Assembly approves bill to standardize insurance-policy terms, tasks DFS with definitions

The New York State Assembly on the floor passed A1572, a bill that would amend sections 3425 and 3426 of the insurance law to require the Department of Financial Services to promulgate standardized definitions for commonly used terms in homeowners and commercial property policies. Sponsor Assemblymember Weprin said the measure grew from hearings after Superstorm Sandy and is aimed at reducing consumer confusion.

"People are often confused by what is in their homeowners and commercial policies in part because different policies define the same terms and phrases differently," Assemblymember Weprin said, arguing that clearer, standardized language will help policyholders understand coverage. He added that the bill allows alternative definitions "as long as such definitions are just as favorable to the policyholder as determined by the superintendent."

Opponents warned the change hands significant authority to the Department of Financial Services and could unsettle longstanding judicial precedent. "We're delegating an awful lot of what should be legislative authority to them," said Assemblymember Rah, who questioned whether DFS would effectively become a drafter for contracts. Assemblymember Blankenbush, drawing on decades in the insurance industry, said standardization risks making commercial coverage less flexible and could push some businesses to self-insure or purchase coverage outside New York.

The Assembly recorded the final vote as Ayes 103, Noes 46; the clerk announced the bill as passed. The sponsor said the DFS rulemaking process will include public comment periods to address concerns raised during debate.