Changes to New York State Insurance Law Affect Auto Policies, Neonatal Intensive Care Coverage, and Exposures for Mortgage Guaranty Insurers

Frederick J. Pomerantz, a partner in Goldberg Segalla’s Global Insurance Services and Insurance Regulatory Practice Groups, has authored three alerts on changes to New York State insurance regulations in the November 2017 edition of the Federation of Regulatory Counsel (FORC) Alerts. In the alerts, Fred details notable recent changes pertaining to private passenger auto policies, neonatal intensive care services, and exposures for mortgage guaranty insurers.

Analysis of Non-Renewals of Private Passenger Auto Policies

Effective October 23, 2017, Section 1, Paragraph 2 of Subsection (l) of Section 3425 of the Insurance Law, in relation to reporting by the Superintendent of Financial Services to the state legislature, has been amended. The amendment relates to automobile insurers as relates to standardization of the reporting to the New York Legislature of the reasons for non-renewal of automobile policies issued in New York State by the Superintendent of Financial Services and is designed to ensure that automobile policyholders are not non-renewed in a discriminatory (or otherwise unjustified) manner, such as through the use of redlining in underwriting. It reads as follows: “(2) The superintendent shall collect, analyze and compile such reports with regard to the number of new insureds, non-renewed insureds and business written by each insurer in each rating territory of each such insurer and, in each case, the class of insureds (including age and sex) affected so that a statistical analysis of the results obtained pursuant to subsections (f) and (m) of this section, and the reasons in the aggregate for the non-renewal of policies, shall be provided to the speaker of the assembly, the temporary president of the senate, the chair of the assembly insurance committee, and the chair of the senate insurance committee on or before June thirtieth, two thousand twenty and every two years thereafter.”

Health Care Coverage for Neonatal Intensive Care Services

Effective December 22, 2017, certain sections of New York’s Public Health Law and Insurance Law, pertaining to health care coverage for neonatal intensive care services, have been clarified by eliminating the right of health care plans to deny admission to NICUs where a prior authorization determination has not been provided. However, the changes preserve prerogative of the health care plan to deny reimbursement for such services if, upon subsequent review of a claim, they are ultimately deemed not medically necessary. Section 4406-c of the New York Public Health Law has been amended to add a new subdivision 9, reading as follows: “9. A health care plan shall not require a prior authorization determination for services provided in a neonatal intensive care unit of a general hospital certified pursuant to article twenty-eight of this chapter. Nothing in this subdivision shall prohibit a health care plan from denying a claim for such services if the services are subsequently determined not medically necessary.” Further, Section 3217-b of the New York Insurance Law has been amended to add a new subsection (k), reading as follows: “(k) An insurer shall not require a prior authorization determination for services provided in a neonatal intensive care unit of a general hospital certified pursuant to article twenty-eight of the public health law. Nothing in this subsection shall prohibit an insurer from denying a claim for such services if the services are subsequently determined not medically necessary.” Section 4325 of the New York Insurance Law has been amended to add a new subsection (l), reading as follows: “(l) A corporation organized under this article shall not require a prior authorization determination for services provided in a neonatal intensive care unit of a general hospital certified pursuant to article twenty-eight of the public health law. Nothing in this subsection shall prohibit a corporation organized under this article from denying a claim for such services if the services are subsequently determined not medically necessary.”

Limiting Exposures of Mortgage Guaranty Insurers

Effective October 23, 2017, Subsection (c) of Section 6503 of the New York Insurance Law, in relation to mortgage guaranty insurance, has been amended. According to a New York Sponsors Memorandum, 2017 S.B. 1478 limits the exposure of mortgage guaranty insurance companies by repealing a section of the Insurance Law requiring that they obtain reinsurance for any coverage they provide that exceeds 25 percent of a borrower’s total indebtedness to the insured lender. It reads as follows: “(c) A mortgage insurer providing coverage on loans secured by a first lien on real estate may elect to pay the entire indebtedness to the insured and acquire title to the authorized real estate security. A mortgage insurer providing coverage on loans secured by a junior lien on real estate may elect to insure a portfolio of loans secured by instruments constituting a junior lien on real estate, provided that the total amount at risk in any one pool shall not at any time exceed twenty percent of the original principal mortgage loans insured.”

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