Recently, the NYS Department of Financial Services informed representatives of the insurance industry that the Department will significantly step up enforcement of the requirement that carriers notify DMV of new auto insurance business (NBS) within seven days of the issuance of the policy. The DFS’s position can best be characterized as “zero tolerance” for late reporting.Big I NY, along with insurance carriers and their trade associations, have been regularly engaged with DMV and DFS regarding NBS compliance over the past several years. The DFS’s aggressive enforcement posture marks a significant development which will have impacts across New York’s auto insurance space.
At this stage, it is unclear what actions carriers will take and how independent agents and brokers will be affected. While the NBS reporting requirement applies solely to carriers, all parties in the insurance transaction (agents, brokers, dealers, carriers, etc.) have a role to play in ensuring notice is provided to DMV. We are currently working with members of the insurance industry to identify solutions to improving compliance.
Our principal objectives are to protect our members’ ability to provide their customers with the best and most responsive service, and ensure that independent agents are not unfairly disadvantaged with respect to captive and direct writers.
We will keep our members apprised of any developments in this emerging issue. In the immediate term, we recommend the following:
- Carefully review your agency’s practices and procedures to ensure that notice of new business is being provided to carriers with as little delay as possible.
- Check the binding authority requirements on your carrier contracts and make sure that your staff is aware of the requirements as well. It’s not uncommon to have the binding authority section stipulate that binding of coverage needs to be reported within a specific number of days.
- If an insured receives a notice from the DMV that there is a lapse in their insurance (through the IIES system), an agent can go into the DMV site and enter the insurance information on behalf of the insured. It’s simple (the agent only needs a copy of the notice received by the insured from the DMV) and the agent can use their own email address so that they get the confirming email as proof. What this does is to trigger the DMV-IIES to go back to the carrier that currently provides the coverage. This particularly helpful if the carrier is not being responsive to the issue.