DFS MODIFIES REG 79 Compromises Reached as Mandatory Inspection Reg Undergoes Intense Scrutiny, Revision
A set of compromises has been reached in the matter of Reg 79 requirements as the DFS adopted modifications to the long-controversial regulation governing automobile photo inspections. Of the several parties to the compromised changes, many reported satisfaction with the Department’s action, taking steps to streamline the inspection process for policyholders, agents, carriers and vendors of the inspection service to comply with mandatory photo inspection rules, all while keeping in tact the State’s and the industry’s shared goal of combatting insurance fraud and related crimes.
According to the DFS, eleven parties appeared to state their views (summarized in the text below) on Reg 79, some, like PIANY advocating for the elimination of this requirement in toto; others seeking the modifications that were realized.
The revisions, effective April 1, 2015, will:
- increase the inspection deferral period from 5 to 14 calendar
- reduce the minimum time frame from 4 years to 2 years for an insured to be eligible for an inspection waiver for an additional and/or replacement automobile when the insured has been continuously insured for automobile insurance, with the same insurer or another insurer under common control or ownership;
- allow an inspection waiver when an insured under a new policy had the automobile continuously insured for physical damage coverage by a previous insurer that inspected the automobile within the prior two years;
- provide for the use of new technologies (digital photography, electronic storage and retrieval of inspection reports and photographs, use of email).
- expand the current renewal inspection notice requirement from 33 days prior to renewal date to at least 45 days but no more than 60 calendar days prior to the annual policy renewal date;
- amend the definitions to clarify the types of vehicles subject to the inspection requirement and establish definitions for certain autos and providers.
On our December 31st deadline date – at 12:15 pm to be exact – PIANY’s statement arrived expressing concern with the requirement set forth in 11 NYCRR 67.3(b)(7), (8) and (10) that in order to waive the mandatory inspection requirement, a vehicle must be physically inspected by the previous insurer, particularly in the case where the vehicle is new or has not been sold or transferred. Yet, overall, “PIANY is extremely pleased with the amendments adopted and we are grateful for the receptive participation of the Department of Financial Services as well as every- one involved with this successful effort,” said PIANY President Anthony A. Kubera, CIC. “We also want to acknowledge the receptive ear agents received from lawmakers, particularly Assemblyman Kenneth P. Zebrowski, who, as chairman of the Administrative Regulations Review Commission, weighed in to support the proposed regulatory changes and has, for years, sponsored legislation to repeal the regulation entirely.” The Department has indicated that they will take under consideration the applicability of these waivers when the vehicle was originally new and the inspection was waived by the previous insurer pursuant to § 67.3(b)(2), but did not want to delay implementation of the proposed amendment at this time, PIANY added.
Full DFS Summary and Analysis from NY State Register December 31st 2014:
Mandatory Underwriting Inspection Requirement for Private Passenger Automobiles.
Effective Date: 2015-April -01 Action taken: Amendment of Part 67 (Regulation 79) of Title 11 NYCRR.
Statutory authority: Financial Services Law, sections 202 and 302; and Insurance Law, sections 301, 3411, 5303 and art. 53
Purpose: Revise requirements regarding the inspection of private passenger automobiles for physical damage coverage.
Substance of final rule:
Section 67.1 amends the definitions to clarify the types of vehicles subject to the inspection requirement and establishes definitions for a new, unused automobile, durable medium, and New automobile dealer.
Section 67.3(b)(3) is amended to reduce the minimum time frame from 4 years to 2 years for an insured to be eligible for an inspection waiver for an additional and/or replacement auto- mobile when the insured has been continuously insured for auto- mobile insurance, with the same insurer or another insurer under common control or ownership.
Section 67.3(b)(11) is added to allow an inspection waiver when an insured under a new policy had the automobile continuously insured for physical damage coverage by a pervious insurer that inspected the automobile within the prior two years. or ownership.
Section 67.4(b) is amended to increase the inspection deferral period from 5 to 14 calendar days.
Section 67.5 is amended to recognize the use of new technology (digital photography, electronic storage and retrieval of inspection reports and photographs, use of email).
Section 67.7(c)(1)(i) is amended to expand the current renewal inspection notice requirement from 33 days prior to renewal date to at least 45 days but no more than 60 calendar days prior to the annual policy renewal date in order to track with Insurance Law section 3425.
The proposed rule also includes non-substantive technical changes designed to clarify various provisions in the regulation.
Final rule as compared with last published rule: Nonsubstantive changes were made in sections 67.3(b)(6), 67.4(b), 67.5(a) and 67.12 FORM A.
Revised Regulatory Impact Statement:
- Statutory authority: Insurance Law section 3411 requires insurers to inspect private passenger automobiles insured for physical damage coverage except as provided for in a regulation prescribed by the Superintendent. Article 53 authorizes the Superintendent to approve plans for providing motor vehicle insurance coverage to persons who are unable to obtain coverage in the voluntary insurance market. The New York Automobile Insurance Plan (“NYAIP”), also commonly known as the Assigned Risk Plan, is the mechanism for providing such coverage. Insurance Law section 5303 specifies coverages that are available through the NYAIP, and subjects those coverages to the requirements of Insurance Law section 3411 as well as other provisions in the Insurance Law.
- Legislative objectives: Insurance Law section 3411 directs the Superintendent to promulgate regulations implementing the section, which, among other things, requires insurers to inspect private passenger automobiles (“automobiles”) when issuing physical damage coverage on the automobiles.
- Needs and benefits: Insurance Law section 3411 prescribes a framework when insurers provide physical damage coverage for automobiles and the duties of insurers and insureds with respect to inspections of automobiles. Inspections of automobiles have been mandatory since 1977 in order to combat insurance fraud, and only under limited circumstances has the cur- rent rule permitted insurers to waive or defer inspections. However, with advances in technology to combat automobile physical damage insurance fraud, certain provisions of the cur- rent rule have been rendered obsolete or unduly burdensome to insurers and insureds. This proposed rule updates the regulation, which should reduce unnecessary expenses to insurers and consumers, while maintaining necessary requirements to combat fraud. The proposed rule also clarifies various provisions of the regulation, including the types of automobiles subject to the inspection requirement, and expands the optional inspection waivers available to insurers.
- Costs: The proposed rule imposes no compliance costs on state or local governments. The proposed rule should reduce costs to insurers overall for the administration, processing of paperwork, operations and underwriting of automobile physical damage insurance. These savings ultimately should be passed on to consumers.
- Local government mandates: None.
- Paperwork: The proposed rule does not generate any additional paperwork, other than a revised Plan of Operation that insurers would file with the Department if insurers chose to incorporate the optional waivers in the proposed rule. However, the rule reduces the paperwork requirements on an insurer by permitting an insurer to use separate entities such as CARCO Group, Inc., to maintain a central repository of its physical damage inspection reports.
- Duplication: None.
- Alternatives: Recognizing advances in technology and measures to reduce automobile insurance fraud, the Superintendent submitted an outreach draft to various stakeholders for comment. Some of the more significant comments that the Superintendent considered are set forth below. Stakeholders recommended adding a number of optional waivers to the inspection requirement, including waivers for certain types of insureds, where the insured has other types of coverage with the insurer, and when the vehicle is at least three years old rather than seven years, as the current rule provides. The Superintendent considered those optional waivers and concluded that waiving the inspection requirement under those circumstances may present improper inducement and discrimination concerns, and could lead to increased instances of fraud. Other suggestions for optional waivers already were addressed in the Department’s amendments to the current rule.
The Superintendent also considered a suggestion that the rule no longer should require inspection reports to settle physical damage claims because to do so is counter-productive and would delay settlement. The Superintendent rejected this suggestion, concluding that using an inspection report in settling a physical damage claim is necessary to protect both the consumer and the insurer because the report confirms the condition of the insured’s automobile, thus deterring fraud, which in turn may lower insurance rates.
Stakeholders also recommended that the five-day inspection deferral period be expanded to 10-14 days. The Superintendent considered this alternative and agreed that a 10-day deferral period would give insureds at least one full weekend in which to comply with the inspection requirements. However, the Superintendent originally rejected any time longer than 10 days on the ground that a longer time could lead to increased incidence of fraud.
All interested parties who subsequently submitted comments to the proposed amendments regarding the Department’s increase in the deferral time period for inspections after the effective date of the policy supported that change, but continued to recommend that the deferral period be longer than 10 days to provide more flexibility to consumers trying to obtain inspections.
Although the Department was originally concerned that a deferral period longer than 10 days would lead to increased incidence of fraud, the Department has reconsidered that position.
Advancements in the use of technology mean that insurers now get almost instantaneous reports from car inspection sites, whereas it used to take several days to mail the reports. Because the reports get into the hands of the insurers sooner, there is no substantive difference between the 10 days plus mailing that the Department was considering as the period and 14 days with electronic reports.
Accordingly, the Department agrees with the commenters and will increase the deferral period to 14 days as some commenters suggested. Fourteen days will allow more time for consumers to obtain inspections without having an adverse impact on other anti-fraud measures in the regulation.
- Federal standards: None.
- Compliance schedule: There is no compliance requirement placed on insurers because changes made to the regulation are optional and insurers could maintain their existing procedures. Insurers that opt to adopt those optional changes would be able to do so as soon as they file revised Plans of Operation with the Department.
Revised Regulatory Flexibility Analysis
The Department of Financial Services (the “Department”) made a nonsubstantive change to section 67.3(b)(6) in order to add language to conform to other provisions in the regulation. In response to a public comment received, the Department also has made a non-substantive change to section 67.4(b) to change the deferral of inspection from 10 calendar days to 14 calendar days for reasons specified in the Revised Regulatory Impact Statement. The Department also made a non-substantive language change in section 67.5(a), and deleted “motorcycle” from Form A because a motorcycle is not a “private passenger automobile” under the regulation. Because these changes have no effect on the last published Regulatory Flexibility Analysis for Small Businesses and Local Governments, it is not necessary to revise the previously published Regulatory Flexibility Analysis for Small Businesses and Local Governments.
Revised Rural Area Flexibility Analysis
The Department of Financial Services (the “Department”) made a nonsubstantive change to section 67.3(b)(6) in order to add language to conform to other provisions in the regulation. In response to a public comment received, the Department also has made a non-substantive change to section 67.4(b) to change the deferral of inspection from 10 calendar days to 14 calendar days for reasons specified in the Revised Regulatory Impact Statement. The Department also made a non-substantive language change in section 67.5(a), and deleted “motorcycle” from Form A because a motorcycle is not a “private passenger automobile” under the regulation. Because these changes have no effect on the last published Rural Area Flexibility Analysis, it is not necessary to revise the previously published Rural Area Flexibility Analysis.
Revised Job Impact Statement
The Department of Financial Services (the “Department”) made a nonsubstantive change to section 67.3(b)(6) in order to add language to conform to other provisions in the regulation. In response to a public comment received, the Department also has made a non-substantive change to section 67.4(b) to change the deferral of inspection from 10 calendar days to 14 calendar days for reasons specified in the Revised Regulatory Impact Statement. The Department also made a non-substantive language change in section 67.5(a), and deleted “motorcycle” from Form A because a motorcycle is not a “private passenger automobile” under the regulation. Because these changes have no effect on the last published Job Impact Statement, it is not necessary to revise the previously published Job Impact Statement.
Initial Review of Rule
As a rule that requires a RFA, RAFA or JIS, this rule will be initially reviewed in the calendar year 2017, which is no later than the 3rd year after the year in which this rule is being adopted.
Assessment of Public Comment
The Department received comments from 11 interested parties in response to its publication of the proposed Fifth Amendment to 11 NYCRR 67 (Insurance Regulation 79) in the New York State Register.
The Department received comments from the following entities:
Property/casualty insurers;
Trade associations comprised of New York State automobile insurers;
An insurance agency;
Trade associations comprised of insurance agents in New York State
A member of the New York State Assembly; and
A motor vehicle inspection company. Summaries of the comments on the proposal and the Department’s responses thereto are as follows: General comments The motor vehicle inspection company strongly supports this proposed rule and asserts that pre-insurance physical damage inspections should remain mandatory because those inspections continue to serve as a valuable tool in combating systemic vehicle thefts by organized stolen car rings.
One insurance agent trade association supports the Department’s proposed changes to the regulation, and suggests additional changes for consideration.
However, insurers and another agent trade association generally do not support any statute or regulation establishing mandatory underwriting inspection requirements because of advances in technology to combat automobile insurance fraud and theft, and even question the need for the mandatory photo inspection of motor vehicles, contending that national databases such as CAR- FAX® and the National Insurance Crime Bureau store vehicle identification numbers and motor vehicle claims information that can be used to determine whether a motor vehicle to be insured actually exists and whether it has any previous physical damage. However, Insurance Law § 3411 requires that an insurer conduct an inspection of an automobile prior to issuing coverage for physical damage and Insurance Regulation 79 implements that statutory mandate. Moreover, the Department disagrees that there is no need for the mandatory inspection of motor vehicles; rather, the regulation is a necessary tool to aid in combating insurance fraud and abuse and organized automobile theft rings in the state. The Department recognizes, however, that in light of advances in technology to combat automobile physical damage insurance fraud, certain provisions of the current rule have become obsolete or unduly burdensome to insurers and insureds. The proposed rule modifies those provisions without compromising the proven effectiveness of photo inspections of motor vehicles in reducing fraud and abuse. Comments on specific parts of the proposed rule are discussed below.
RE: Proposed 11 NYCRR 67.1 (“Definitions”)
Comment
One insurer trade association recommended that the definition of “private passenger automobile” in § 67.1(a) be amended to exclude private passenger vehicles primarily used for commercial purposes or that are insured under commercial vehicle policies because fraud involving those vehicles is “highly uncommon.” Alternatively, the association recommended that all references to “private passenger” be removed from the regulation because the term implies that the rule may not apply to commercial vehicles. The association also asserted that applying the Vehicle and Traffic Law definition to “farm vehicle” may be confusing because insurers and agents may not be able to determine which vehicles fall within that definition, and suggested that “farm vehicle” should be defined as “a vehicle predominantly used for farm purposes.”
Department’s Response
The Department is not persuaded that there is an insignificant amount of fraud relating to vehicles insured under commercial vehicle policies, and the association has proffered no evidence that this is the case. The regulation uses the term “private passenger” automobile because that is the term used in § 3411. The Department also believes that the definitions of “private passenger” and “farm vehicle” in the regulation and the VTL are clear and unambiguous.
Comments
One insurer recommended that 11 NYCRR § 67.1(g) be clarified to address whether a licensed repair shop’s or an authorized representative’s visual inspection, along with photographs from an insured satisfy the inspection requirement for out-of-state vehicles. The insurer suggested waiving the inspection requirement for out-of-state vehicles or per- mitting only a visual inspection. The insurer also recommended that § 67.1(j) be amended to permit an insurer to manually repro- duce an inspection report rather than have to produce an exact copy of the report as the provision requires, because “systems limitations” may not permit the reproduction of exact copies. Another insurer suggested that the rule be clarified to not require insurers to use a particular motor vehicle inspection service, and that an insurer be permitted to designate an agent or staff member in the agent’s office to conduct inspections.
Department’s Responses
11 NYCRR § 67.1(g) was amended to eliminate the licensing or registration requirement for motor vehicle inspection companies because the Department performs no such licensing or registration. The proposed rule only requires that the individual or entity selected to perform motor vehicle inspections be “properly qualified” to do so, and does not require an insurer to use any particular motor vehicle inspection service. The Department is not persuaded by the insurer’s claim that it is more difficult to reproduce an exact copy of an inspection report, given today’s advances in technology, than it is to manually copy information from an inspection report.
Comment
One insurer asserted that this provision could have an adverse impact on consumers by delaying new coverage or amending existing coverage until a vehicle is inspected. According to the insurer, such a delay also could have “adverse consequences under the state’s “financial responsibility laws for those making a legitimate request for insurance,” and the insurer suggested that more waivers of the mandatory inspection requirement would minimize those consequences. The insurer also questioned whether this provision would adversely impact the practice that when a vehicle is added as a replacement for a covered vehicle or a new vehicle, coverage under an existing policy is extended for a brief period until a new policy is issued.
Department’s Response
The Department does not find the insurer’s comments compelling enough to warrant additional waivers of the mandatory inspection requirement. With respect to the “brief ” extension of coverage to a replacement or new vehicle to be added to an existing policy, § 67.4(i)(1) provides a limited exception to § 67.2 whereby an insurer may extend coverage to a replacement vehicle for five calendar days from the date the insured acquired the replacement vehicle. Lastly, since the inspection requirements do not impact liability insurance coverage, the Department does not understand how they could have adverse consequences under state financial responsibility laws.
Comment
One insurer trade association sought clarification regarding § 67.2 and its relationship to § 67.4(i)(1), particularly with respect to the notice that an insured is required to provide its insurer when it obtains a new vehicle, and regarding why § 67.4(i)(1) only applies to replacement vehicles and not additional vehicles.
Department’s Response
The proposed regulation is clear that the notice requirement in § 67.4 shall commence at the conclusion of the five-calendar-day period with regard to the limited exception. 11 NYCRR 67.4(i)(1) provides a limited exception to the mandatory inspection requirement set forth in § 67.2 when the named insured acquires an automobile that replaces an automobile currently insured on the policy and has yet to inform the insurer of the acquisition of the replacement vehicle. This limited exception exists in the current regulation and the only change being made is the duration of the automatic extension of coverage. The Department has approved policy form filings that provide such automatic extension of coverage to a replacement vehicle.
Comments
One insurer proffered several comments regarding this provision. The insurer recommended (1) that the waiver be applied to vehicles more than four years old rather than at least seven years old, as proposed in the rule; (2) that the current requirement that the age of the vehicle be calculated as the model year of the vehicle as of January 1 remain unchanged, rather than having the age be calculated as of the effective date of the coverage as the Department proposed, because that proposal would result in unduly burdensome costs to the insurer; (3) that the waiver be applied to six months of continuous coverage, just as in New Jersey, which has amended its waiver provision, rather than to two years as the Department proposed; (4) that the requirement that an insured must agree to the transfer of coverage in order to comply with the waiver be eliminated because this requirement is “unnecessary” to the inspection process; (5) that the two-year continuous coverage without a lapse requirement for the waiver be eliminated, or alternatively, that “without a lapse” be eliminated as unnecessary; (6) that the requirement that the inspection waiver be based on underwriting criteria be eliminated as unnecessary; (7) the elimination of the provision mandating that coverage not be suspended during the initial policy term because the insured failed to submit the requisite documents, and the requirement that if an insured fails to produce the documents prescribed in § 67.3, then the insured must have the vehicle inspected, because they would result in “programming” costs to insurers; (8) that the insurer requesting either a copy of the window sticker/advanced dealer shipping notice or a copy of the bill of sale should be sufficient rather than both as the rule requires; and (9) that the insured should be required to send a copy of the window sticker and bill of sale within a prescribed time rather than having until its anniversary coverage renewal date as the rule pro- posed because this proposal would result in “programming costs” to the insurer.
Department’s Responses
The Department does not find any of the insurer’s comments compelling. The Department believes that waiving the inspection requirement after two years of continuous coverage without a lapse is a reasonable compromise of the current four-year requirement to establish a trustworthy relationship between an insurer and its insured. The insurer has proffered no evidence that six months of coverage will result in a similar reduction in potential fraud. Also, New Jersey has a four-year continuous coverage requirement and not a shorter time period as the insurer stated. The inspection waiver being subject to underwriting criteria is necessary to ensure that insurers are fairly and consistently applying waivers of inspection to all their insureds. The Department believes it is necessary for the insurer to receive both the window sticker/advance dealer shipping notice and a copy of the bill of sale, because these documents contain different pertinent information. The rule as proposed provides a clear time frame for the insurer to obtain these required documents for applying the waiver of the inspection of a new automobile. If the documents are not received at least 60 days prior to the anniversary renewal, the insurer will need to require the mandatory inspection of the vehicle to continue the physical damage coverage upon renewal. Finally, the Department is not persuaded that any programming costs incurred to implement this provision would be unduly burdensome.
Comment
The vehicle inspection company stated that it did not oppose the proposed reduction from a four-year time period to a two-year time period that the insured must be continuously insured before an insurer can waive the inspection requirement, but recommended changing the time period to three years based on “feedback from law enforcement.”
Department’s Response
The Department believes that at least two years of continuous coverage is sufficient to provide additional flexibility to insurers to waive inspections when warranted while safeguarding against insurance fraud and abuse. The motor vehicle inspection company has not provided any empirical data or written statements from “law enforcement” that the Department’s proposal would have a deleterious effect.
Comment
One trade organization representing insurers recommended that the provision requiring consent from the insured before coverage is transferred should be eliminated because a named insured “does not commonly affirmatively consent” to the transfer, but is only advised by its agent of the transfer of coverage. One insurer also asserted that this provision should be eliminated because it is irrelevant to the inspection process.
Department’s Response
The Insurance Law does not permit any automatic transfers of motor vehicle insurance coverage to another insurer without issuance of an appropriate termination notice by the current insurer unless the policy has been replaced. A replacement policy may not be effected without some form of consent from the insured. This may be done affirmatively or presumptively with appropriate and timely notification provided to the insured but subject to the insured’s rejection of the move. The Department is not compelled to revise the current provision as it exists in the regulation.
Comments
The motor vehicle inspection company recommended that the rule should be amended to make payment of a physical damage claim dependent on whether the insurer obtained proof of the prior inspection from the previous insurer as required for specific optional waivers set forth in § 67.3(b) in order to minimize potential fraud. Insurers and their trade associations asserted that requiring inspections as a condition of renewal is largely unnecessary, would only increase costs and burden consumers, and would not deter fraudulent activity because an insured who intends to commit automobile insurance fraud likely would do so within the initial policy year. Therefore, they stated, these pro- visions should be deleted from the regulation.
Department’s Response
With respect to the motor vehicle inspection company’s recommendation, it is not appropriate for an insured to not receive payment of a valid physical damage claim solely due to a previous insurer not providing the inspection documents when the insured vehicle had actually been inspected as required by those specific optional waivers. Additionally, the Department does not find compelling the arguments of the insurers and their trade associations that inspections as a condition of renewal will not serve to deter fraud. Those commentators have proffered no evidence that fraudulent activity only occurs during the initial policy year, and the Department finds it implausible that no insured who intends to commit insurance fraud would attempt to do so during a renewal period.
Comment
An agent trade association expressed concerns with the requirement set forth in 11 NYCRR 67.3(b)(7), (8) and (10) that in order to waive the mandatory inspection requirement, a vehicle must be physically inspected by the previous insurer, particularly in the case where the vehicle is new or has not been sold or transferred.
Department’s Response
The Department will take under consideration the applicability of these waivers when the vehicle was originally new and the inspection was waived by the previous insurer pursuant to § 67.3(b)(2), but will not delay implementation of the proposed amendment at this time.
Comment
When the Department sought outreach comments prior to pro- posing the amendments, stakeholders recommended that the five- day inspection deferral period in 11 NYCRR 67.4(b) be expanded to 10-14 days. The Superintendent considered this alternative and agreed that a 10-day deferral period would give insureds at least one full weekend in which to comply with the inspection requirements. However, the Superintendent at that time rejected any time longer than 10 days on the ground that a longer time might lead to increased incidence of fraud. All interested parties who sub- mitted comments to the proposed amendments regarding the Department’s increase in the deferral time period for inspections after the effective date of the policy supported that change but continued to recommend that the deferral period be longer than 10 days to provide more flexibility to consumers trying to obtain inspections.
Department’s Response
Although the Department was originally concerned that a deferral period longer than 10 days would lead to increased incidence of fraud, the Department has reconsidered that position. Advancements in the use of technology mean that insurers now get almost instantaneous reports from car inspection sites, whereas it used to take several days to mail the reports. Because the reports get into the hands of the insurers sooner, there is no substantive difference between the 10 days plus mailing that the Department was considering as the period and 14 days with electronic reports. Accordingly, the Department agrees with the commenters and will increase the deferral period to 14 days as some commenters suggested. Fourteen days will allow more time for consumers to obtain inspections without having an adverse impact on other anti-fraud measures in the regulation.
Comment
Insurers and their trade associations recommended that the notification of mandatory inspection requirements prescribed in 11 NYCRR 67.4(f) et. seq. should be deleted as impractical and that an online transaction should serve as an insured’s consent to receive notice electronically.
Department’s Response
As the Department has expressed, pre-insurance automobile inspections are critical to thwarting insurance fraud and abuse. These notification of inspection provisions are necessary to ensure that consumers are made aware of the mandatory automobile inspections. The Department does not find it an undue burden, especially with advances in technology, for an insurer to maintain a record of the insurer’s representative who notified the insured in person or by telephone of the inspection requirement and possible inspection locations, or for an insurer to format its online database to ensure than an insured acknowledges the notice of mandatory inspection before completing its transaction.
Comment
One insurer suggested that § 67.5(a)(1) and (2) pertaining to inspection times and locations be deleted or waived because there may not be a facility convenient to an insured on a Sunday and there may be instances where an insured purchased a vehicle in a state with no inspection requirement or no location within 50 miles of the insured, and the insured may not return to New York State before the inspection deferral period expires.
Department’s Response
The Department is not persuaded by the insurer’s reasons for deleting or waiving those provisions. These provisions were amended to provide the widest possible latitude for insurers and consumers to comply with the inspection requirement prescribed in Insurance Law § 3411 and Insurance Regulation 79.
Comment
An insurer expressed concerns with the provision in § 67.5(e)(3) that requires an insurer to send a copy of the inspection report to the insured within seven calendar days of the inspection, if the person presenting the vehicle for inspection was not the insured.
Department’s Response
This amendment will ensure that the insured receives a copy of the inspection report, and the Department believes that such instances will be infrequent and that insurers will not incur any unduly burdensome costs to comply with this requirement.
Comment
One insurer questioned why § 67.6(a) was amended to state that the automobile should be made “available” rather than to explain how the inspection should be conducted as set forth in the current regulation.
Department’s Response
This amendment was made to address the concern that an insured should not be penalized for not complying with the mandatory inspection requirement because the inspection facility was unable to conduct the inspection at the time the vehicle was made available.
Comment
One insurer questioned the need to provide an insured with a Confirmation of Suspension of Physical Damage Coverage form for failing to comply with the mandatory inspection requirement because, when coverage is suspended, the insurer sends the insured an endorsement policy declaration page that shows removal of coverage.
Department’s Response
The prescribed Confirmation of Suspension of Physical Damage Coverage form is necessary to specifically notify an insured that coverage has been suspended for failure to comply with the mandatory inspection requirement. A policy declaration page does not specifically alert the insured of this suspension but simply informs the insured that the coverage is no longer part of the pol- icy, along with providing other information regarding the policy.
Comment
A trade association representing insurers recommended that § 67.8(c) be amended to include the use of a form substantially equivalent to the prescribed Automobile Insurance Inspection Report (Form A).
Department’s Response
Insurance Law § 3411(h) requires that the inspection be recorded on a form prescribed by the Superintendent, and that is Form A.
Comments
One insurer objected to the deletion of current § 67.9(d), which pertains to the New York mandatory automobile repairs endorsement for physical damage, because the insurer may require a completed Certification of Automobile Repairs.
Department’s Response
This provision was removed from Insurance Regulation 79 because it pertains to endorsements and is unrelated to mandatory inspection requirements. This provision may be found at 11 NYCRR 216.12 (Insurance Regulation 64).
Proposed 11 NYCRR 67.11 (“Inspection report central repository”)
Comments
An insurer asked whether there is any record-keeping requirement should an insurer elect to maintain inspection records in a central repository pursuant to 11 NYCRR 67.11. Another insurer sought clarification as to whether this provision precludes an insurer from maintaining an inspection in its own repository in addition to a central repository.
Department’s Responses
All inspection records, regardless of where maintained, are subject to the record retention requirements prescribed in § 67.5(e)(1) and 11 NYCRR 243 (Insurance Regulation 152), and the insurer is responsible for ensuring that the records are kept in accordance with such requirements. See 11 NYCRR 243.2(d). Nothing in the proposed rule, however, precludes an insurer from maintaining its inspection records in its own repository.
Proposed 11 NYCRR 67.12 (“Forms”)
Comments
One insurer suggested that the Insurance Inspection Report (NYS APD FORM A) be amended to include other accessories and optional equipment. Another insurer suggested removing “motor- cycle” from the Inspection Report since a motorcycle is not a “private passenger automobile” under the regulation.
Department’s Responses
Form A contains an “Other” section to include accessories and optional equipment that are not specified on the form. The Department agrees with the technical change to remove “motor- cycle” from Form A. The form has been amended to reflect that change.
