Bills advocated by NAIFA-NYS which would strengthen the Life Insurance Company Guaranty Corporation’s ability to protect insurance consumers and would give life insurers permission to pay out the accelerated death benefit applied for by a policyholder in a more timely manner than allowed by current law have been signed by Governor Andrew Cuomo.
Because the 2012 liquidation of the Executive Life Insurance Company of New York caused the depletion of the statutory, aggregate cap on assessments of life insurers for the funding of insolvent life companies there has been no statutory authority for assessments to be made in the case of any future life company insolvency.
That situation will be corrected by A9915/S7320A – now Chapter 454 of the Laws of 2014 – sponsored by Assemblyman Kevin Cahill (D- Kingston) and Senator James Seward (R-Milford), who chair the Insurance Committees in their respective legislative houses.
Supporting enactment of the bills, NAIFA-NYS pointed out that while all states provide guaranty fund protection, New York was the only state that had a life time cap on the total amount that could be assessed against insurers for impairments and insolvencies. The association added, “If this bill to eliminate the cap is not enacted into law, New York policyholders will have no guaranty fund protection in the event of a future life insurer insolvency.”
The accelerated death benefits bill – S6507A/A9154A – sponsored by Senator Seward and Assembly Insurance Committee member Steven Cymbrowitz (D – Brooklyn) makes a needed change in a 20 year-old law that prohibits life insurers from paying a policyholder an accelerated death benefit until fourteen days after they have applied for receipt of such benefit.
Now Chapter 448 of the Laws of 2014, the legislation shortens that duration of time to five days, giving needed financial assistance in a timelier manner to policyholders who need the death benefit payment as quickly as possible due to their health conditions and expensive medical care or long term care services.
In October 8th letters calling on the Governor to sign both bills into law, NAIFA-NYS President Lawrence J. Holzberg, LUTCF pointed out that the association and its members “not only actively promote the principles of sound insurance, financial and estate planning, but also advocate for legislation and regulation that protects the needs of the consuming public.”