The bill also would have allowed a third-party claimant, who is not a party to the insurance contract, to file a direct action against a defendant’s insurer to determine whether the claim is covered. Insurers and brokers were divided over the bill.
The Council of Insurance Brokers of Greater New York Inc. last month expressed support for a late notice bill, while the American Insurance Association, which writes more than 25% of all the property/casualty premiums in New York, in a letter last month urged Gov. Spitzer to veto the legislation.
The National Association of Mutual Insurance Companies (NAMIC) also did not support the late notice bill and in a statement released today, the organization commended Spitzer’s decision.
“This legislation would have drastically altered the processes and procedures under which insurance claims are negotiated and settled,” said Paul Tetrault, NAMIC’s state affairs manager for the northeast region. “In doing so, it would have placed New York far outside the mainstream regarding insurance claim practices, making it more difficult and costly for businesses to operate in the state.
“This legislation would dramatically alter the dynamics of the insurer/insured relationship so that an insurer would have to show it had been materially prejudiced in order to deny a claim for late notice,” he said. “Requiring insurers to make such a showing creates a heavy, unbalanced and improper burden.”