwriting guidelines to Non-Corporation Applicants, consisting of "Incidental Applicants" and "Resident Agent Applicants". The Incidental Applicants are customers of the Company’s insurance agents who are licensed as non-resident agents. and the "Resident Agent Applicants" are customers of the Company’s insurance agents who are licensed as resident agents. Policies for these Non-Corporation Applicants will not be directly written.

The Corporation Applicants and the Non-Corporation Applicants will be subject to the same premium rates, rating plans, rating rules, rate manuals and rating classifications and territories, except that the Company has a mass merchandising plan that has been filed and approved by the Department that provides for a discount off the total premium for the Corporation Applicants.

Analysis

As was discussed in the March 27, 2002 opinion, the N.Y. Ins. Law (McKinney 2000 & Supp. 2001-2002) protects certain classes of persons from discrimination by prohibiting insurers from refusing to issue to (or renew policies of) persons included in certain protected classes. The proposed underwriting change would not discriminate against any of the protected classes.2  Accordingly, provided that the proposal is in accordance with a mass merchandising plan that has been filed and approved by the Department, there would be no objection to the insurer implementing its proposal.3

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

1 By letter of March 27, 2002 the Company was advised that in effectuating its proposal it had to comply with the cancellation and non-renewal provisions contained in N.Y. Ins. Law § 3425 (McKinney Supp. 2003). In the inquirer’s October 6, 2003 letter the inquirer confirmed that the Company is so complying.

2  See N.Y. Ins. Law §§ 2606, 2607, 2608, 2612, 3429, 3434, 3435-a (McKinney 2000).

3  See N.Y. Comp. Codes R. & Regs. tit. 11, Part 13 (Reg. 58) and N.Y. Comp. Codes R. & Regs. tit.11, Part 153 (Reg. 135).