NY State Senate Bill 2015-S1759

Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2016	referred to insurance
Jan 14, 2015	referred to insurance

2015-S1759 (ACTIVE) - Details

See Assembly Version of this Bill:: A3107
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add Art 58 §§5801 - 5809, Ins L
Versions Introduced in 2013-2014 Legislative Session:: S3858, A5631

2015-S1759 (ACTIVE) - Summary

Relates to domestic excess line insurance companies.

2015-S1759 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S1759

TITLE OF BILL:  An act to amend the insurance law, in relation to
domestic excess line insurance companies

PURPOSE: The purpose of this legislation is to facilitate the
formation and operation of domestic line insurance companies within
New York State.

SUMMARY OF PROVISIONS: This bill amends insurance law by adding a new
article 58 to create domestic excess line insurance companies.
Specifically, the bill authorizes the superintendent to provide a
certificate of eligibility permitting domestic excess line insurers to
enter insurance transactions through excess line licensees, procuring
excess line insurance, provide independently procured insurance to the
extent permitted by law and conduct an excess line and/or surplus line
business in any other state which grants the insurer eligibility The
bill would allow a New York-domiciled insurer to be treated as
non-admitted in New York for the purposes of writing surplus lines
policies in New York. Further, the legislation defines a domestic
lines insurance company and provides that a domestic excess line
insurance company is deemed a non-admitted insurer for the purposes of
the Dodd Frank Wall Street Reform and Consumer Protection Act, Pub L.
No. 111-203.

EXISTING LAW: The insurance law currently does not provide for the

formation and operation of a domestic excess line insurance company
within New York State.

JUSTIFICATION: The excess line market is an important segment of New
York's insurance marketplace. The excess line market provides a source
of additional insurance capacity and an avenue for coverage in
situations involving hard-to-place risks that the licensed market
cannot or will not write. Historically, an insurance group would have
two surplus line insurers. The first would underwrite excess and
surplus business in 49 states, but could not do so in its state of
incorporation where it is licensed. This required a second surplus
line insurer to be incorporated in a different state, so it could
underwrite excess and surplus risk in the one other state where the
other insurer could not. Six states (Illinois, Arkansas, Delaware, New
Hampshire, New Jersey and Oklahoma) have enacted laws to permit an
insurance company to incorporate an insurer under their laws for the
purposes of underwriting excess and surplus line risks through excess
and surplus line brokers.

Under current law, excess line admitted carriers are not permitted to
write coverage on the New York portion of a multistate surplus line
policy. It then becomes necessary for such company to obtain that
portion of coverage from another insurer through a separate policy,
domiciled outside New York State, solely to write surplus lines
business in New York.

Further, insurer which underwrite an excess and surplus line
multistate risk under the excess and surplus line laws of the insurers
home state, but which has risk exposures in a state where the insurer
is licensed, have exposure that a court located where the insurer is
licensed will not apply the excess and surplus law, but may apply the


law relating to licensed insurers.  The bill if enacted would avoid
inconsistent court interpretations which occasionally apply the law,
which applies only to licensed insurers to a policy issued as an
excess line policy.

In enacting this legislation New York would maintain a competitive
edge and join the six other states which now authorize such
incorporations. Domestic excess line insurer legislation would create
operational cost savings and efficiencies for such insurers and permit
these insurers to operate exclusively as excess and surplus lines. In
addition to efficiencies, reductions in cost and better service for
policyholders, allowing a New York domestic insurer to offer surplus
lines coverage in all fifty states, including its state of domicile,
would spur economic growth in the New York marketplace by helping to
attract new businesses and jobs to New York and prevent the movement
of businesses and jobs away from New York.

LEGISLATIVE HISTORY: S 3858 of 2013-14; S 6808 of 2012

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: 120 days after it shall have become a law.

2015-S1759 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  1759

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            January 14, 2015
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to domestic  excess  line
  insurance companies

  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 article 58  to
read as follows:
                                ARTICLE 58
                DOMESTIC EXCESS LINE INSURANCE COMPANIES
SECTION 5801. PURPOSE AND APPLICABILITY OF ARTICLE.
        5802. DEFINITIONS.
        5803. ORGANIZATION AND APPROVAL.
        5804. TAXATION.
        5805. POLICY RATE AND FORMS.
        5806. APPLICABILITY OF OTHER INSURANCE LAWS.
        5807. EXEMPTIONS.
        5808. PRINCIPAL PLACE OF BUSINESS.
        5809. MANDATORY DISCLOSURE NOTICE.
  S  5801.  PURPOSE  AND  APPLICABILITY  OF ARTICLE. THE PURPOSE OF THIS
ARTICLE IS TO FACILITATE THE FORMATION AND OPERATION OF DOMESTIC  EXCESS
LINE  INSURANCE  COMPANIES  WITHIN  THE STATE OF NEW YORK WHICH SHALL BE
SUBJECT TO REGULATION AND OVERSIGHT, WITH RESPECT TO FINANCIAL SOLVENCY,
INVESTMENTS, CORPORATE GOVERNANCE, REPORTING AND DISCLOSURE, AS PROVIDED
FOR IN THIS ARTICLE.
  S 5802. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE,  THE  FOLLOWING
TERMS SHALL HAVE THE FOLLOWING MEANINGS:
  (A)  "CERTIFICATE  OF  ELIGIBILITY" MEANS A WRITTEN AUTHORIZATION FROM
THE SUPERINTENDENT PERMITTING A DOMESTIC EXCESS LINE  INSURANCE  COMPANY
TO:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04735-01-5

S. 1759                             2

  (1) ENTER INSURANCE TRANSACTIONS THROUGH EXCESS LINE LICENSEES PROCUR-
ING EXCESS LINE INSURANCE;
  (2)  SELL  INSURANCE  DIRECTLY  TO  INSUREDS WHO INDEPENDENTLY PROCURE
INSURANCE WHERE PERMITTED BY LAW BUT IN NO EVENT  TO  AN  INSURED  WHOSE
HOME  STATE  IS  NEW YORK FROM ANY OFFICE OF SUCH INSURER LOCATED IN NEW
YORK STATE; AND
  (3) CONDUCT AN EXCESS LINE AND/OR SURPLUS LINE BUSINESS IN  ANY  OTHER
STATE WHICH GRANTS THE INSURER ELIGIBILITY.
  (B) "DOMESTIC EXCESS LINE INSURANCE COMPANY" MEANS:
  (1)  AN  INSURER  ORGANIZED AND INCORPORATED IN NEW YORK AS AN INSURER
WHICH IS NOT AN AUTHORIZED INSURER AS DEFINED  IN  SECTION  ONE  HUNDRED
SEVEN  OF THIS CHAPTER BUT WHICH IS GRANTED A CERTIFICATE OF ELIGIBILITY
BY THE SUPERINTENDENT TO:
  (A) INSURE RISKS PLACED BY EXCESS  LINE  LICENSEES  OF  THE  KINDS  OF
INSURANCE  SET  FORTH  IN  SECTION TWO THOUSAND ONE HUNDRED FIVE OF THIS
CHAPTER;
  (B) SELL INSURANCE DIRECTLY  TO  INSUREDS  WHO  INDEPENDENTLY  PROCURE
INSURANCE  WHERE  PERMITTED  BY  LAW BUT IN NO EVENT TO AN INSURED WHOSE
HOME STATE IS NEW YORK FROM ANY OFFICE OF SUCH INSURER  LOCATED  IN  NEW
YORK STATE; AND
  (C) INSURE EXCESS LINE AND/OR SURPLUS LINE RISKS FOR ANY INSURED WHOSE
HOME STATE IS A STATE OTHER THAN NEW YORK PROVIDED THE INSURER IS ELIGI-
BLE TO WRITE SUCH RISKS IN SUCH STATE.
  (2)  A  DOMESTIC EXCESS LINE INSURANCE COMPANY IS DEEMED A NONADMITTED
INSURER FOR PURPOSES OF THE DODD FRANK WALL STREET REFORM  AND  CONSUMER
PROTECTION ACT, PUB. L. NO. 111-203.
  S  5803.  ORGANIZATION AND APPROVAL. (A) A DOMESTIC EXCESS LINE INSUR-
ANCE COMPANY MAY BE INCORPORATED AND ORGANIZED IN THE MANNER  SET  FORTH
IN SECTION ONE THOUSAND TWO HUNDRED ONE OF THIS CHAPTER, EXCEPT AS MODI-
FIED BY THE PROVISIONS OF THIS ARTICLE.
  (B) UPON INCORPORATION AND COMPLETION OF THE REQUIREMENTS OF ORGANIZA-
TION  UNDER  SECTION  ONE  THOUSAND  TWO  HUNDRED ONE AND SUBJECT TO ALL
PROVISIONS OF THIS ARTICLE, UNLESS THE SUPERINTENDENT,  UPON  A  WRITTEN
RECORD  DETERMINES  THAT  ANY  INCORPORATOR, DIRECTOR, OFFICER, PROPOSED
SHAREHOLDER OR  MEMBER  OF  THE  PROPOSED  HOLDING  COMPANY  SYSTEM,  IS
UNTRUSTWORTHY,  IN  A FINANCIALLY HAZARDOUS CONDITION OR OTHERWISE COULD
NOT QUALIFY TO OBTAIN A CERTIFICATE OF AUTHORITY IN NEW YORK, THE SUPER-
INTENDENT SHALL, WITHIN NINETY DAYS OF RECEIPT OF A CERTIFIED COPY OF  A
RESOLUTION  ADOPTED BY THE BOARD OF DIRECTORS DECLARING THAT THE INSURER
INTENDS TO ACT AS A DOMESTIC EXCESS  LINE  INSURANCE  COMPANY,  ISSUE  A
CERTIFICATE OF ELIGIBILITY.
  (C)  EVERY  DOMESTIC EXCESS LINE INSURANCE COMPANY MUST HAVE AND MAIN-
TAIN PRIOR TO ISSUANCE OF A CERTIFICATE OF ELIGIBILITY AND AT ALL  TIMES
THEREAFTER  A  MINIMUM CAPITAL AND PAID IN SURPLUS IN AN AMOUNT EQUAL TO
OR EXCEEDING THE GREATER OF FORTY-FIVE MILLION DOLLARS  OR  THE  MINIMUM
AMOUNT  REQUIRED  BY  NEW YORK FOR FOREIGN AND ALIEN INSURER EXCESS LINE
ELIGIBILITY AS SET FORTH IN A REGULATION PROMULGATED BY THE  SUPERINTEN-
DENT.
  (D)  TRANSACTIONS  UNDER  THIS  ARTICLE  SHALL NOT CONSTITUTE DOING AN
INSURANCE BUSINESS WITHOUT A LICENSE IN VIOLATION OF SUBSECTION  (A)  OF
SECTION ONE THOUSAND ONE HUNDRED TWO OF THIS CHAPTER.
  (E)  UPON  ISSUANCE  OF A CERTIFICATE OF ELIGIBILITY THE DIRECTORS AND
INCORPORATORS SHALL HAVE NO FURTHER LIABILITY FOR THE DEBTS AND  LIABIL-
ITIES OF THE INSURER.
  S  5804. TAXATION.   (A) THE TAX SET FORTH IN SECTION TWO THOUSAND ONE
HUNDRED EIGHTEEN OF THIS CHAPTER  SHALL  APPLY  TO  THE  GROSS  PREMIUMS

S. 1759                             3

CHARGED  LESS  THE  AMOUNT OF PREMIUM RETURNED TO SUCH INSUREDS ON EVERY
POLICY PROCURED BY AN EXCESS LINE LICENSEE WHEN NEW  YORK  IS  THE  HOME
STATE  OF THE INSURED. IT IS THE DUTY OF THE EXCESS LINE LICENSEE TO PAY
SUCH TAX.
  (B)  EVERY DOMESTIC EXCESS LINE INSURANCE COMPANY IS EXEMPT FROM ARTI-
CLE NINETY-ONE OF THIS CHAPTER, SECTION TWO HUNDRED SIX OF THE FINANCIAL
SERVICES LAW EXCEPT SUBSECTION (F) OF SUCH SECTION, AND  ARTICLES  NINE,
NINE-A AND THIRTY-THREE OF THE TAX LAW.
  S  5805.  POLICY RATE AND FORMS. DOMESTIC EXCESS LINE INSURANCE COMPA-
NIES ARE EXEMPT FROM ARTICLE TWENTY-THREE OF THIS CHAPTER AND SHALL  NOT
BE  REQUIRED  TO  FILE NOR SEEK APPROVAL FOR ANY FORM, CONTRACT OR OTHER
DOCUMENT WHICH EXPRESSES COVERAGE TERMS AND CONDITIONS.
  S 5806. APPLICABILITY OF OTHER INSURANCE LAWS. (A) EXCEPT AS  MODIFIED
BY  THE PROVISIONS OF THIS ARTICLE DOMESTIC EXCESS LINE INSURANCE COMPA-
NIES ARE SUBJECT TO THE PROVISIONS OF:
  (1) ARTICLE ONE OF THIS CHAPTER. GENERAL PROVISIONS.
  (2) ARTICLE TWO OF THIS CHAPTER. ORGANIZATION  OF  THE  DEPARTMENT  OF
FINANCIAL SERVICES.
  (3)  ARTICLE  THREE  OF  THIS  CHAPTER.  ADMINISTRATIVE AND PROCEDURAL
PROVISIONS.
  (4) ARTICLE FOUR OF THIS CHAPTER. INSURANCE FRAUDS PREVENTION.
  (5) ARTICLE ELEVEN OF THIS CHAPTER. LICENSING OF INSURERS.
  (6) ARTICLE TWELVE OF THIS CHAPTER. ORGANIZATION AND CORPORATE  PROCE-
DURE.
  (7) ARTICLE THIRTEEN OF THIS CHAPTER. ASSETS AND DEPOSITS.
  (8) ARTICLE FOURTEEN OF THIS CHAPTER. INVESTMENTS.
  (9) ARTICLE FIFTEEN OF THIS CHAPTER. HOLDING COMPANIES.
  (10)  ARTICLE  SIXTEEN  OF  THIS  CHAPTER.  SUBSIDIARIES  OF  DOMESTIC
PROPERTY/CASUALTY INSURANCE COMPANIES AND CERTAIN OTHER ENTITIES.
  (11) ARTICLE SEVENTY-ONE OF THIS CHAPTER. MERGER, CONSOLIDATION, REDO-
MESTICATION, ACQUISITION OF ASSETS AND ACQUISITION OF CERTAIN SHARES  OF
INSURERS.
  (12)  ARTICLE  SEVENTY-FOUR  OF  THIS  CHAPTER. REHABILITATION, LIQUI-
DATION, CONSERVATION AND DISSOLUTION OF INSURERS.
  (B) NOTWITHSTANDING SUBSECTION (A) OF THIS SECTION:
  (1) NO LICENSE TO ACT AS AN AUTHORIZED INSURER  IS  REQUIRED  FOR  ANY
INSURER TO WHICH A CERTIFICATE OF ELIGIBILITY HAS BEEN ISSUED.
  (2)  SECTION  ONE  THOUSAND TWO HUNDRED THIRTEEN OF THIS CHAPTER SHALL
NOT APPLY TO DOMESTIC EXCESS LINE INSURERS.
  (C) EXCEPT AS MODIFIED BY THIS ARTICLE, DOMESTIC EXCESS LINE  INSURERS
ARE SUBJECT TO EACH PROVISION OF THIS CHAPTER WHICH:
  (1)  APPLY  BROADLY  TO  INSURANCE POLICIES ISSUED OR DELIVERED IN NEW
YORK AND NOT EXCLUSIVELY TO AUTHORIZED INSURERS; OR
  (2) EXPRESSLY APPLY TO OR EXEMPT EXCESS  LINE  INSURANCE  POLICIES  OR
COVERAGE PROVIDED, IN SUCH POLICIES; AND
  (3) ARE SET FORTH IN ANY OF THE FOLLOWING:
  (A)  ARTICLE  TWENTY-ONE  OF THIS CHAPTER. AGENTS, BROKERS, ADJUSTERS,
CONSULTANTS AND INTERMEDIARIES.
  (B) ARTICLE TWENTY-FOUR OF THIS CHAPTER. UNFAIR METHODS OF COMPETITION
AND UNFAIR AND DECEPTIVE ACTS AND PRACTICES.
  (C)  ARTICLE  TWENTY-FIVE  OF  THIS  CHAPTER.   PROHIBITIONS   AGAINST
CONTROLLED BUSINESS.
  (D)  ARTICLE TWENTY-SIX OF THIS CHAPTER. UNFAIR CLAIM SETTLEMENT PRAC-
TICES; OTHER MISCONDUCT; DISCRIMINATION.
  (E) ARTICLE TWENTY-SEVEN OF THIS CHAPTER. HOLOCAUST VICTIMS  INSURANCE
ACT OF 1998.

S. 1759                             4

  (F)     ARTICLE     THIRTY-FOUR    OF    THIS    CHAPTER.    INSURANCE
CONTRACTS-PROPERTY/CASUALTY.
  (G)  ARTICLE  FORTY-ONE  OF  THIS CHAPTER. PROPERTY/CASUALTY INSURANCE
COMPANIES.
  (H) ARTICLE SEVENTY-FOUR OF THIS CHAPTER. REHABILITATION, LIQUIDATION,
CONSERVATION AND DISSOLUTION OF INSURERS.
  (D) NOTWITHSTANDING SUBSECTION (C) OF THIS SECTION, SECTION FOUR THOU-
SAND ONE HUNDRED THREE OF THIS  CHAPTER  SHALL  NOT  APPLY  TO  DOMESTIC
EXCESS LINE INSURANCE COMPANIES.
  S  5807.  EXEMPTIONS.  DOMESTIC  EXCESS  LINE  INSURANCE COMPANIES ARE
EXEMPT FROM THE PROVISIONS OF:
  (A) ARTICLE FIFTY-TWO OF THIS CHAPTER. MOTOR VEHICLE ACCIDENT INDEMNI-
FICATION CORPORATION.
  (B) ARTICLE FIFTY-THREE  OF  THIS  CHAPTER.  MOTOR  VEHICLE  INSURANCE
ASSIGNED RISK PLANS.
  (C)  ARTICLE  FIFTY-FOUR  OF THIS CHAPTER. NEW YORK PROPERTY INSURANCE
UNDERWRITING ASSOCIATION.
  (D) ARTICLE FIFTY-FIVE OF THIS CHAPTER. MEDICAL MALPRACTICE  INSURANCE
ASSOCIATION.
  (E)  ARTICLE  SEVENTY-SIX  OF THIS CHAPTER. PROPERTY/CASUALTY SECURITY
FUNDS.
  S 5808. PRINCIPAL PLACE OF BUSINESS. A DOMESTIC  EXCESS  LINE  INSURER
SHALL  MAINTAIN  ITS PRINCIPAL PLACE OF BUSINESS WITHIN THE STATE OF NEW
YORK.
  S 5809. MANDATORY DISCLOSURE  NOTICE.  THE  SUPERINTENDENT  SHALL,  BY
REGULATION,  REQUIRE  EVERY  POLICY  AND/OR  BINDER ISSUED BY A DOMESTIC
EXCESS LINE INSURANCE COMPANY TO BEAR  SPECIFIC  LANGUAGE  CONSPICUOUSLY
DISPLAYED, WHICH ADVISES THE INSURED THAT THE INSURER IS NOT LICENSED BY
THE  STATE  OF  NEW YORK, THAT IN THE EVENT OF INSOLVENCY OF THE INSURER
PROTECTIONS PROVIDED BY THE NEW YORK STATE SECURITY FUNDS DO  NOT  APPLY
AND  THAT  THE  POLICY  MAY  NOT  BE  SUBJECT  TO ALL OF THE REGULATIONS
PERTAINING TO POLICY FORMS.
  S 2. This act shall take effect on the one hundred twentieth day after
it shall have become a law. Effective immediately, the addition,  amend-
ment and/or repeal of any rule or regulation necessary for the implemen-
tation  of this act on its effective date is authorized to be made on or
before such date.

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Senate Bill S1759

Sponsored By

Archive: Last Bill Status - In Senate Committee Insurance Committee

2015-S1759 (ACTIVE) - Details

2015-S1759 (ACTIVE) - Summary

2015-S1759 (ACTIVE) - Sponsor Memo

2015-S1759 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S1759

Share this bill

Sponsored By

James L. Seward

Archive: Last Bill Status - In Senate Committee Insurance Committee

2015-S1759 (ACTIVE) - Details

2015-S1759 (ACTIVE) - Summary

2015-S1759 (ACTIVE) - Sponsor Memo

2015-S1759 (ACTIVE) - Bill Text download pdf

Comments