Bill S5440-2011

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

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

Details

Actions

  • Jan 9, 2012: RECOMMIT, ENACTING CLAUSE STRICKEN
  • Jan 4, 2012: REFERRED TO INSURANCE
  • Jun 24, 2011: COMMITTED TO RULES
  • Jun 13, 2011: ADVANCED TO THIRD READING
  • Jun 7, 2011: 2ND REPORT CAL.
  • Jun 6, 2011: 1ST REPORT CAL.1024
  • May 23, 2011: REFERRED TO INSURANCE

Votes

VOTE: COMMITTEE VOTE: - Insurance - Jun 6, 2011
Ayes (8): Flanagan, Grisanti, Lanza, Larkin, Martins, Young, Diaz, Kennedy
Ayes W/R (6): Seward, Golden, LaValle, Saland, Kruger, Peralta
Nays (3): Breslin, Espaillat, Smith
Absent (1): Parker

Memo

BILL NUMBER:S5440

TITLE OF BILL: An act to amend the insurance law, in relation to exemption for certain stock and non-stock insurance companies

PURPOSE OR GENERAL IDEA OF BILL: This bill will positively affect the balance sheets of all medical malpractice carriers in the state and prevent the unregulated Risk Retention Groups from using the pool obligation as a competitive argument against the state carriers.

SUMMARY OF SPECIFIC PROVISIONS: Section one of the bill adds a new section 1326 to the Insurance Law to allow carriers to limit the application of contingent liabilities to the financial statements of medical malpractice insurers.

JUSTIFICATION: Medical malpractice insurance is a unique business in New York. The vast majority of the state's medical malpractice insurance capacity is provided by admitted, single-state, mono-line insurance. carriers, most of which are mutuals or reciprocal insurers that are owned or controlled by physicians which provide medical malpractice coverage to physicians. However, in addition to financial challenges, these insurers, admitted in New York State, have been confronted with mounting competition from Federally sanctioned out-of-state Risk Retention Groups which are less-regulated than New York admitted carriers. These Risk Retention groups may be able to provide cheaper medical malpractice coverage in the short term, but may not have the financial wherewithal to pay claims over the long term.

This bill changes the way carriers have to ledger the obligations of the Medical Malpractice Insurance Pool as liabilities to the carriers, removing gross (aggregated) liabilities in favor of posting obligations only within a year of when they become due. Carriers will be required to maintain a reserve of not less than 10% of their respective and proportionate liabilities of the pool. ALL carriers will see an immediate benefit to surplus as a result, thus improving the balance sheet and the annual statement to be filed in March.

This bill modernizes the Insurance Law as it relates to medical malpractice insurance. It recognizes the unique place that medical malpractice insurance holds in the provision of health care in New York.

PURPOSE OR GENERAL IDEA OF BILL: This bill will positively affect the balance sheets of all medical malpractice carriers in the state and prevent the unregulated Risk Retention Groups from using the pool obligation as a competitive argument against the state carriers.

SUMMARY OF SPECIFIC PROVISIONS: Section one of the bill adds a new section 1326 to the Insurance Law to allow carriers to limit the application of contingent liabilities to the financial statements of medical malpractice insurers.

JUSTIFICATION: Medical malpractice insurance is a unique business in New York. The vast majority of the state's medical malpractice insurance capacity is provided by admitted, single-state, mono-line insurance. carriers, most of which are mutuals or reciprocal insurers that are owned or controlled by physicians which provide medical malpractice coverage to physicians. However, in addition to financial challenges, these insurers, admitted in New York State, have been confronted with mounting competition from Federally sanctioned out-of-state Risk Retention Groups which are less-regulated than New York admitted carriers. These Risk Retention groups may be able to provide cheaper medical malpractice coverage in the short term, but may not have the financial wherewithal to pay claims over the long term.

This bill changes the way carriers have to ledger the obligations of the Medical Malpractice Insurance Pool as liabilities to the carriers, removing gross (aggregated) liabilities in favor of posting obligations only within a year of when they become due. Carriers will be required to maintain a reserve of not less than 10% of their respective and proportionate liabilities of the pool. ALL carriers will see an immediate benefit to surplus as a result, thus improving the balance sheet and the annual statement to be filed in March.

This bill modernizes the Insurance Law as it relates to medical malpractice insurance. It recognizes the unique place that medical malpractice insurance holds in the provision of health care in New York.

PRIOR LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ 5440 2011-2012 Regular Sessions IN SENATE May 23, 2011 ___________
Introduced by Sen. DeFRANCISCO -- 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 exemption for certain stock and non-stock 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 section 1326 to read as follows: S 1326. STATUTORY ASSOCIATION MEMBERSHIP; OBLIGATIONS. 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 ASSO- CIATION 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 ONLY 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 ACTUAL- LY 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 CONTRIBUTION IS DUE AND OWING OR PREVIOUS YEARS IN 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 CONTRIBUTIONS ARE REQUESTED; PROVIDED, HOWEVER, THAT COMPANIES SHALL MAINTAIN AT ALL TIMES A RESERVE OF NOT LESS THAN TEN 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. S 2. This act shall take effect immediately.

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