The New York Department of Financial Services has issued FAQs which clarify various aspects of its recently issued emergency regulations regarding non-payment of premiums due to COVID-19 related financial hardship.
On March 30, 2020, the New York Department of Financial Services (“NY DFS”) promulgated Regulation 216 (11 NYCRR 229) and amended Regulation 27-A (11 NYCRR 185), Regulation 27-C (11 NYCRR 187), and Part 405 of the New York Code of Rules and Regulations on an emergency basis (collectively, the “Emergency Regulation”). (See New York’s Executive Order and Emergency Regulation regarding Premium Payments). The Emergency Regulation imposed new requirements relating to grace periods for the payment of premium by certain individuals and small businesses that are experiencing financial hardship due to COVID-19. Since the issuance of the Emergency Regulation, there have been additional developments regarding the applicability of the Emergency Regulation which are discussed herein.
The NY DFS recently published Frequently Asked Questions (“FAQs”) on its website that address questions regarding the Emergency Regulation for both consumers and regulated entities. For example, the NY DFS has clarified that the Emergency Regulation applies retroactively to covered policies in effect on March 30, 2020, regardless of whether a notice of cancellation, non-renewal, or conditional renewal was issued before such date, or if the policy was already in a grace period. For those policies which were already in a grace period on March 30, 2020, the grace period would be extended to 90 days from the original premium due date on which the existing grace period started. Further, the NY DFS advises that insurers may treat premium that is owed but unpaid as an admitted asset for 90 days after the new due date for the payment of such premium under the Emergency Regulation.
The FAQs also modify guidance previously provided to the Excess Lines Association of New York (“ELANY”) regarding the applicability of the Emergency Regulation to excess lines policies. Initially, in guidance that NY DFS communicated directly to ELANY, the NY DFS excluded commercial excess lines policies from the requirements of the Emergency Regulation. However, in the FAQs, the NY DFS notes an exception to this exclusion, stating that the Emergency Regulation does apply to commercial fire insurance policies issued on an excess lines basis.
The NY DFS has also stated that additional regulations are forthcoming which will allow those consumers and small businesses experiencing financial hardship due to COVID-19 to defer paying health insurance premiums through June 1, 2020.