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N.Y. to Fine Insurers for Lax Y2K Reporting

Regulators seek disclosure data

By Thomas Hoffman 07/12/99 The New York State Insurance Department said last week it plans to fine 44 insurance companies for failing to disclose pertinent information about their year 2000 projects.

While the agency is still determining how much each insurer will be penalized, the actions represent yet another attempt by regulators to crack down on the Y2K-readiness of the companies they monitor.

Last month, the U.S. Securities and Exchange Commission (SEC) announced that it's weighing a new rule that would require the brokerages it oversees to verify their Y2K-readiness by Oct. 15 or risk being shut down [News, June 28].

The SEC already requires public companies to report on their Y2K statuses in 10-K, 10-Q and other earnings reports.

New York requires insurers to follow SEC guidelines for disclosing Y2K project information. That information includes companies' overall state of readiness, their project costs, the business risks they face and what kind of contingency planning they have performed.

The New York agency hopes its actions will get insurers to step forward and disclose the statuses of their year 2000 projects to avoid penalties, said a department spokeswoman. The department previously issued warnings to 266 property, life and health insurers that failed to file Y2K plans as of April 1. The number of companies that weren't compliant then dropped to 44.

"I would expect most of the insurers will react positively and [disclose] this information," said Martin Sheffield, vice president of the property casualty rating division atA. M. Best Co., an Oldwick, N.J.-based insurance information and ratings provider.

-- Mike Lang (webflier@erols.com), July 12, 1999