New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter III - Policy and Certificate Provisions › Subchapter B - Property and Casualty Insurance › Part 73 - Claims-made Policies; Scope Of Application; Minimum Standards › Section 73.0 - Preamble

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Traditionally,
				  most liability insurance policies protect against injury or damage that occurs
				  during the policy period. Such "occurrence" policies generally provide
				  coverage, even though an actual claim is made or suit is filed, arising from
				  that occurrence, subsequent to the policy period. In contrast, "claims-made"
				  policies generally provide coverage only when a claim is made during the policy
				  period with regard to injury or damage that has taken place during that
				  time.
(b) Following a public
				  hearing on the Commercial General Liability (CGL) claims-made policy form
				  proposed for general application by the Insurance Services Office, Inc. (ISO),
				  and after evaluation of information received as a result of numerous meetings
				  and communications with all interested parties, the Insurance Department issued
				  an opinion and decision dated October 11, 1985 disapproving the proposed policy
				  form and related endorsements for use in this State. Additional modifications
				  thereafter submitted by ISO have been carefully analyzed by the department,
				  which, however, reaffirmed its disapproval of the claims-made policy form
				  approach for CGL purposes.
(c) The
				  Insurance Department finds that claims-made coverage tends to provide less
				  protection than occurrence coverage, that claims-made coverage compared to
				  occurrence coverage is a more complicated and confusing method of coverage that
				  can create potential coverage gaps and that, on balance, across-the-board
				  application of the claims-made policy form for all types of liability coverages
				  would be an unwarranted and inappropriate change in the traditional insurance
				  system and, therefore, not in the public interest.
(d) As indicated in the October 11, 1985
				  opinion, however, the department has approved, and will continue to approve,
				  claims-made policy forms for specific types of commercial liability coverages,
				  as authorized by this Part, where substantial availability problems have been
				  experienced, where there is sufficient size and sophistication, or where risks
				  embody exposures with long-tail or latent injury characteristics. The
				  department, taking into consideration the range of existing and potential
				  problems with the claims-made policy form, sets forth in this Part governing
				  definitions and minimum standards required for department approval of a
				  claims-made policy form in such areas.
(e) The fourth amendment adds employment
				  practices liability to the list of coverages eligible to be written on a
				  claims-made basis; lowers the financial threshold requirements for large
				  commercial insureds; and eliminates a disclosure requirement. These actions
				  recognize marketplace developments over the last decade that have resulted in
				  the widespread use of claims-made policies and the increased knowledge and
				  sophistication of insureds, insurance agents and brokers with respect to this
				  coverage.