Comprehensive Insurance Disclosure Act – S7052

Written as an amendment to New York Civil Practice Law & Rules section 3101(f) the Comprehensive Insurance Disclosure Act (S7052) requires defendants to produce specified insurance information to the plaintiff within 60 days of answering the complaint, and is retroactive in the sense it applies to pending cases in which an answer has already been filed. In those cases, defendants have until March 1, 2022. Among the required documents are copies of all policies – primary, excess, and umbrella – that may be invoked to satisfy all or part of a judgment; information concerning policy limits; information about previous matters that may have eroded those limits; the amount of attorneys’ fees that have been paid out in those matters and the contract information from attorneys who got them; and – in a provision particularly alarming to many defense attorneys – copies of the actual applications for the policies in question.

The new requirements appear to create numerous pitfalls that could lead to inadvertent disclosure of privileged claim-related information and confidential business information.

Prior to the amendment, CPLR 3101(f) provided only that “a party may obtain discovery of the existence and contents of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgement which may be entered in the action or to indemnify or reimburse for payment made to satisfy the judgement.” It further states “An application for insurance shall not be treated as part of an insurance agreement.”

The amendments to CPLR § 3101(f) are substantial sweeping, and, importantly, require the defendant (or third-party defendant, or cross-claim or counter-claim defendant) to produce the specified information to the plaintiff and any other party in the action within 60 days of answering the complaint, or, in pending cases in which an answer has already been filed, by March 1, 2022. This automatic disclosure requirement applies to, among other things:

• Complete copies of all primary, excess, and umbrella policies that may be liable to satisfy part of all of a judgment, including any issued by captive insurance entities, risk retention groups, reciprocal insurance exchanges, and syndicates;
• Applications for such policies;
• Contact information for the relevant claim adjuster(s) (including third-party administrators and insurance carrier personnel);
• Information concerning policy limits available to satisfy a judgment in the action and the erosion of those limits, including information about any lawsuits that have eroded, or may erode, limits; and
• The amount of any payment of attorneys’ fees that has eroded policy limits and the contact information of any attorney who received such payments.

Importantly, under CPLR § 3122-b, both the disclosing party and its attorneys must certify, i.e., submit a sworn affidavit, to the effect that the insurance information is accurate and complete, and there is an ongoing obligation to ensure that the disclosures remain so.

• The disclosures under the rule are still not automatically admissible in evidence.
• Further, the disclosures apply to all civil cases and are not limited to personal injury cases.

Proposed Amendments to the Comprehensive Insurance Act – B7882

Since signing the amendments into law, the Governor is asking the legislature to soften them -- extending the compliance deadline from 60 days to 90 days; deleting the requirement that insurance applications must be disclosed; and limiting the disclosure of policies to only those that relate to the claim being litigated.

Under New York Senate Bill 7882, introduced on January 18, 2022, the Insurance Disclosure Act would be amended as follows, to:

• Apply the Act’s rules to newly filed cases only (i.e., no retroactive effect on pending cases)
• Require compliance within 90 days of filing an Answer (instead of the 60-day rule)
• Require disclosure of only a copy of the policy or, if the Plaintiff is in agreement, only its Declaration Page
• Require disclosure of a full copy of all primary, excess and umbrella policies, but only “insofar as such documents relate to the claim being litigated”
• Require disclosure of the total amounts left in the policy(ies) after erosion
• Require disclosure of only the name and e-mail of an “assigned individual” and/or adjuster/TPA (phone number no longer needs to be disclosed)
• Require only a duty on the party to make “reasonable efforts” to ensure that the disclosure is accurate and complete, but requires updates to the information at the filing of the Note of Issue, before mediation or settlement conferences and at trial call
• Exempt automobile No-Fault and Personal Injury Protection (PIP) policies.

The proposed amendments remove the obligation to provide detailed information regarding prior lawsuits, claims and payments of attorneys’ fees that may have eroded the policy’s limits. Also, the application for insurance need not be disclosed.

New York Senate Bill 7882 is currently before the Senate Rules Committee. The Bill was placed on the third reading calendar on January 24, where it could remain indefinitely if no further action is taken. That appears unlikely. Once it is decided that a bill should move to the floor for a vote, it will appear on the Active List and will be voted on.

We will continue to keep you apprised of the status of the Senate vote and the progress of the bill and proposed amendments.

Proposed Strategy

We are working diligently to create appropriate templates for our carrier clients to utilize for these disclosures, which would address all of the required information and look forward to sharing them with you.