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Significant New Disclosures and Obligations for Insurers and Defense Counsel

January 10, 2022

At the close of 2021, Governor Hochul signed into law the New York 2022 Comprehensive Insurance Disclosure Act. This law provides for significant amendments to the Civil Practice Law and Rules (C.P.L.R.) and will greatly impact insurance carriers as well as defense counsel moving forward. The new law mandates certain insurance disclosure requirements that may have detrimental effects on the defense industry by opening up the flood gates to more litigation and inflated demands on settlement. It also imposes burdensome requirements within a short period of time to disclose actual insurance policies and other lawsuits that affect or implicate coverage.

The amended CLPR 3101(f) addresses the scope of discovery and the insurance information that defendants are now required to disclose in regard to a claim. Previously, CPLR 3101(f) required defendants to disclose only the existence and contents of insurance policies available to satisfy the claim. The new provisions move the goal posts and place an affirmative duty on the defense to update information as well as increasing the type and amount of information that must be disclosed. This duty to disclose remains throughout the pendency of the litigation and for sixty days after the settlement or entry of a final judgment including appeals.

The revised version of discovery rule CLPR 3101(f) requires:

  • Defendants must provide all information relating to any insurance agreement within sixty days after an answer is served. This provision includes primary, excess and umbrella policies. Insurance applications must also be disclosed under the new provision.
  • The information provided must include the contents of the policies themselves as well as all declarations, agreements, conditions, exclusions, endorsements and any other relevant provisions including an application for insurance if applicable.
  • Any new information found during the litigation after the initial disclosure is made must be provided within thirty days of receipt. This duty extends for sixty days after settlement or entry of final judgment.
  • Contact information for claims adjusters including name, telephone number and email. This includes third party administrators.
  • Details regarding any other lawsuits or proceedings that have resulted or may result in the reduction of the funds available under the insurance policy.
  • If attorney’s fees have eroded the limits of the policy, the amount of fees and the name and address of any attorney who received payments under the policy must also be disclosed to the opposing party.
  • A new, continuing obligation on the part of carriers as well as defense counsel to continuously monitor and supplement any emerging or previously undisclosed relevant information.
  • All updates and shared information must be certified by affidavit or affirmation.

The stated purpose behind this new legislation was to curtail alleged “delay tactics” by insurers and their counsel by requiring them to disclose all primary, excess and umbrella policies relevant to the claim upfront at that start of the litigation. Proponents of the law claim that it reduces delays caused by parties having to compel the disclosure of insurance documents. Those in opposition argue that some provisions are unclear such as what penalties will be levied for noncompliance. This law went into effect on January 1, 2022 and also applies to all claims that are currently pending.

Important Takeaways for Insurers

  • Identify all applicable policies at first notice of the claim and procure complete copies of all policies.
  • Insurers should assess whether the new requirements have been satisfied as to pending claims and supplement with any missing information.
  • Provide notice of any other lawsuits that have eroded relevant policies. Provide notice of any pending lawsuits that have the potential to erode the policies.
  • Remain abreast of new or changing information concerning the policies and immediately inform defense counsel of any updates or changes.
  • Provide the name, telephone number and email addresses of all claims adjusters. This includes TPAs and persons within the insuring entity to whom the TPA is required to report. Continue to provide updated contact information to all parties throughout the litigation.

Important Takeaways for Defense Counsel

  • Defense attorneys must assess if any of their pending cases have missing information that needs to be updated or disclosed under the new law.
  • Defense attorneys must obtain two certifications to comply with the law when any disclosures are made: one from the insured and one from the attorney.
  • Attorneys have a continuing affirmative requirement to ensure that all information is updated and complete throughout the pendency of litigation and for sixty days following settlement or entry of final judgment.

This change in the law significantly alters the discovery requirements placed upon defendants and new steps will need to be taken by insurance carriers as well as defense counsel to ensure that parties are in full compliance. It is expected that an amended version of the law will be proposed seeking to increase the notification period to ninety days as well as eliminating the requirement to disclose insurance applications as well as other lawsuits affecting the policy. It remains to be seen what, if anything, will come of this possible proposed revision.

Please do not hesitate to reach out to a member of our team should you have questions or concerns about how to implement these new measures into your business practice.

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