New York Allows Premium Deferral for One Year; Louisiana Suspends Policy Cancellations

On March 27, two states at the center of the pandemic adopted emergency measures designed to assist insurance policyholders. New York’s action excusing late premiums does not provide any guidance for insurers on mitigating negative effects, such as on lapse assumptions or underwriting performance. Louisiana’s action suspending policy cancellations does allow some relief for carriers as summarized below.

• Governor Andrew M. Cuomo of New York announced that holders of insurance policies can defer premium payments for one year if they are experiencing financial hardship due to COVID-19. For life policies, the deferral applies to “consumers” for a 90-day period. For property-casualty policies (including “auto, homeowners, renters, workers’ comp, medical malpractice, livery and taxi”), the deferral applies to “consumers” and “small businesses” for a 60-day period. No late fees will be assessed, and no negative data will be reported to credit bureaus during this time, according to the announcement.
  
  
• Louisiana Insurance Commissioner James J. Donelon suspended cancellation, nonrenewal and non-reinstatement (other than for fraud or misrepresentation) of policies in force at 12:01 a.m. on March 12, 2020. Any property and casualty carrier may offset, against claims during this period, premiums due and unpaid. Health and accident claims related to a delinquent policy may be suspended during the moratorium until full payment of premium.