Authors Stephen R. Zogby, IIABNY chair, and the association’s President and CEO Richard A. Poppa state that the late notice denial of claims has escalated to a "very serious problem" for the association's members and the companies' policyholders. "We urge your company to take a public stand with your agents that you will not use a late notice denial unless such late notice has prejudiced your rights to effectively investigate, negotiate a settlement or defend the claim," Zogby and Poppa write.
A bill vetoed by Gov. Eliot Spitzer in August would have limited insurers when denying claims due to late notice. The 125-year-old IIABNY agreed with Spitzer’s veto because the legislation—crafted by trial lawyers—would have permitted attorneys to “shop around” and sue policyholders to find out what coverages and limits are available before liability against the policyholder was established.
IIABNY is continuing to work with the state Insurance Department to draft legislation that would implement changes to late notice procedures. A second draft of the legislation is likely in the near future, and will incorporate the association’s initial comments.