Insurers Decry N.Y. Spousal Coverage Law
By Daniel Hays
NU Online News Service, Sept. 26, 2:26 p.m. EST?Two insurance trade groups are voicing anger that New York Gov. George Pataki has signed into law a measure requiring insurers to offer coverage to married persons who are barred by statute from suing their spouses for injuries resulting from an auto accident.
The measure's sponsor reacted today by calling objections from the Independent Insurance Agents Association of New York, Inc. and the National Association of Independent Insurers "absurd." Both organizations complained that the new statute failed to address fraud.
"I am mystified that they would oppose this bill," commented Assemblywoman Helene E. Weinstein, D-Brooklyn.
She said the bill simply requires insurers "to notify individuals there is a spousal immunity law, and let them know they can purchase supplemental insurance."
Ms. Weinstein said if she had been able, she would have pushed legislation entirely eliminating New York's 65-year-old law that provides immunity from legal action by one's spouse.
The New York Law State Revision Commission had called for revision of the law, noting an appeals court recommendation to that effect.
According to the commission, "millions of married New Yorkers are unaware that their automobile liability insurance policy, while providing coverage for every other passenger or person injured in an accident caused by the driver's negligence, does not provide any coverage when the injured passenger is their spouse."
Michael Barrett, the lobbyist for the Syracuse, N.Y.-based agents group, said they objected to the fact that insurers were mandated to offer the coverage. His organization issued a statement that said the law was "inviting more deception to an auto insurance system already plagued by massive levels of fraud."
"With this law on the books, there will surely be more collusion among those seeking to scam the state's no-fault auto insurance system," said IIAANY Chairman John R. Costello.
Assemblywoman Weinstein said the existing law had resulted in tragic situations where severely injured spouses were limited to the basic coverage of the no-fault law. The notion that a person would severely injure or kill themselves "so they could sue [a spouse] is absurd," she said.
Insurers can take cases to trial where they believe fraud is an issue, she noted.
Gerald L. Zimmerman, senior counsel for the NAII in Des Plaines, Ill., called the new law "impractical." He said it requires insurers to notify policyholders by Jan. 1, 2003 of their new ability, and, "if insurers started mailing out offers today, they wouldn't be able to comply with the law."
The NAII said it is seeking a chapter amendment to the new law, which would give insurers more time in which to meet notification standards.
"At a time when the New York insurance market is awash in fraud and pricing problems, an irresponsible law like this is the last thing we need," Mr. Zimmerman complained. "We are very disappointed that Gov. Pataki did not recognize the serious harm this law could have on an already struggling insurance market."
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