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Comprehensive Insurance Disclosure Act
On December 31, 2021, New York State Governor Hochul signed into law the Comprehensive Insurance Disclosure Act (“CIDA”). What follows below is a summary of the important changes that were made to §3101(f) of the civil practice law and rules (“CPLR”) regarding disclosure of insurance information. What also follows below are the already proposed amendments to CIDA, which may be approved soon by the legislature.
According to the newly enacted Senate Bill, the justification for CIDA is that these requirements will reduce the use of delaying tactics by explicitly compelling disclosure of the complete primary, excess, and umbrella policies implicated by the claim, as well as directing disclosure of other claims, contracts, or agreements that may deplete the available coverage, along with current residual limits of policies that have been eroded by other payments.
Information and Documentation to be Produced
Within sixty (60) days after serving an answer, a defendant is now required to provide plaintiffs with notice and proof of the existence and contents of any insurance agreement through which a judgment could be satisfied. Specifically, a defendant must produce all primary, excess, and umbrella policies, and a complete copy of those policies, including declarations, insuring agreements, conditions, exclusions, endorsements, and similar provisions. This also includes information regarding the amounts available under any policy, contract, or agreement to satisfy a judgment or to reimburse for payments made to satisfy the judgment. In addition, the CIDA specifically identifies insurance applications, as part of the information and documentation that must be produced.
Further, a defendant must also provide information and documentation regarding lawsuits that have reduced or eroded or may reduce or erode such amounts available under the applicable policy. With respect to these additional lawsuits, a defendant must identify the caption of any such lawsuit, the date the lawsuit was filed, and the identity and contact information of the attorneys for all represented parties, and further, the amount, if any, of any payment of attorney’s fees that have eroded or reduced the face value of the policy, along with the name and address of any attorney who received such payments.
The information and documentation to be produced also includes the disclosure of the contact information, including the telephone number and e-mail address, of any person(s) responsible for adjusting the claim. This also includes third-party administrators and persons within the insuring entity to whom the third-party administrator is required to report.
Under the CIDA, the Defendants have an ongoing obligation to ensure that the information remains accurate and complete and must provide updated information within 30 days of receiving information that renders the prior disclosure inaccurate or incomplete. The obligation exists during the entire pendency of the litigation and for 60 days after settlement or entry of final judgment in the case inclusive of all appeals.
Under the CIDA, two (2) certifications must be produced. Specifically, the CIDA requires the insured, and the attorney representing the insured, to certify that the information and documents produced under the CIDA is accurate and complete and further, that reasonable efforts will be taken to ensure this information remains accurate and complete.
Applicability and Deadline
This law takes effect immediately and applies to not only future cases, but all pending litigations as well. In regard to the pending litigations, a defendant has sixty (60) days from the date the law became effective to provide the information and documents identified under the CIDA. Thus, the deadline for compliance with the CIDA for cases currently pending is March 1, 2022.
PROPOSED AMENDED BILL
Even prior to Governor Hochul signing the CIDA bill, the new purported requirements were immediately met with a negative response from the insurance community. Many were concerned that these new disclosure requirements were too burdensome and will put defense counsel and insurance carriers at a disadvantage at the inception of every litigation.
With that said, while New York State Governor Hochul signed the CIDA into law effective immediately, the Governor simultaneously inserted proposed changes to the bill. The proposed changes are as follows:
- Insurance applications would not be required to be disclosed.
- The provision regarding the amounts available under any policy, contract, or agreement to satisfy a judgment or to reimburse for payments made to satisfy the judgment would be amended to require disclosure only of “the total limits available” after accounting for erosion and any other offsets available to satisfy a judgment.
- Mandated disclosure within 90 days of serving the answer (instead of 60 days).
- Only the name and e-mail address of the claims adjuster must be disclosed (not telephone number).
- The proof of insurance agreement can be a copy of the policy, or if a party agrees in writing, in the form of a declaration page.
- A defendant would only need to produce the policy that relates to the current claim.
- The provisions regarding lawsuits which have eroded or may reduce or erode such amounts available under the applicable policy, would be deleted.
- The term “ongoing obligation” would be deleted and replaced by “must”. Specifically, carriers must make reasonable efforts to provide accurate information initially and throughout the litigation.
- The new disclosure requirements would not apply to actions brought to recover motor vehicle insurance personal injury protection benefits under Insurance Law Article 51 or Insurance Regulation 68.
- The original retroactive application to “all pending cases” would be deleted.
Although it appears that these proposed changes will be approved by the legislature, it is important to remember that the initial CIDA remains in effect while the proposed amendment is pending. As mentioned above, the current disclosure deadline is March 1, 2022.
Please notify us if you would like our office to provide further instruction or information to your claims department regarding the new requirements under the Comprehensive Insurance Disclosure Act or the proposed amendments.