Who Regulates Insurance and Provides Protection to Insurance Consumers in New York?
In New York State, the NYS Department of Financial Services, through the Insurance Division, oversees the affairs of insurance companies and premium finance agencies in the state. It also regulates all forms of insurance. The department is responsible for conducting regular on-site evaluations of all New York insurance providers to evaluate their financial conditions and underwriting and claims handling processes. The NYS Department of Financial Services’ insurance examiners are responsible for carrying out these evaluations to ensure state insurance providers comply with the New York Insurance Law. With an estimated population of over 19,835,913 New York represents a large insurance market. The NYS Department of Financial Services helps protect insurance consumers from unfair and fraudulent practices and actions that do not comply with the state's insurance laws.
Even though the NYS Department of Financial Services regulates insurance in New York, its main jurisdiction is over insurance bodies licensed to write insurance in the state and not federal insurance bodies that function in the state. For instance, New York is prone to floods from coastal storms due to its intensively used waterfront and extensive coastal geography. Some New York residents purchase flood insurance from the United States Federal Emergency Management Agency (FEMA), which is centrally regulated at the federal level and not by the NYS Department of Financial Services. The FEMA administers the National Flood Insurance Program (NFIP) for all states, including New York, where it ensures compliance with the NFIP flood policies. However, the NYS Department of Financial Services regulates insurance purchased from private insurance companies in the New York insurance marketplace.
Note that some private insurance providers sell flood and hurricane insurance policies through the NFIP flood and hurricane insurance, Write Your Own (WYO) program. In such cases, the NFIP is charged with providing financial protection for policyholders and the payment of claims.
The head of the NYS Department of Financial Services is known as a Superintendent, who administers the affairs of the department.
Individuals who have questions related to the department’s regulation of insurance in New York can contact the NYS DFS’s Contact Us portal or visit any of their office locations:
New York City - Main Office
New York State Department of Financial Services
1 State Street
New York, NY 10004-1511
Albany
New York State Department of Financial Services
1, Commerce Plaza
Albany, NY 12257
Buffalo
535 Washington Street, Suite 305
Buffalo, New York 14203
Garden City
1399 Franklin Avenue
Suite 203
Garden City, NY 11530
Oneonta
New York State Department of Financial Services
28 Hill Street, Room 210
Oneonta, NY 13820
Syracuse
New York State Department of Financial Services
333 East Washington Street
Syracuse, NY 13202
What is the New York Department of Insurance?
In New York, the Department of Insurance is known as the Insurance Division of the New York State Department of Financial Services. The NYSDFS oversees, administers, and regulates different types of institutions, including the insurance institution in New York. It does this through chartering, licensing, registration requirements, examination, and other related activities. One of the most important functions of the New York State Department of Financial Services is to protect the rights of insureds in the state. It does this by receiving, investigating, and resolving cases of fraudulent or unfair insurance practices reported by insureds in New York. The department’s Insurance Division has life, health, and property bureaus, which consist of over 1,700 insurance companies with assets of over $5.5 trillion as of December 31, 2021, including:
866 property/casualty insurance companies
131 life insurance companies
94 health insurers and managed care organizations
The New York State Department of Financial Services performs the following functions in regulating insurance companies in the state:
Oversees the solvency of the insurance companies in New York,
Manages corporate and marketplace conduct, and compliance with the Insurance law and regulations,
Performs periodic financial and market conduct examinations of insurance companies,
Reviews and approves health insurance premium adjustments and new rates and filings,
Issues legal interpretations of contract language for health insurance, including continuing care retirement communities (CCRCs) and Disability Benefits Law (DBL) coverage,
Conducts annual reviews of reserves,
Issues certificates of reserve valuation,
Reviews actuarial opinions and memoranda,
Audits minimum statutory formula reserves,
Reviews rates and actuarial aspects of life insurance and annuity policy forms,
Reviews reserve procedures for separate account plans of operation,
Reviews applications for the creation of continuing care retirement communities,
Conducts legal reviews and evaluations of life insurance and annuity contracts,
Reviews related policy forms and life settlement contracts,
Drafts regulations and proposed legislation regarding life insurance policies and annuity contracts.
Who Regulates the New York Department of Insurance?
The Insurance Division that oversees insurance in the state is regulated by the New York State Department of Financial Services.
What are the Unfair Trade Practices in New York?
In New York, unfair trade practices refer to misleading, unfair, and deceptive practices and communications made regarding the sale, lease, rental, or loan of consumer goods or services, or in extending consumer credit or collecting consumer debts. Unfair trade practices, known as deceptive acts and unlawful practices in New York are prohibited in the state according to Section 349 of the General Business Law. This law also protects individuals and businesses from false advertising and fraudulent acts. The Attorney General enforces this law and is responsible for bringing action against persons and businesses guilty of unlawful acts or practices. Hence, victims (businesses or individuals) of unfair trade practices are authorized to report such practices to the Attorney General by filing a complaint through the New York Attorney General’s website. In addition, victims can report insurance-related unfair trade practices to the NYS Department of Financial Services Consumer Complaint portal based on the Unfair Methods of Competition and Unfair and Deceptive Acts and Practices Law.
Some general unfair and deceptive trade practices in New York are:
Portraying that goods or services have approval, sponsorship, accessories, features, advantages, ingredients, uses, or quantities that they do not have; or that goods or services are of a particular standard, quality, grade, style, or model
Misrepresenting or exaggerating a material fact or failing to state a material fact if the intent is to deceive or mislead consumers
Falsely stating information concerning products, the reasons for price reductions, or prices in comparison to competitors’ prices or the business’s own past or future prices
Discrediting the products, services, or businesses of another by false or misleading representations of material facts
Offering goods or services with the intent not to sell them as offered or not to supply appropriate public demand, unless the offer specifies the limitation of quantity
Falsely declaring that a consumer’s transaction includes consumer rights, remedies, or responsibilities that it does not include
Falsely declaring that certain services, replacements or repairs are required when they are not
Giving false information about the reasons for offering or supplying goods or services at scale discount prices.
How to Report Suspected Unfair Trade Practices in New York?
General cases of suspected unfair trade practices in New York can be reported to the state Attorney General. Anyone that suspects that they have been a victim of an unfair trade practice can file a complaint with the New York State Attorney General’s Office using the General Consumer Complaint Form. Persons filing complaints are to enclose copies (not original documents) of all relevant documents and also submit the completed forms with clearly and concisely written complaints.
Note that filing a false complaint is a Class A misdemeanor. Also, the Office of the New York State Attorney General does not resolve the following complaints:
Complaints between businesses
A case where the person reporting has already gone to court
A case where a judge has already issued a judgment
If a private attorney represents the consumer
If the dispute is between two individuals (not between an individual and a business)
Individuals can file insurance complaints to the New York State Department of Financial Services online, by calling (212) 480-6400, or mailing paper complaints to:
The Department of Financial Services
Consumer Assistance Unit
1 State Street
New York, NY 10004
Or
The Department of Financial Services
Consumer Assistance Unit
1 Commerce Plaza
Albany, NY 12257
Complaints can be made from Monday to Friday, 9:00 AM - 5:00 PM.
In addition, if you suspect that you (a member of the general public) have been a victim of insurance fraud, you should report it to the NYS Department of Financial Services. The department will keep the matter confidential. You can report insurance fraud in the following ways:
By Phone: Call the Insurance Fraud Hotline: (888) FRAUDNY or (888) 372-8369
Online: Complete the Report Insurance Fraud form
By fax: Print, fill out, and fax the Report Fraud Form to (212) 709-3555
By mail: Print, fill out, and mail the Report Fraud Form to:
New York State Department of Financial Services
Insurance Frauds Bureau
One State Street
New York, NY 10004
What is the New York Life and Health Insurance Guaranty Association?
Known as the Life Insurance Company Guaranty Corporation of New York (New York Guaranty Corporation) in New York State, it was formed by the New York Legislature in 1985. The purpose of creating it was to protect New York state residents who are policyholders and beneficiaries of policies provided by impaired or bankrupt life insurance companies, up to determined limits. The New York Guaranty Corporation mandates all life insurance companies licensed to write life insurance in New York to be members of the corporation. This is considered a requirement of doing business in New York for life insurance companies based on the Life Insurance Company Guaranty Corporation of New York Act. If a member company is unable to continue coverage and pay claims due to impairment or bankruptcy, funds can be obtained through assessments of the guaranty corporation's other member insurance companies. Every state in the US, including the District of Columbia, and Puerto Rico has life insurance guaranty corporations or associations.
Typically, the New York Guaranty Corporation covers individual and group life insurance policies, health insurance policies, annuities, and funding agreements issued by New York State-licensed life insurance companies. Individuals with lost or old policies or questions about whether a particular contract would be covered can reach the Guaranty Corporation by calling (212) 202-4243 or emailing info@nylifega.org.
Specific insurance types not issued by life insurance companies (including automobile, homeowners, medical malpractice, professional liability, workers' compensation, etc.) may be protected by the New York Property/Casualty Insurance Security Fund. This can be reached at:
New York Property/Casualty Insurance Security Fund
C/o Liquidation Bureau, New York State Department of Insurance
110 William Street
New York, NY 10038
Telephone: (212) 341-6400
How Does the New York Life and Health Insurance Guaranty Association Work?
In New York, if the assets of a New York Guaranty Corporation member insurer are liquidated due to them being declared insolvent or bankrupt by a court of law, the guaranty fund will pay the member insurer’s policyholders’ valid claims and cover administrative expenses. Primarily, it protects policyholders from their licensed life insurer’s insolvency or financial impairment. In most cases, the insured will remain protected and the New York Guaranty Corporation will continue coverage for the period their premiums are being paid or cash value exists. Coverage in such cases may be done directly, or, most likely, the New York Guaranty Corporation will transfer the policy to another insurance company. Whichever the case, policyholders may be required to continue making premium payments if they want to keep their coverage active.
- Are all Policies Covered in Full?
No, not all policies are covered in full. Upon the insolvency of an individual’s insurance company, the maximum amount of protection the guaranty corporation provides for all policy types in the aggregate is $500,000 per life, regardless of how many types of policies you purchased. The $500,000 aggregate limit applies to life insurance cash surrender values, life insurance death benefits, allocated group annuity benefits, individual health insurance claims, and individual annuity benefits. On the other hand, the limit for funding agreement benefits and unallocated group annuity is $1,000,000 per contract. Group health insurance benefits do not have limits. For an included policy that is jointly owned and not in payout status, coverage would typically be subject to a single limit ($500,000 for an annuity). In the case of payout annuities where payments are based upon the lives of two individuals (eg., joint and survivor annuities) coverage is provided to each individual.
The New York Guaranty Corporation only provides coverage for individual and group life insurance policies, health insurance policies, annuity contracts, supplemental contracts, and funding agreements. However, it only provides coverage if these policies are issued by New York State-licensed annuities or life and health insurance companies. In addition, the New York Guaranty Corporation policy coverage only covers policies that meet the requirements of the Life Insurance Company Guaranty Corporation of New York Act.
- How Much Coverage Does the New York Life and Health Insurance Guaranty Association Provide?
The Life Insurance Company Guaranty Corporation of New York Act does not specify the exact limits the New York Guaranty Corporation provides. To qualify for coverage, a policy must meet the requirements and must be a covered claim. However, the Guaranty Fund provides coverage of up to $500,000 to a life insurance policy owner, and individual annuity (like a single premium deferred annuity) contract holder. It also provides the same amount of coverage to an individual accident and health insurance policyholder, or any assignee, beneficiary, or payee of the entities previously mentioned.
- How Fast Does the New York Guaranty Association Pay?
According to the Life Insurance Company Guaranty Corporation of New York Act, assessments are due on the date set by the board, which is between 30 and 60 days after initial written notice to the member insurers. After the due date, assessments shall accrue interest determined by the law.
- Do I Need to Continue Paying Premiums?
This is determined by whether you want to continue coverage. If you wish to keep your coverage in place, you will need to continue paying premiums. After the liquidation of your insurance company, the premiums you pay go to the guaranty corporation providing you continuous coverage. Therefore, if you stop paying premiums, your insurance coverage may be terminated.
- What if My Claim Exceeds the Amount the Association Can Pay?
If your claim exceeds the amount the association can pay, the association together with the Receiver may be able to negotiate a transfer of your policy, up to the guaranty association benefit limits, to a financially secure insurer. Suppose an association administers claims against the policy and reaches the benefit’s limits. In that case, the claim exceeding that limit may be submitted as a policyholder-level claim against the failed insurance company’s estate. Also, the contract holder may get distributions as the company’s assets are liquidated by the Receiver.
- What if I No Longer Live in New York?
Given that you were a New York State resident when you purchased your policy and your insurer is state-licensed as a life insurance company, you will remain protected up to the statutory limits of the New York Guaranty Association. In addition, you may also have protection in the state you currently reside in, that would be coordinated with whatever coverage the association in New York provides.
- Is my Insurance Company Covered by the New York Life and Health Insurance Guaranty Association?
Being a member of the New York Guaranty Association is mandatory in New York for all state-licensed life insurance companies in New York. To determine whether your insurance company is licensed to write business in New York, you may call the Guaranty Corporation at (212) 202-4243 or send an email to info@nylifega.org.
- Why Hasn't my Insurance Agent or Company Told me More About the New York Life and Health Insurance Guaranty Association?
The Life Insurance Company Guaranty Corporation of New York Act prohibits insurance agents and companies from advertising their membership with the New York Guaranty Corporation in a bid to convince people to purchase policies from them. This is because membership with the guaranty corporation should not be a substitute for your careful selection of a well-managed and financially sound insurance company.
