Proposed legislation would require insurance companies providing coverage for liability under the Scaffold Law to report to the superintendent of financial services relating to its finances and claims paid thereunder.
State Assembly Bill A332 and State Senate Bill 5995 would enact the Construction Insurance Transparency Act to require insurers issuing liability insurance policies related to claims made under the Scaffold Law (Section 240 of the labor law) in the state of New York.
The key changes involve the filing of annual financial statements and detailed claim data with the Superintendent of Financial Services.
Key provisions (Section 346):
1. Definition of Insurer (a):
o The term "insurer" is defined broadly to include any person, corporation, association, or business entity issuing liability insurance for contractors or property owners in New York against claims made by injured workers under Section 240 of the labor law.
2. Financial Statement Filing Requirements (b):
o Insurers are required to submit a detailed financial statement annually by April 1st.
o The initial filing should cover not only the prior calendar year but also the preceding nine calendar years.
o The financial statement must segregate the cost of providing coverage under Section 240 from general liability insurance.
o Specific information to be included in the financial statement ranges from premiums and losses to investment income and expenses related to risk management programs.
3. Detailed Claim Data Submission (c):
o Insurers must provide the Superintendent with detailed closed claim information for the same coverage as specified in subsection (b).
o Until data collection forms and procedures are established, insurers can use existing forms required by law or commonly used in the insurance industry.
o The detailed claim data should be submitted in the same manner as the financial statement.
4. Public Accessibility (d):
o Both financial statements and detailed claim information will be made available to the public.
o The information will be provided in aggregate form for all insurers and without specific identification of individual claims or insurers.
o Access to the electronic copies on the department's website will be highlighted and presented in a user-friendly manner.
5. Annual Reports by the Superintendent (e):
o The Superintendent is required to issue reports summarizing and explaining the information collected from financial statements and detailed claim information.
o Recommendations for risk management programs and steps to enhance workplace safety are to be included in these reports.
o Copies of reports are to be forwarded to legislative leaders and relevant committees.
6. Enforcement and Penalties (f):
o If an insurer fails to provide full disclosure, the Superintendent may take various actions, including imposing civil penalties, temporary suspension of policy issuance, and conducting audits.
o Civil penalties may go up to $50,000 for each violation.
7. Rulemaking Authority (g):
o The Superintendent is granted authority to promulgate rules and regulations for the proper administration of the act, including emergency rulemaking if deemed necessary.
The proposed Construction Insurance Transparency Act of 2023 places significant reporting obligations on insurers providing liability coverage under the Scaffold Law. The intent is to enhance transparency, enable public scrutiny, and encourage risk management practices to reduce premiums and improve workplace safety. If enacted, the act would establish a comprehensive framework for monitoring and assessing the financial and claims performance of insurers in this specific context.