NY Reg comment 1.08 Reg. 79 FINAL

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Publié par	Enfea
Nombre de lectures	20
Langue	English

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January 24, 2008

Buffy Cheung
State of New York Insurance Department
25 Beaver Street
New York, NY 10004

Re: INS-50-07-00002-P—Mandatory Underwriting Inspection Requirements for Private
Passenger Automobiles

On behalf of the Professional Insurance Agents of New York, I write in support of this proposed
rulemaking. PIANY in general supports every type of liberalization in the current rules. Changes
like those proposed in this rulemaking can provide more time and flexibility with which to
accommodate the needs of our members’ clients and prevent inadvertent lapses in their physical
damage coverage.

While in two instances we request clarification from the Department in its adoption notice (see
below), we strongly support the initiative of the Insurance Department in proposing changes to
improve what we consider to be a burdensome regulation. The regulation, we recognize, is
required by law. However, we believe at this point that the physical damage inspection
requirement imposed by Section 3411 of the Insurance Law is a rule whose costs far outweigh its
benefits at this point—a discussion that is beyond the scope of this proposed rulemaking.

Specifically, we believe the change in the tolling of the five-day deferral for the inspection from
the current calendar days, to business days, will benefit clients by affording them a longer period
of time to have the inspections performed.

We also appreciate the proposed language that would clarify that digital photos and other durable
electronic media are acceptable for producing the required photos and storing the inspection
documents. While this has been the Department’s position, it will be helpful to our members to
see it set forth in the regulation itself, eliminating any confusion.

Similarly, it is helpful to have an unambiguous definition of “new, unused automobile,” as
proposed, since this is a question that sometimes arises.

We approve the change in the existing optional waiver at Subdivision 65.3(b)(3) which reduces,
from four to two policy-years, the amount of time an insured must have been continuously
insured with the same insurer for inspection to be waived on an additional or replacement vehicle.

We likewise support adding two more situations in which a company, at its discretion, may waive
the inspection requirement. However, we do have certain questions about these additional
waivers, as follows:

1. Proposed new Subdivision 67.3(b)(11) and 67.3.(c)(2). Taken together, these permit a waiver
where an insured under a new policy has had continuous physical damage coverage from, and the
vehicle has been inspected within the past two years by, a prior insurer, and the new insurer is
provided with a copy of an inspection report and photos.

- continued -

Page 2

Our question has to do with the construction of proposed 67.3(c)(2), especially the sentence, “If a mandatory
inspection is waived pursuant to subdivision (b)(11) of this section, the insurer shall be provided with a copy of
the inspection report and applicable photographs from the previous insurer or its authorized representative
within ten business days of the effective date of coverage” [emphasis added].

This passive-construction language (“shall be provided”), we believe, could be interpreted to create a legal
obligation on the part of third parties that is triggered by the new insurer’s waiver decision. For example, it
potentially could be construed to create a new duty on the part of the prior insurer, its agent or its designated
central repository to furnish to the new insurer any inspection report/photos that are requested by the new insurer
pursuant to the new insurer’s decision to waive. We would oppose this interpretation and would appreciate a
clarification in the adoption notice regarding the intent of this language.

2. Proposed new Subdivision 67.3(b)(12). We understand and support the ability of the insurer to waive
inspection based on true hardship, especially if this involves hardship to the insured. However, we would oppose
any application of this provision that would work to the detriment of one market distribution system and to the
advantage of another.

Specifically, an insurer which does not market its insurance through local independent agents nor maintain a
physical presence in New York might look at this provision as an opportunity to grant across-the-board inspection
waivers based on a purported “serious hardship to the insurer.” Again, we would appreciate clarification in the
adoption notice of the types of situations that would constitute bona fide “circumstances of such hardship,” as
would be required to be documented in the insured’s policy record, especially as regards “serious hardship to the
insurer,” in such a way that clarifies that all types of insurers equally are subject to the provisions of the
regulation.

In closing, PIANY appreciates the Insurance Department’s continuing willingness to help customers and the
industry work within the statutory requirement, which PIANY considers at this point to be onerous and
unnecessary. We support repeal of the underlying statute (Insurance Law Section 3411), which we believe has
been rendered unnecessary by vastly improved ways of verifying and tracking the existence and physical
condition of insured vehicles since its original enactment. However, failing a legislative remedy, we commend the
Insurance Department for undertaking these proposed changes.

Sincerely,

ELLEN D. KIEHL, Ph.D.
Assistant Executive Director
for Government & Industry Affairs

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