Relates to an exemption for certain stock and non-stock insurance companies.
Law Section: Insurance Law
Law: Add S1326, Ins L
Co-sponsor(s): MARTINSCommittee: INSURANCE
Law Section: Insurance Law
Law: Add S1326, Ins L
- Jan 5, 2012: PRINT NUMBER 5808A
- Jan 5, 2012: AMEND AND RECOMMIT TO INSURANCE
- Jan 4, 2012: REFERRED TO INSURANCE
- Jan 4, 2012: returned to senate
- Jan 4, 2012: died in assembly
- Jun 20, 2011: referred to insurance
- Jun 20, 2011: DELIVERED TO ASSEMBLY
- Jun 20, 2011: PASSED SENATE
- Jun 20, 2011: ORDERED TO THIRD READING CAL.1415
- Jun 17, 2011: REFERRED TO RULES
VOTE: COMMITTEE VOTE: - Rules - Jun 20, 2011
VOTE: FLOOR VOTE: - Jun 20, 2011
Ayes (58): Adams, Addabbo, Alesi, Ball, Bonacic, Carlucci, DeFrancisco, Diaz, Dilan, Espaillat, Farley, Flanagan, Fuschillo, Gallivan, Gianaris, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Huntley, Johnson, Kennedy, Klein, Krueger, Kruger, Lanza, Larkin, LaValle, Libous, Little, Marcellino, Martins, Maziarz, McDonald, Montgomery, Nozzolio, O'Mara, Oppenheimer, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Saland, Sampson, Savino, Serrano, Seward, Skelos, Smith, Stavisky, Stewart-Cousin, Valesky, Young, Zeldin
Nays (4): Avella, Breslin, Duane, Squadron
BILL NUMBER:S5808A TITLE OF BILL: An act to amend the insurance law, in relation to exemption for certain stock and non-stock insurance companies; and providing for the repeal of such provisions upon expiration thereof SUMMARY OF PROVISIONS: Section one of the bill creates a new section 1326 of the insurance law to provide that medical malpractice insurance carriers responsible for covering the projected deficit of the Medical Malpractice Insurance Pool shall maintain reserves for such deficits of not less than twenty percent of their respective proportionate shares of such deficits, that obligations to pay on such deficits shall be for and in years in which obligations are actually due and owing, and that reserves held shall be increased by any percentage increase in the projected deficit of the Pool. Subsection (b) of new section 1326 of the insurance law provides for a mechanism whereby the superintendent can direct the increases in reserves for the Pool deficit when obligations actually become due and owing. Section two of the bill provides for an effective date. JUSTIFICATION: Medical malpractice carriers are currently mandated by accounting rules inconsistent with New York law to carry reserves for possible deficits of the Pool at one hundred percent of the projected shortfall. This not only creates unnecessary balance sheet hardships, it increases pressure on medical malpractice insurance rates. The deficits for which these reserves must be held have not materialized in over a decade, and are projected to not develop for many more years, if at all. They are based on long term actuarial estimates only. This bill would allow for balance sheet relief, less pressure on insurance rates and a safety mechanism whereby the superintendent can call for the refunding of reserve accounts to assure that reserves are adequate when they are actually needed to cover actual deficits. LEGISLATIVE HISTORY: New Bill. FISCAL IMPLICATIONS: None to State. EFFECTIVE DATE: This bill shall take effect December 31, 2012 and shall be considered in effect for purposes of companies' 2012 annual financial statements; provided however, that this section shall expire on December 31, 2016; provided further, that the superintendent shall evaluate the proper reserving level necessary for maintaining adequate security for the aggregate deficit of the association in light of loss development trends, actuarial projections of the financial condition of the association and other factors and report to the legislature on the findings of such evaluation no later than March 31, 2016.
S T A T E O F N E W Y O R K ________________________________________________________________________ 5808--A 2011-2012 Regular Sessions I N SENATE June 17, 2011 ___________ Introduced by Sens. DeFRANCISCO, MARTINS -- read twice and ordered printed, and when printed to be committed to the Committee on Rules -- recommitted to the Committee on Insurance in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the insurance law, in relation to exemption for certain stock and non-stock insurance companies; and providing for the repeal of such provisions upon expiration thereof THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS:
Section 1. The insurance law is amended by adding a new section 1326 to read as follows:
S 1326. STATUTORY ASSOCIATION MEMBERSHIP; OBLIGATIONS. (A) FOR THOSE STOCK AND NON-STOCK COMPANIES TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH TWO OF SUBSECTION (B) OF SECTION ONE THOUSAND THREE HUNDRED TWENTY-FOUR OF THIS ARTICLE APPLIES, NO LIABILITIES ARISING FROM THE OBLIGATIONS OF AN ASSOCIATION AUTHORIZED PURSUANT TO SUBPARAGRAPH (D) OF PARAGRAPH TWO OF SUBSECTION (C) OF SECTION FIVE THOUSAND FIVE HUNDRED TWO OF THIS CHAPTER SHALL BE DUE AND OWING FROM SUCH COMPANIES UNLESS AND UNTIL SUCH OBLI- GATIONS CAN BE SATISFIED, AFTER CONSIDERATION OF ALL RESOURCES OF THE ASSOCIATION, INCLUDING BUT NOT LIMITED TO CURRENT PREMIUM INCOME, BY A CONTRIBUTION FROM SUCH COMPANIES AND THE COMPANIES ARE NOTIFIED OF SAME BY SUCH ASSOCIATION NOT LESS THAN THREE HUNDRED SIXTY-FIVE DAYS PRIOR TO THE DATE UPON WHICH SUCH OBLIGATIONS SHALL BE DUE AND OWING, AND SHALL ONLY RELATE TO OBLIGATIONS OF THE ASSOCIATION THAT ARE ACTUALLY DUE AND OWING BY THE ASSOCIATION IN THAT YEAR IN WHICH CONTRIBUTION IS TO BE MADE BY THE COMPANIES. SUCH OBLIGATIONS SHALL NOT BE AGGREGATED FOR ANY OTHER YEAR EXCEPT THAT IN WHICH THE CONTRIBUTION IS DUE AND OWING OR PREVIOUS YEARS FOR WHICH CONTRIBUTIONS HAVE NOT BEEN SATISFIED; FURTHER, SUCH LIABILITIES AND THE CONTRIBUTIONS THEREFOR SHALL NOT INCLUDE ANY CONTINGENT LIABILITIES OF THE ASSOCIATION FOR THE YEAR FOR WHICH EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11724-06-1 S. 5808--A 2 CONTRIBUTIONS ARE REQUESTED; PROVIDED, HOWEVER, THAT COMPANIES SHALL MAINTAIN AT ALL TIMES A RESERVE OF NOT LESS THAN TWENTY PERCENT OF THEIR RESPECTIVE AND PROPORTIONATE LIABILITIES OF THE AGGREGATE DEFICIT OF THE ASSOCIATION, AS SUCH RESPECTIVE AND PROPORTIONATE LIABILITIES OF THE AGGREGATE DEFICIT ARE REPORTED BY THE ASSOCIATION CONSISTENT WITH THE PROVISIONS OF THIS SECTION; FURTHER, COMPANIES SHALL EACH YEAR INCREASE ITS MINIMUM RESERVE, ASSUMING IT IS LESS THAN ONE HUNDRED PERCENT OF THE RESPECTIVE AND PROPORTIONATE LIABILITY OF A COMPANY FOR THE AGGREGATE DEFICIT OF THE ASSOCIATION, BY THE PERCENTAGE INCREASE IN THE AGGREGATE DEFICIT OF THE ASSOCIATION FROM THE PREVIOUS YEAR. (B) THE SUPERINTENDENT SHALL, FOR A YEAR IN WHICH THE AGGREGATE DEFI- CIT OF THE ASSOCIATION IS REPORTED BY THE ASSOCIATION AS REQUIRING A CONTRIBUTION, INSTRUCT CONTRIBUTING COMPANIES TO INCREASE RESPECTIVE AND PROPORTIONATE RESERVES PROVIDED FOR IN SUBSECTION (A) OF THIS SECTION BY AN AMOUNT NOT LESS THAN TWENTY-FIVE PERCENT PER YEAR AND FOR EACH CONSECUTIVE YEAR THEREAFTER FOR EACH YEAR THAT A CONTRIBUTION IS NECES- SARY UNTIL SUCH TIME AS A COMPANY HAS REACHED A RESERVING LEVEL OF ONE HUNDRED PERCENT OF ITS RESPECTIVE AND PROPORTIONATE LIABILITIES FOR THE AGGREGATE DEFICIT OF THE ASSOCIATION; PROVIDED, HOWEVER, THAT COMPANIES MAY REDUCE ITS RESERVES THEREAFTER BY SUCH AMOUNT IN AND FOR THE SECOND CONSECUTIVE YEAR AND EACH YEAR THEREAFTER IN WHICH A CONTRIBUTION IS NOT REQUIRED TO THE MINIMUM RESERVE PROVIDED FOR IN SUBSECTION (A) OF THIS SECTION. S 2. This act shall take effect December 31, 2012 and shall be consid- ered in effect for the purposes of companies' 2012 annual financial statements; provided, however, that this section shall expire on Decem- ber 31, 2016; provided further, that the superintendent shall evaluate the proper reserving level necessary for maintaining adequate security for the aggregate deficit of the association in light of loss develop- ment trends, claims settlement trends, actuarial projections of the financial condition of the association and other factors and report to the legislature on the findings of such evaluation no later than March 31, 2016.