Permits insurers to make available multiple rating plans for private passenger motor vehicle insurance within the same company.
TITLE OF BILL: An act to amend the insurance law, in relation to permitting insurers to make available multiple rating plans for private passenger motor vehicle insurance within the same company
PURPOSE: To permit property/casualty insurers to make available multiple rating plans within the same company for personal lines insurance in the voluntary market.
SUMMARY OF PROVISIONS: Section 1: Adds Insurance Law Section 2352 to permit insurers to make available multiple rating plans within the same company for personal lines insurance in the voluntary market.
EXISTING LAW: Currently, insurance companies are prohibited from having more than one rating plan within the same company.
JUSTIFICATION: While insurance companies are prohibited from having more than one rating plan within the same company, in practice, this restriction only affects smaller, regional insurance companies that do business primarily in New York. Larger insurers, like those that operate on a national basis that want to offer multiple rating plans to their customers, simply establish a separate subsidiary or affiliate company that is set up for the primary purpose of offering the new rating plan. Since smaller insurers lack the financial resources to set up separate corporations each time they want to offer a new rating plan, they are placed at a competitive disadvantage by the prohibition.
To remain competitive, insurance companies need to be able to continually develop new rating plans that introduce different rating elements that allow them to better segment and price business.
Adding a new section to the insurance law that specifically authorizes multiple rating plans within the same company will level the playing field so that all insurers, not just large companies, can offer more than one rating plan to their customers. Each time a company develops a new plan, the plan would be provided only to new business customers, as is the current practice used when larger insurers establish a separate corporation to offer a new plan.
LEGISLATIVE HISTORY: New bill.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 2705 2011-2012 Regular Sessions IN SENATE January 28, 2011 ___________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 permitting insurers to make available multiple rating plans for private passenger motor vehi- cle insurance within the same company 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 2352 to read as follows: S 2352. MULTIPLE RATING PLANS. (A) AN INSURER MAY MAKE AVAILABLE MULTIPLE RATING PLANS WITHIN THE SAME COMPANY FOR PERSONAL LINES INSUR- ANCE IN THE VOLUNTARY MARKET, PROVIDED THAT EACH TIME A NEW RATING PLAN IS DEVELOPED, IT SHALL APPLY ONLY TO POLICIES ISSUED ON AND AFTER THE EFFECTIVE DATE OF THE NEW PLAN. (B) FOR PURPOSES OF THIS SECTION "PERSONAL LINES INSURANCE" SHALL MEAN PROPERTY/CASUALTY INSURANCE COVERAGE SOLD TO INDIVIDUALS AND FAMILIES FOR PRIMARILY NON-COMMERCIAL PURPOSES. S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08794-01-1