Relates to an exemption for certain stock and non-stock insurance companies.

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S5808A-2011 Actions

• 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

S5808A-2011 Votes

S5808A-2011 Memo

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.

S5808A-2011 Text

                      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.