The Business Council opposes the provision in Section 16 of this legislation which would increase the maximum penalties for Insurance Law violations from $1,000 per offense to the greater of $10,000 per offense or twice the damages or economic gain attributable to the violation.
The memo in support of the Executive’s proposal does not explain nor justify any need for this significant increase in the penalty amount. As current law provides that each policy with a violation of the Insurance Law is a separate and distinct violation and for a company found to have incurred violations, the penalty amount can reach an exorbitant amount very quickly.
DFS is aggressive in issuing violations and fees against companies. However, increasing each penalty by ten times the current amount – an action that is in the sole discretion of the Superintendent of DFS – will have additional ramifications. In the short term it benefits the state coffers by boosting revenues, but ultimately will negatively impact businesses and consumers by driving up premiums.
This provision is unnecessary as an enforcement tool and as a revenue raiser, it is simply bad policy.
For these reasons The Business Council opposes this proposal, and urges its rejection by the Senate and the Assembly.