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.

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S6552-2011 Actions

• Mar 26, 2012: referred to insurance
• Mar 26, 2012: DELIVERED TO ASSEMBLY
• Mar 26, 2012: PASSED SENATE
• Mar 21, 2012: ADVANCED TO THIRD READING
• Mar 20, 2012: 2ND REPORT CAL.
• Mar 19, 2012: 1ST REPORT CAL.373
• Feb 27, 2012: REFERRED TO INSURANCE

S6552-2011 Meetings

Insurance: Mar 19, 2012

S6552-2011 Calendars

Active List: Mar 26, 2012 , Floor Calendar: Mar 20, 2012 , Floor Calendar: Mar 21, 2012 , Floor Calendar: Mar 22, 2012 , Floor Calendar: Mar 26, 2012

S6552-2011 Votes

S6552-2011 Memo

BILL NUMBER:S6552

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 twen-
ty-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 Insur-
ance to waive the diligent effort requirement and declare certain cover-
ages 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.

S6552-2011 Text

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

                                    6552

                              I N  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 PRODUCT

   EXPLANATION--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.