NY Ins L § 1116 (2021)
2021 New York Laws ISC - Insurance Article 11 - Licensing of Insurers 1116 - Prepaid Legal Services Plans and Legal Services Insurance.

§ 1116. Prepaid legal services plans and legal services insurance. (a) (1)  An  authorized  insurer  subject  to the provisions of this chapter (except an insurer organized to write the kinds of  insurance  specified in  paragraph eighteen, twenty-three or twenty-five of subsection (a) of section one thousand  one  hundred  thirteen  of  this  article  or  any corporation  licensed or organized pursuant to article sixty-six of this chapter) may, if licensed  to  transact  legal  services  insurance,  as defined  in  paragraph  twenty-nine  of  subsection  (a)  of section one thousand one hundred thirteen of this  article,  be  authorized  by  the superintendent to issue contracts of legal services in connection with a prepaid  legal  services  plan,  if  such plans satisfy the criteria set forth in subsection (b) of this section and the superintendent makes the determinations  set  forth  in  subsection  (g)  of  this  section.  The provisions  of  this  section  shall  be  applicable  to  a  corporation organized pursuant to article forty-three of this chapter  only  if  the proposed  plan  and method of operations have been approved by a vote of at least two-thirds of the corporation's board of directors  before  the plan is submitted to the superintendent.  (2) A prepaid legal services plan may include legal services insurance as  part  of  the  plan,  provided  however, not more than an incidental amount of the premium with respect to such prepaid legal  services  plan shall  be  attributable to legal services for defense only coverages for commercial or other business related lawsuits or arbitration proceedings commenced against the business entity that purchased the policy.  (3) Legal  services  insurance  may  not  be  written  except  (i)  in conjunction  with  prepaid  legal  services  plans as authorized in this section,  or  (ii)  pursuant  to  a  regulation   promulgated   by   the superintendent permitting legal services insurance to be written as part of  a policy of liability insurance covering related risks and, provided further, that legal services for defense only coverages  for  commercial or  other business related lawsuits or arbitration proceedings commenced against the business entity that purchased the policy is not  more  than an incidental part of such liability insurance.  (b)  The  superintendent  may,  in  accordance  with the provisions of article  twenty-three  of  this  chapter,  authorize  the  issuance   of contracts  in  connection  with  a prepaid legal services plan when such plan satisfies the following criteria:  (1) its provisions are not misleading, confusing or inconsistent  with the needs of the public;  (2)   it  avoids  interference  with  judicial  supervision  over  the professional and public obligations of lawyers;  (3)  it  provides  for  prompt  resolution  of  grievances  concerning benefits;  (4)  it  does  not  restrict  the  beneficiary's  choice  of attorney, provided, however, that compensation  by  the  plan  for  attorneys  not participating  in  the plan shall be subject to the schedule of benefits and fee structure set forth in the  applicable  contract  and,  provided further,  that  nothing  herein  shall  be  construed  as prohibiting an attorney who is not participating in the plan from charging  a  fee  for services provided in excess of the schedule of benefits or fee structure set forth in the applicable contract;  (5)  it provides for a broad range of legal services, through personal and telephone consultations, such  as  wills,  residential  real  estate matters  and  domestic  relations matters, provided nothing herein shall require or prohibit the offering of a particular type of legal  services by a prepaid legal services plan;  (6)  it provides for written disclosure to contract holders, including a description of the schedule of benefits, fee structure, exclusions  or  other  limitations on benefits, and an explanation of a covered person's financial responsibility  for  the  payment  of  premiums,  co-payments, deductibles  or amounts charged in excess of the schedule of benefits or fee structure by attorneys not participating in a plan;  (7)  unless  it  provides  for  a  shorter  period,  as  provided in a paragraph two of subsection (d) of section three thousand  four  hundred twenty-six  of  this  chapter, or for a longer period, the plan shall be issued or renewed for a one-year policy period;  (8) it may be cancelled by an insurer only if cancellation is based on one or more of the reasons set forth in paragraph one of subsection  (c) of  section  three thousand four hundred twenty-six of this chapter upon no less than fifteen days written notice to a contract holder and  shall include  no  less  than  a  fifteen-day  grace  period in the event of a cancellation based on non-payment of premium, provided, however, in  the event  a contract is issued on a group basis, an individual group member may be canceled upon termination  of  his  or  her  employment  with  or membership in the group contract holder;  (9)  it  may  be nonrenewed by an insurer for any reason upon at least forty-five, but not more than sixty, days written notice to  a  contract holder; and  (10)  it  may  be  cancelled  by a contract holder for any reason upon thirty days written notice to an insurer.  (c)  The  contracts  may  be  issued  on  a  group  basis  subject  to regulations promulgated by the superintendent.  (d) Such contracts shall be subject to all other applicable provisions of this chapter and regulations thereunder.  (e) The superintendent may permit an authorized insurer subject to the provisions  of this section to enter into contracts with any corporation or other organization,  which  provides  or  sponsors  a  prepaid  legal services  plan  not  subject to this chapter, to administer such plan if the plan satisfies the criteria set forth  in  subsection  (b)  of  this section  and  provided  the  superintendent makes the determinations set forth in  subsection  (g)  of  this  section.  Such  administration  may include,  but  need  not  be  limited  to,  marketing,  actuarial,  data processing,  accounting,  claims  and  other  related   services.   Such contracts  shall  provide  for  the payment of a reasonable fee for such administrative services.  (f) The superintendent may permit an authorized insurer subject to the provisions of this chapter to reinsure the risk  of  any  prepaid  legal services  plan  as  if  it  were  legal  services  insurance if the plan satisfies the criteria set forth in  subsection  (b)  of  this  section, provided  the  superintendent  makes  the  determinations  set  forth in subsection (g)  of  this  section.  Such  reinsurance  agreements  shall provide for the payment of a reasonable premium.  (g)  The  superintendent may take the actions set forth in subsections (a), (e) and (f) of this section only if the superintendent  determines, with respect to each such action, that:  (1)  the sponsors and other participants in the plan can reasonably be anticipated to be able to carry out  their  responsibilities  under  the plan, and  (2)  the  plan  attempts  to  address  the  problem that desired legal services are unavailable to some citizens of  this  state  because  some individuals  and families who are not eligible for government subsidized programs cannot afford the cost of those services, and  (3) the proposed activity by the authorized insurer will not cause  or constitute  an  impairment  of  the  insurer's  ability  to  satisfy its existing and anticipated contracts and other obligations, including such  standards as the superintendent prescribes concerning  adequate  capital and financial requirements.  (h)  The  superintendent  shall  promulgate  such regulations that are necessary to implement the provisions of this section.