Circular Letter No. 3 (2017)
March 15, 2017
All authorized property/casualty insurance companies, co-operative property/casualty insurance companies, non-profit property/casualty insurance companies, property/casualty insurer trade organizations, rate service organizations, and the New York Property Insurance Underwriting Association
Homeowner Natural Disaster Preparedness, Home Safety and Loss Prevention Courses
STATUTORY REFERENCES: Chapter 54 of the Laws of 2016, Insurance Law § 2346
The purpose of this circular letter is to provide guidance to, and encourage action by, authorized property/casualty insurance companies, co-operative property/casualty insurance companies, non-profit property/casualty insurance companies, property/casualty insurer trade organizations, rate service organizations, and the New York Property Insurance Underwriting Association (“addressees”) pursuant to Chapter 54 of the Laws of 2016, which amended Insurance Law § 2346 by adding a new subsection 5. Under Insurance Law § 2346(5), the Superintendent of Financial Services may permit an insurer providing homeowner’s insurance or property/casualty insurance for residential real property to offer actuarially appropriate discounts for: (a) completion of a homeowner natural disaster preparedness, home safety, and loss prevention course (“disaster preparedness course”) by the insured occupant of the covered residential real property; and/or (b) the installation of equipment, devices, or other capital improvements to real property that can help to eliminate or mitigate natural disaster damage, improve home safety, or prevent other losses. This circular letter addresses disaster preparedness courses.
A disaster preparedness course:
. . . may provide useful information to participants on items including, but not limited to: courses of action that can be taken before, during and after the occurrence of a natural disaster, strategies to reduce risk exposure to insured residential property owners and renters, and information about the installation of equipment, devices or other capital improvements to real property which can help to eliminate or mitigate damage to real or personal property, personal injury or the loss of life caused by a natural disaster or other insurable event or occurrence of a fire, theft, burglary, personal injury or property damage.
Insurance Law § 2346(5)(a)(3).
And, for purposes of Insurance Law § 2346(5):
“[n]atural disaster” means the occurrence or imminent threat of widespread catastrophic or severe damage, injury, or loss of life or property resulting from any natural cause including, but not limited to, fire, flood, earthquake, hurricane, tornado, high water, landslide, mudslide, wind, storm, wave action, ice storm, epidemic, air contamination, blight, drought, infestation, explosion, water contamination, bridge failure, or bridge collapse.
Insurance Law § 2346(5)(a)(2).
Section 2346(5) contemplates that an insurer or another person, agency, or organization will: (a) develop a disaster preparedness course; (b) submit the specifications of the disaster preparedness course to the Department of Financial Services (“Department”); and (c) be prepared and able to offer such disaster preparedness course upon approval by the Department.
The legislature stated its intent when adding Insurance Law § 2346(5) as follows:
The purpose of this act is to clearly provide in statute for insurers to offer and for homeowners, condominium owners, cooperative apartment owners, and renters to obtain a financial incentive if they complete a course of instruction on how to make their residence more resilient to a natural disaster, reduce the potential loss of life or property damage that could result from a natural disaster, reduce the risk of fire, theft, burglary, personal injury or property damage, and raise their awareness of natural disaster preparedness by offering property/casualty insurance premium reductions.
L. 2016, Ch. 54, Part BB, § 1. The Department seeks to further this intent by encouraging insurers to submit disaster preparedness courses for the Department’s approval so that homeowners may enroll in such courses and seek appropriate policy discounts.
By this circular letter, the Department is hereby soliciting addressees to submit disaster preparedness courses to the Department. Upon receipt of an application for approval of a disaster preparedness course, as provided in Insurance Law § 2346(5), the Department will promptly review it. In addition, the Department requests that the relevant insurers then file with the Department actuarially appropriate discounts that the insurers propose to offer their insureds for completion of such courses.
Please direct questions concerning this circular letter to Marshal Bozzo, Assistant Deputy Superintendent, Property Bureau, by telephone at (212) 709-3870, by mail to the New York State Department of Financial Services, One State Street, New York, NY 10004, or by e-mail to [email protected].
Very truly yours,