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ELANY Issues Bulletin Reiterating Position on Excess Line Binders and Confirmations of Coverage

The NYDFS recently completed an audit of records of NY excess line transactions submitted by brokers and found that binders were being issued by brokers who had no binding authority at all or who had not filed binding authority agreements with ELANY. As a result, on February 19, 2019, ELANY issued Bulletin No. 2019-09 clarifying the NYDFS’ interpretation of binder and the proper issuance of binders.

A binder may only be issued for an eligible excess line insurer or its representative by a New York licensed excess line broker with a proper written binding authority or a third party with a legitimate binding authority. Excess line brokers without binding authority should, instead, issue a “confirmation of placement of coverage” (“confirmation”), which serves as a broker’s representation of insurer’s actions without acting on the insurer’s behalf. While binders and confirmations must be initially submitted to ELANY for review and stamping, brokers are still required to submit the subsequent declarations page to ELANY as soon as possible.

The full bulletin may be viewed here:

For any questions regarding New York’s excess line broker requirements, or for assistance in any excess line compliance matters, please contact Westmont Associates, Inc.

Florida Senator Seeks to Replace the Existing No-Fault Law

A Florida Senator is again proposing a measure to eliminate the existing motor vehicle no-fault insurance law and replace it with legislation that will require all drivers to purchase bodily injury and property damage coverage at minimum limits. Senator Jeff Brandes has proposed Senate Bill 896, the Responsible Roadways Act, which seeks to mandate that Florida consumers purchase bodily injury liability coverage at limits of $25,000 per person/$50,000 for more than one person, and $10,000 for property damage. If passed, the Responsible Roadways Act would replace the current no-fault law which provides for $10,000 in personal injury protection coverage, regardless of the insured’s fault in an accident.
The Florida legislature attempted to enact similar legislation in 2017, but neither the House Bill nor the Senate Bill ever reached the Senate floor. Regulators point to unaffordable auto insurance prices and widespread fraud and abuse as reasons to repeal the no-fault system. A Federal Insurance Office study found that nearly 30% of zip codes in Florida are areas in which auto insurance is unaffordable.
For any questions regarding the proposed Responsible Roadways Act or any updates on its progress through the Florida legislature, please contact Westmont Associates, Inc.
Westmont Associates, Inc. tracks developments affecting the insurance industry, in addition to our other services.  If you have any questions, please contact us.

New York Issues Guidance on Use of External Data in Underwriting Life Insurance

On January 18, 2019, the New York State Department of Financial Services (“the Department”) released Insurance Circular Letter No. 1 to advise life insurers regarding the type of data that they may use when underwriting policies.  This guidance was issued after the Department conducted an investigation into insurers’ underwriting guidelines and practices, which followed reports it had received of the emergence of unconventional sources of external data available to insurers.
Circular Letter No. 1 identified two particular areas of concern regarding the use of external data sources, algorithms or predictive models that were identified during the Department’s investigation.  First, the use of such tools might unlawfully discriminate against protected classes of consumers.  Second, such tools often lack transparency for consumers.  In light of these issues, the Department provided specific guidelines on how to apply data and algorithms that help set premium rates. For example, the Department advised that an insurer must determine that external data sources or external tools do not collect or utilize prohibited criteria and, that an insurer may not simply rely on a vendor’s claim of non-discrimination or the proprietary nature of the third-party process.
For information regarding the other guidelines provided by the Department or for assistance in compliance matters relating to external data sources, please contact Westmont Associates, Inc.
Westmont Associates, Inc. tracks developments affecting the insurance industry, in addition to our other services.  If you have any questions, please contact us.


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