Insurers Handed Updated Disaster Response/Recovery Plan Requirements in New York

April 26, 2018

The New York Department of Financial Services (DFS) has issued updated disaster response and recovery plan requirements for all insurance companies licensed to conduct business in New York state.

It issued these updated requirements in light of disasters that may occur outside of New York, such as hurricanes, terrorist attacks or cybersecurity breaches, which could affect an insurer’s ability to serve New York consumers.

“When disaster strikes, as it did when Hurricanes Maria and Irma devastated Puerto Rico and the Virgin Islands last year, it is important for all insurers to be able to respond quickly and to be able to continue operations to ensure they can serve the increased needs of consumers resulting from the emergency, whether it’s a storm, a data breach or a terrorist attack,” said New York DFS Superintendent Maria Vullo in a press release.

DFS is directing all insurers to submit updated disaster response and recovery plans and responses to online questionnaires by June 29, 2018. It also directed property/casualty companies to file responses to a Pre-Disaster Data Survey by May 19, 2018. The updated guidance for property/casualty companies now additionally requires mortgage insurers and title insurers to file a disaster response plan and questionnaire by Sept. 28, 2018.

“Disaster response and business continuity plans should reflect the nature, scale and complexity of each insurer’s business, and these plans need to be updated at least annually,” Vullo added in the release.

Through the issuance of two updated circular letters, DFS advised insurers of their disaster-related obligations under New York’s Insurance Law. The first circular letter was directed to property/casualty insurers, including mortgage guaranty insurers, title insurers and captive insurers.

The second circular letter was directed to life insurers, as well as entities such as health insurers, fraternal benefit societies and employee welfare funds. The second circular letter was also updated to add student health plans, which are required to submit a disaster response plan and responses to the disaster response plan and business continuity questionnaires by Sept. 28, 2018.

In addition to filing a disaster response and recovery plan, insurers licensed in New York state are required to have a business continuity plan and regularly perform a business impact analysis to predict the consequences of disruption of a business function.

The guidance issued by DFS clarifies requirements for the business analysis. It should identify the operational and financial impacts resulting from the disruption of business functions and processes and include, at a minimum, the following:

The circular letters also outline what an insurer’s business continuity plan should include at a minimum, such as:

When a disaster occurs in New York, DFS provides the governor and the New York State Office of Emergency Management with critical information regarding the amount and extent of losses, damages, personal injuries and deaths resulting from the disaster. Based on this information, the governor determines whether and when to request a federal disaster declaration and how to prioritize the deployment of state assets.

Following a disaster, the DFS superintendent, in accordance with the nature and extent of the disaster, will activate the Department’s Insurance Emergency Operations Center (IEOC). The IEOC is staffed by insurance industry disaster liaisons and department representatives to coordinate disaster responses. Where possible, the superintendent will consult with the insurance industry before activating the IEOC.

Electronic templates for responses to the pre-disaster survey and disaster response plan and business continuity plan questionnaires, and instructions for their completion and submission, are available on the DFS website.

Source: New York Department of Financial Services

*This story appeared previously in our sister publication Insurance Journal.