Relates to the duties of excess lines brokers in selecting unauthorized insurers where the full amount of insurance required could not be procured from authorized insurers.
Ayes (60): Adams, Addabbo, Alesi, Avella, Ball, Bonacic, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Duane, Espaillat, Farley, Flanagan, Fuschillo, Gallivan, Gianaris, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Huntley, Johnson, Kennedy, Klein, Krueger, Lanza, Larkin, LaValle, Libous, Little, Marcellino, Martins, Maziarz, McDonald, Montgomery, Nozzolio, O'Mara, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Saland, Sampson, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Valesky, Young, Zeldin
Excused (1): Oppenheimer
TITLE OF BILL: An act to amend the insurance law, in relation to duties of excess line brokers
PURPOSE: To modernize certain aspects of New York's Insurance Law pertaining to the placement of risks in the excess line market.
SUMMARY OF PROVISIONS: This bill amends section 2118 of the insurance law to recognize that where a quote for coverage from an authorized insurer exceeds by twenty-five percent or more a quote for comparable coverage from the excess line market, the licensed insurer quote may be regarded as a declination from the authorized insurer.
The bill further expands the authority of the Superintendent of Insurance to waive the diligent effort requirement and declare certain coverages eligible for export to the excess line market based upon the best interests of the insureds seeking coverage.
Finally, the bill also relieves an excess line broker's diligent effort obligation in the circumstances in which the diligent effort standard would not apply is where a policy is renewed with the same insurer for a second or third consecutive one year term.
Section 2 of the bill provides for an effective date
EXISTING LAW: Current law grants the Superintendent discretion to waive the diligent effort, but in limited circumstances.
Expanding the authority of the Superintendent to waive the diligent effort will confer a degree of commercial flexibility required for excess line brokers to meet New York insurance consumers' coverage needs in an efficient manner. This bill amends the insurance law to remediate redundancies that add expenses and unnecessary delay to the procurement of insurance from the excess line market.
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. This bill seeks to modernize the excess line law with tailored reforms aimed at ameliorating the burdens and costs of certain reporting requirements that are currently an unnecessary element of New York's regulatory compliance regime, but in a manner that preserves consumer protections extant in the insurance law.
LEGISLATIVE HISTORY: New bill.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: Immediately; provided that the amendments to subsection (b) of section 2118 of the insurance law made by sections one and two of this act shall not affect the expiration of such subsection and shall be deemed to expire therewith.
STATE OF NEW YORK ________________________________________________________________________ 6552 IN SENATE February 27, 2012 ___________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 duties of excess line brokers THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subparagraph (D) of paragraph 3 of subsection (b) of section 2118 of the insurance law, as amended by chapter 684 of the laws of 1993, is amended to read as follows: (D) (I) Declinations obtained from authorized insurers which are affiliates of, or, as defined in article fifteen of this chapter, under common control with, each other or the unauthorized insurer shall not meet the requirements of this subsection unless such related insurers operate as distinct and autonomous entities, and for underwriting purposes, compete with each other for the same type of coverage or class of insurance. (II) ANY QUOTE FOR COVERAGE FROM AN AUTHORIZED INSURER WHERE THE GROSS PREMIUM EXCEEDS BY TWENTY-FIVE PERCENT OR MORE, A QUOTE FOR COMPARABLE COVERAGE ACQUIRED BY AN EXCESS LINE BROKER MAY BE SUBMITTED AS A DECLI- NATION BY THE EXCESS LINE BROKER OR AFFIRMING BROKER. S 2. Paragraph 4 of subsection (b) of section 2118 of the insurance law, as amended by chapter 630 of the laws of 1988, is amended to read as follows: (4) (A) The number of declinations constituting diligent effort in regard to placement of coverage with authorized insurers for purposes of paragraph three of this subsection shall be three, unless the super- intendent after a hearing, on a record, upon findings and conclusions, determines that another number of such declinations is appropriate in regard to particular coverages. In making such determinations, the superintendent shall consider relevant market conditions, including
[unavailability of particular coverages from authorized insurers, and may conduct market surveys]WHAT IS IN THE BEST INTERESTS OF INSUREDS SEEKING INSURANCE, THE NECESSITY FOR MANUSCRIPTED POLICIES WHERE STAND- ARD FORMS ARE INADEQUATE OR UNAVAILABLE, FOSTERING INSURANCE PRODUCTEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14565-01-2 S. 6552 2
INNOVATION AND DEVELOPMENT, AND WHERE PARTICULAR COVERAGES ARE NOT REASONABLY AND WIDELY AVAILABLE. THE SUPERINTENDENT MAY CONDUCT MARKET SURVEYS TO DETERMINE MARKET CONDITIONS. Any such determination shall be reviewed at least annually by the superintendent. (B) THE DILIGENT EFFORT MADE BY AN EXCESS LINE BROKER OR AFFIRMING BROKER FOR ANY NEW POLICY WHICH PROVIDES COVERAGE FOR A POLICY TERM OF ONE YEAR, SHALL BE DEEMED VALID FOR THE FIRST AND SECOND ANNUAL RENEWAL THEREOF WHEN THE SAME INSURER PROVIDES SUCH RENEWAL COVERAGE. S 3. This act shall take effect immediately; provided that the amend- ments to subsection (b) of section 2118 of the insurance law made by sections one and two of this act shall not affect the expiration of such subsection and shall be deemed to expire therewith.