I moved this post up because of the interest it’s generated.
Matthew S. Lerner, Esq., recently wrote about a draft regulation on his blog:
As InsureReinsure.com reports, New York Superintendent of Insurance Eric Dinallo unveiled a draft regulation that would establish a system of principles-based regulation in New York State (see post here and see press release here).
The principles include:
(1) A licensee shall lawfully conduct its business with integrity, due skill, and diligence.
(4) A licensee shall observe proper standards of market conduct.
(5) A licensee shall pay due regard to the interests of its clients and treat them fairly.
(6) A licensee shall pay due regard to the information needs of its clients, and communicate information to them in a way that is clear, fair and not misleading.
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edit: this post has received a lot of comments. I’m moving two of them to the post:
Even if we could agree to disagree that “no one wears a white hat in NF litigation,” there is an undeniable reality, as pronounced by the Court of Appeals in “Medical Society v. Serio,” that no-fault fraud is a problem so enormous, and so costly, that insurers have no choice but to give a high level of scrutiny to the majority of no-fault claims. The consequence of not doing so is to literally be driven out of business. It is not ‘bad faith’ for a no-fault insurer to challenge every bill from a ‘doc in a box’ provider when so many of them have been proven to be nothing more than bill-generating facilities owned by non-physicians. Moreover, there is already a de facto penalty for ‘bad faith’ denials, and that is a punitively-high interest rate for losing a no-fault case. In what other field can one earn 24% annual interest? So, in effect, every no-fault suit carries with it a built-in bad faith penalty, even when there is no bad faith. And in addition, no-fault fraud costs the insurance industry $1 billion a year. Isn’t that penalty enough? Whom do you think ultimately pays the freight for all this, anyway? All these costs get passed on to the rate-paying public. Finally, I still say the Rockanova case is controlling for first party bad faith claims.
Larry, Larry, Larry. Be realistic, or stick to the Rogak Report. How can you, with a straight face, quote fraud statistics from eight years ago? Your “driven out of business” comment is laughable. In 2005, the year of Hurricane Katrina, insurers that also provide auto insurance made a record $48.8-billion profit, 18.7% increase over 2004. The industry raised its surplus by more than 7% to nearly $427 billion. The ratio of claims and expenses to premiums was among the lowest in 30 years. In 2006, the profits were $59.9-billion and the surplus was $600 billion. Certainly, New York is much harder for insurers because of all the fraud, right? Wrong. Auto insurers reported $10.5 billion in earned premiums in New York in 2005, a jump of nearly 29 percent from $8.2 billion in 2000. Meanwhile, during the same period, incurred losses plummeted by more than 20 percent, from $6.4 billion to $5.1 billion. From 2000 to 2005, the loss ratio (the amount of each insurance premium dollar that goes to pay claims) in New York fell from 78.3 percent to 48.4 percent of premiums, according to the National Association of Insurance Commissioners (NAIC). This means that in 2005 only 48.4 cents of each premium dollar was paid to policyholders, a nearly 30 percentage point drop from 2000. The 2005 New York loss ratio was the lowest in the nation and was 11.8 percentage points below the nationwide loss ratio of 60.2 percent.
“For too long, auto insurance companies have been price-gouging New Yorkers,” Thompson said. “Rising premiums are becoming cost prohibitive and squeezing New Yorkers even more as they struggle to pay their rent, food, gas and other necessities. A reduction in premiums is the right direction so that drivers can afford to stay on the road.” William C. Thompson, Jr. New York City Comptroller.