2023 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.