NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10226B
SPONSOR: Carroll TITLE OF BILL:
An act in relation to requiring certain perils be covered under business
interruption insurance during the coronavirus disease 2019 (COVID-19)
pandemic
PURPOSE OR GENERAL IDEA OF BILL:
This bill is intended to hold harmless businesses and non-profits, who
currently hold business interruption insurance, for losses sustained as
a result of the current COVID-19 health emergency, but for which no such
coverage is currently offered.
SUMMARY OF PROVISIONS:
Section 1 Defines terms
Section 2 provides a mechanism by which certain businesses that suffer
losses due to interruption as a result of the COVID-20l9 pandemic may
recover those losses from their insurer if they had a policy of business
interruption insurance in force on March 7, 2020, the date on which the
Governor declared a Public Health Emergency and State of Emergency in
Executive Order 202, The bill would apply to businesses covered by such
a policy with less than 250 eligible employees in the State of New York.
"Eligible employee" is defined as a full-time employee who works a
normal work week of 25 or more hours. This section stipulates that every
policy of insurance related to business interruption insurance that
expires during the covid 19 state of emergency shall be subject to auto-
matic renewal at the current rate. Additionally this section requires
that any existing insurance policy that allows the insurer to deny
coverage based on a virus that causes illness be declared null and void.
Section 3 provides that an insurer which indemnifies an insured who has
filed a claim pursuant to its provisions may apply to the Superintendent
of the Department of Financial Services for relief and reimbursement
from funds collected and made available for this purpose as provided in
the bill, pursuant to an additional special purpose assessment under the
general scheme already established by law to recover the general
expenses of the Department of Financial Services as the regulator of the
insurance industry in this State. The superintendent shall establish
procedures for the submission and qualification of claims by insurers
which are eligible for reimbursement, incorporating such standards as
are necessary to protect against the submission of fraudulent claims by
insureds, and appropriate safeguards for insurers to employ in the
review and payment of such claims.
Section 4 authorizes the superintendent to impose upon, distribute
among, and collect from insurance companies, other than life and health
insurance companies, the additional amounts as may be necessary to
recover the amounts paid pursuant to the bill. The additional special
purpose apportionment authorized by the bill shall be distributed
according to essentially the same procedures and calculations as are
provided currently for the existing special purpose apportionment.
Section 5 sets the effective date.
JUSTIFICATION:
Industry sources have indicated that global virus transmission and
pandemic are generally excluded from the list of covered perils under
the existing standard business interruption insurance policy. The Insur-
ance Services Office, ISO, has developed a rider to provide an insured
with the option of purchasing such coverage, but to date, no states have
yet approved the form. This bill is intended to hold harmless businesses
who currently hold business interruption insurance, for losses sustained
as a result of the current COVID-19 health emergency, but for which no
such coverage is currently offered.
PRIOR LEGISLATIVE HISTORY:
None
FISCAL IMPLICATIONS:
To be determined
EFFECTIVE DATE:
This act shall take effect immediately, shall be retroactive to March 7,
2020
STATE OF NEW YORK
________________________________________________________________________
10226--B
IN ASSEMBLY
March 27, 2020
___________
Introduced by M. of A. CARROLL, FAHY, GRIFFIN, SIMOTAS, EPSTEIN, LENTOL,
M. G. MILLER, PHEFFER AMATO, WRIGHT, DINOWITZ, ORTIZ, THIELE, CUSICK,
BARRETT, COLTON, MALLIOTAKIS, MAGNARELLI, FALL, FRONTUS, GLICK,
PAULIN, ROZIC, JONES, JACOBSON, NIOU, SIMON -- Multi-Sponsored by --
M. of A. ENGLEBRIGHT, McDONOUGH -- read once and referred to the
Committee on Insurance -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee -- again
reported from said committee with amendments, ordered reprinted as
amended and recommitted to said committee
AN ACT in relation to requiring certain perils be covered under business
interruption insurance during the coronavirus disease 2019 (COVID-19)
pandemic
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. For the purposes of this act:
2 (a) "business" shall mean a business registered with the department of
3 tax and finance or not-for-profit corporation registered with the Attor-
4 ney General's charities bureau.
5 (b) "income" shall mean traditional business income as well as not-
6 for-profit revenue from donations, sponsorships, and grants.
7 (c) "net written premiums received" shall mean gross direct premiums
8 written, less return premiums thereon and dividends credited or paid to
9 policyholders, as reported on the company's annual financial statement.
10 (d) "premium taxes" shall mean payments required under subdivision (d)
11 of section 2118 of the insurance law.
12 § 2. (a) Notwithstanding any provisions of law, rule or regulation to
13 the contrary, every policy of insurance insuring against loss or damage
14 to property, which includes, but is not limited to, the loss of use and
15 occupancy and business interruption, shall be construed to include among
16 the covered perils under that policy, coverage for business interruption
17 during a period of a declared state emergency due to the coronavirus
18 disease 2019 (COVID-19) pandemic.
19 (b) Every policy of insurance insuring against loss or damage to prop-
20 erty, which includes, but is not limited to, the loss of use and occu-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD16053-05-0
A. 10226--B 2
1 pancy and business interruption, whose policy expires during a period of
2 a declared state emergency due to the coronavirus disease 2019 (COVID-
3 19) pandemic, shall be subject to an automatic renewal of the policy at
4 the current rate of charge.
5 (c) Every policy of insurance or endorsement thereto insuring against
6 an insured's business income loss resulting from loss, damage, or
7 destruction of property owned by others, including direct suppliers of
8 goods or services to the insured and/or direct receivers of goods or
9 services manufactured or provided by the insured, shall be construed to
10 include among the covered perils under that policy, coverage for contin-
11 gent business interruption during a period of a declared state emergency
12 due the coronavirus disease 2019 (COVID-19) pandemic.
13 (d) Every policy of insurance or endorsement thereto insuring against
14 an insured's business income loss resulting from loss, damage, or
15 destruction of property owned by others, including direct suppliers of
16 goods or services to the insured and/or direct receivers of goods or
17 services manufactured or provided by the insured, whose policy expires
18 during a period of a declared state emergency due to the coronavirus
19 disease 2019 (COVID-19) pandemic, shall be subject to an automatic
20 renewal of the policy at the current rate of charge.
21 (e) Any clause or provision of a policy of insurance insuring against
22 loss or damage to property, which includes, but is not limited to, the
23 loss of use and occupancy and business interruption and contingent busi-
24 ness interruption, which allows the insurer to deny coverage based on a
25 virus, bacterium, or other microorganism that causes disease, illness,
26 or physical distress or that is capable of causing disease, illness, or
27 physical distress shall be null and void; provided, however, the remain-
28 ing clauses and provisions of the contract shall remain in effect for
29 the duration of the contract term.
30 (f) The coverage required by this section shall indemnify the insured,
31 subject to the limits under the policy, for any loss of business or
32 business interruption and contingent business interruption for the dura-
33 tion of a period of a declared state emergency due to the coronavirus
34 disease 2019 (COVID-19) pandemic.
35 (g) This section shall apply to policies issued to insureds with less
36 than 250 eligible employees in force on the effective date of this act.
37 "Eligible employee" means a full-time employee who works a normal work
38 week of 25 or more hours.
39 § 3. (a) An insurer, including excess lines insurers, which indem-
40 nifies an insured who has filed a claim pursuant to section two of this
41 act may apply to the superintendent of financial services for relief and
42 reimbursement by the department from funds collected and made available
43 for this purpose as provided in section four of this act.
44 (b) The superintendent of financial services shall establish proce-
45 dures for the submission and qualification of claims by insurers which
46 are eligible for reimbursement pursuant to this act. The superintendent
47 of financial services shall incorporate in these procedures such stand-
48 ards as are necessary to protect against the submission of fraudulent
49 claims by insureds, and appropriate safeguards for insurers to employ in
50 the review and payment of such claims.
51 § 4. (a) The superintendent of financial services is authorized to
52 impose upon, distribute among, and collect from the companies, including
53 excess lines insurers, engaged in business pursuant to the insurance
54 law, such additional amounts as may be necessary to recover the amounts
55 paid to insurers pursuant to section three of this act.
A. 10226--B 3
1 (b) The additional special purpose apportionment authorized pursuant
2 to subdivision (a) of this section shall be distributed in the propor-
3 tion that the net written premiums, or premium taxes in the case of
4 excess lines insurers, received by each company subject to the appor-
5 tionment authorized by this section for insurance written or renewed on
6 risks in this state during the calendar year immediately preceding,
7 bears to the sum total of all such net written premiums, or premium
8 taxes in the case of excess lines insurers, received by all companies
9 writing that insurance or coverage within the state during that calendar
10 year, as reported.
11 § 5. This act shall take effect immediately, and shall be deemed to
12 have been in full force and effect on and after March 7, 2020 and shall
13 apply to insurance policies in force on that date.
