New York Department of Financial Services Issues Guidance on Insurance Loss Mitigation Tools and Services
On May 23, 2024, the New York Department of Financial Services (the “Department”) issued Insurance Circular Letter No. 3 (the “Letter”). The Letter is addressed to “all insurers authorized to write property/casualty insurance in New York State, the New York Property Insurance Underwriting Association [‘NYPIUA’], and rate service organizations.” The purpose of the Letter is to “encourage all insurers authorized to write property/casualty insurance in New York State (‘insurers’) to offer loss mitigation tools and services to insureds for free or a reduced fee…and to encourage insurers, the [NYPIUA], and rate service organizations…to file with the [Department] actuarially appropriate discounts for insureds for the installation of devices or systems that mitigate or prevent losses….” As a result in a rise in the InsurTech space, in 2021 the National Association of Insurance Commissioners (“NAIC”) updated the anti-rebating section of the NAIC Model Unfair Trade Practices Act (#880) (Section 4(I)) by excluding various value-added products or services that an insurer or producer may offer at no cost or a reduced fee from the definition of impermissible discrimination or rebates. Other states have also implemented such changes.
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