On December 31, 2021, New York Gov. Kathy Hochul executed the Comprehensive Insurance Disclosure Act making it law in the State of New York. The Comprehensive Insurance Disclosure Act amended the Civil Practice Law and Rules (CPLR) Section 3101 (F) and added CPLR Section 3122-B. This Act is far-reaching and imposes significant burdens on insurers and third-party administrators that do business in the State of New York.
Pursuant to the amendments to the CPLR, which became effective on January 1, 2022, any defendant, third-party defendant, or defendant on a cross or counterclaim, must disclose within 60 days after serving an answer the existence and contents of any insurance agreement under which an insurer may be liable for all or part of a judgment. However, the new law goes much further than it would appear on its face.
Specifically, the new law requires that the defendants provide the following:
- Complete copies of all potentially applicable primary, umbrella and excess insurance agreements;
- Insurance applications;
- Impairment or insurance exhaustion information under the policies, which includes, but is not limited to, the identification of all other litigations, whether or not resolved, by caption name, court and index no. that may call upon the policy or policies to pay judgment, along with any other settlements, judgments and/or claims that have been paid from the policy and/policies identified, as well as all erosion of policy limits for any other reason, inclusive of defense/claim investigation costs; and
- Complete contact information including name, address, telephone number, and email address for all persons responsible for adjusting the claim, including any third party administrators, and the person within the insuring entity to whom the third party administrator reports.
Additionally, the legislature added a new CPLR Statute, Section 3122-B, which requires the above disclosures be accompanied by a certification of the defendant, third-party defendant, defendant on a cross-claim or counterclaim, or by an attorney appearing for that party sworn in either an affidavit or affirmation form stating that the information contained in that disclosure is accurate and complete and that reasonable efforts have been undertaken to ensure that the information remains accurate and complete.
The act has taken effect immediately, and all pending current litigation defendants are required to provide this information on or before March 1, 2022. For any new actions commenced, the original 60-day requirement exists. Further, the act imposes a continuing obligation on defendants and their insurers to provide updated information to the plaintiffs within 30 days of any change in status of the insurance policy or the available limits, including excess and umbrella policies. This obligation also continues through 60 days post settlement of the claim.
GRSLBG&B recommends that prompt, affirmative steps must be taken by insurance carriers, third-party administrators, defense counsel, insurance brokers, risk managers, et al., to ensure immediate compliance with the Act. We view the following as three key, preliminary actions that should be taken to assist with developing Best Practices procedures to ensure compliance:
First, moving forward, this critically relevant insurance disclosure information should start being compiled as soon as a claim is reported and maintained in a centralized “Insurance Disclosure Database” which can be added to by authorized users as new information becomes available. Maintaining an organized, thorough and concise database of relevant information at the outset will allow for easier dissemination of same to claims teams, defense counsel, and all other interested parties to the litigation. To that end, to ensure compliance with the statutory obligations, we recommend that upon the assignment of a matter to defense counsel, that insurance carriers, and third-party administrators include with its assignment package the requisite information necessary for the disclosure, including complete copies of all primary, excess and umbrella policies, and endorsements. Additionally, upon assignment the requisite information about any other claims/lawsuits pending against that insured that will impact the policy at issue should be provided.
Second, it is our belief and recommendation that with every disclosure there should be included language that the “disclosing party does not and cannot warrant or assure that any of the insurance coverage contained within the policies provided is or will be available to the insureds to satisfy judgment that may be rendered in the pending actions as a result of insurance coverage positions which have been, are, or may be maintained by the insurance companies that issued the policies in question”. Our reason for the proposed disclaimer is, as part of the defense counsel’s duty and obligation to the insured, is that despite the tripartite relationship, the insured defendant cannot control the actions of the insurance carrier or the third-party administrator in its decisions to exercise any potential coverage defenses that they may have.
Lastly, in connection with current litigation, creating a centralized “Insurance Disclosure Database” is equally as critical as for newly reported claims. With a looming March 1st deadline for compliance on all open, pending litigation matters, insurance carriers, third-party administrators, insurance brokers, risk managers, et al. should be conducting an immediate survey of the pending claims and compiling critically important insurance disclosure information to be provided to defense counsel as soon as possible to ensure compliance with the Act.
From a practical standpoint, the Act is overreaching and onerous, and compliance will be a difficult undertaking for those required to satisfy its requirements. We anticipate that there will be further discussion by the Legislature as the apparent pitfalls begin to present themselves, and we will continue to monitor the legislation for possible amendments. Notwithstanding, this is currently the Law of the State, and best efforts must be put forth to comply with same. GRSLBG&B is committed to answering any questions you may have about the new Statute and assisting you implement Best Practice procedures to comply with the new Law.
 Eric S. Schlesinger, Esq. is a Shareholder in GRSLBG&B’s Litigation Department. He defends wide variety of clients in the Courts in New York and New Jersey State and Federal Courts. In addition to his general liability practice, he handles appeals in both States. Eric can be reached at ESchlesinger@grsl.com
 Russ M. Patane, Esq. is a Shareholder in GRSLBG&B’s Litigation Department. He defends a wide variety of clients in various civil actions brought forth in New Jersey State and New York State and Federal Courts. Russ can be reached at RPatane@grsl.com.