Relates to the incorporation of co-operative property/casualty insurance companies and to the keeping of records by such companies.
Ayes (54): Adams, Addabbo, Alesi, Avella, Ball, Bonacic, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Espaillat, Farley, Flanagan, Fuschillo, Gianaris, Golden, Griffo, Grisanti, Hassell-Thomps, Huntley, Johnson, Klein, Krueger, Lanza, Larkin, LaValle, Libous, Little, Marcellino, Martins, McDonald, Montgomery, Nozzolio, O'Mara, Oppenheimer, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Saland, Sampson, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Young, Zeldin
Nays (1): Duane
Excused (6): Gallivan, Hannon, Kennedy, Maziarz, Parker, Valesky
TITLE OF BILL: An act to amend the insurance law, in relation to incorporation of co-operative property/casualty insurance companies and the keeping of records by such companies
PURPOSE: Co-operative property/casualty insurance companies (co-ops) are exclusively domiciled here in New York. They write business that tends not to be offered by the larger national insurers and regional non-co-op insurance companies. This legislation is aimed at streamlining the corporate governing structure and operations of these co-ops to ensure that they continue to have the tools necessary to thrive and provide their unique insurance services in New York.
SUMMARY OF PROVISIONS: Section 1. Amends section 6603(a)(5)(E) and (F) of the insurance law to streamline the minimum number of directors required for a cooperative property/casualty insurance company's board of directors from nine to seven. In addition, this proposed amendment to the law would clarify that a majority of the directors must be citizens and residents of the United States and that not less than one director of the cooperative property/casualty insurance corporation shall be a New York resident.
Section 2. Amends section 6611(a)(4)(C) of the insurance law to reduce the number of officers of the company who are required to sign checks from two to one. In addition, eliminates the provision allowing the board to authorize, by resolution, non-officers to sign checks for miscellaneous expenses.
Section 3. Provides for an immediate effective date.
JUSTIFICATION: Cooperative insurance companies are the major insurance writers of coverage for farm owners, agricultural-related small businesses, seasonal businesses, small diners/taverns, as well as small contractors' liability insurance. Co-ops also provide employment for over 2,200 professional and clerical staff in New York State, with the vast bulk of these jobs spread throughout Upstate New York. In addition, New York cooperative insurance companies provide necessary property/casualty coverage to over 70,000 New York State small businesses.
Co-ops are required by current law to always maintain a minimum of nine directors. Given that Chapter 293 of 2009 modified the minimum number of directors required for New York domestic mutual property/casualty insurance companies who are not cooperatives from thirteen to seven, it only seems fair and equitable to permit the
much smaller cooperative companies to have the same number of directors. This reduction in the board size will help coops because many small co-ops are having difficulty attracting directors.
In order to provide parity in legal treatment between non-cooperative property/casualty insurance companies' board of directors and cooperatives' boards, this bill uses Chapter 293's residency requirements for non-cooperative insurers and applies them to the requirements for a cooperative director. More specifically, the legislation stipulates that a majority of a cooperative's directors must be United States citizens and residents with at least one of the directors being a New York State resident. The current law, which requires all directors to be residents of the co-op, can be problematic. The reality is that, as directors' age, many are moving to warmer climates on a part time basis, yet they are still desirous of serving as directors. Again, the problem of attracting and retaining a sufficient number of qualified, intelligent directors for these small co-ops is exacerbated by the current law's overly stringent residency requirement.
Insurance Law section 6611(a)(4)(C) stipulates that: "All checks issued shall be signed either by two officers or by one officer upon the written order of another officer, except as otherwise provided by resolution of the corporation's board of directors or in its by-laws for handling of miscellaneous expenses." This law has been problematic for coops because they cannot, even with small checks, authorize non-officers to sign checks unless they are for "miscellaneous expenses," Unfortunately, "miscellaneous expenses" has been interpreted very narrowly by the Insurance Department Therefore, this proposed amendment would help co-ops in their routine operations by alleviating this problem and requiring that all checks be signed by just one officer
LEGISLATIVE HISTORY: Passed Senate in 2011.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 2874--A 2011-2012 Regular Sessions IN SENATE February 2, 2011 ___________Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance -- 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 incorporation of co-operative property/casualty insurance companies and the keeping of records by such companies THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subparagraphs (E) and (F) of paragraph 5 of subsection (a) of section 6603 of the insurance law, subparagraph (E) as amended by chapter 114 of the laws of 1988 and subparagraph (F) as added by chapter 137 of the laws of 1986, are amended to read as follows: (E) The number of its directors, which shall be not less than
[nine]SEVEN, and a provision that in no case shall the number of directors be less than [nine]SEVEN. (F) The times and manner of electing its directors and officers, the manner of filling vacancies in such offices, and a provision that at all times a majority of the directors shall be citizens and residents of this state and that [all shall be residents]NOT LESS THAN ONE SHALL BE A RESIDENT within the territory in which the corporation is licensed to do business. S 2. Subparagraph (C) of paragraph 4 of subsection (a) of section 6611 of the insurance law, as added by chapter 137 of the laws of 1986, is amended to read as follows: (C) All checks issued shall be signed [either by two officers or]by one officer [upon the written order of another officer, except as other- wise provided by resolution of the corporation's board of directors or in its by-laws for handling of miscellaneous expenses]. S 3. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08796-03-2