New York acquires refunds for disability insurance policies
New York Governor Andrew Cuomo has announced that Zurich American, a leading insurance firm, will be providing refunds to disability insurance policyholders throughout the state. The refunds come due to Zurich running afoul of a state regulation that requires the insurer to pay no less than 60% of the premiums it collects on claims. Zurich was unable to meet this standard and will begin issuing refunds on disability insurance policies over the next month or so.
Refunds signify strong regulatory action
Governor Cuomo has noted the important of holding insurance companies accountable for their actions and claims that regulators are working to ensure that insurers are spending money on policyholders rather than executive paychecks. Cuomo claims that the refunds acquired from Zurich represent a victory in keeping insurance companies honest. According to state officials, Zurich will be issuing more than $4.56 million in disability insurance refunds, which will be received by approximately 73,000 people throughout the state.
Funds to be issued over coming month
Policyholders will not receive refunds in a monetary sense. Instead, the New York State Department of Financial Services will be issuing refunds as credit that will help cover the costs of disability insurance policies. The majority of the recipients of the refunds are small businesses, many of whom are likely to benefit well from lower costs for disability insurance. These refunds are expected to be rolled out over the coming month per an agreement reached with Zurich.
Zurich misses New York standard due to calculation error
Zurich was unable to meet the state’s standard because it has overestimated the amount of money it would be spending on claims associated with the disability insurance policies it offers. These policies were priced at a lower rate in order to compete in the New York market, but claims associated with these policies proved too costly for the insurer to manage, leading it to fall short of the state’s standard.