senate Bill S2874A

Amended

Relates to the incorporation of co-operative property/casualty insurance keeping of records by such companies

download pdf

Sponsor

Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
view actions

actions

  • 02 / Feb / 2011
    • REFERRED TO INSURANCE
  • 04 / Apr / 2011
    • 1ST REPORT CAL.232
  • 05 / Apr / 2011
    • 2ND REPORT CAL.
  • 06 / Apr / 2011
    • ADVANCED TO THIRD READING
  • 07 / Jun / 2011
    • PASSED SENATE
  • 07 / Jun / 2011
    • DELIVERED TO ASSEMBLY
  • 07 / Jun / 2011
    • REFERRED TO INSURANCE
  • 04 / Jan / 2012
    • DIED IN ASSEMBLY
  • 04 / Jan / 2012
    • RETURNED TO SENATE
  • 04 / Jan / 2012
    • REFERRED TO INSURANCE
  • 11 / Apr / 2012
    • AMEND AND RECOMMIT TO INSURANCE
  • 11 / Apr / 2012
    • PRINT NUMBER 2874A
  • 25 / Apr / 2012
    • 1ST REPORT CAL.566
  • 26 / Apr / 2012
    • 2ND REPORT CAL.
  • 30 / Apr / 2012
    • ADVANCED TO THIRD READING
  • 02 / May / 2012
    • PASSED SENATE
  • 02 / May / 2012
    • DELIVERED TO ASSEMBLY
  • 02 / May / 2012
    • REFERRED TO INSURANCE
  • 16 / May / 2012
    • RECALLED FROM ASSEMBLY
  • 16 / May / 2012
    • RETURNED TO SENATE
  • 16 / May / 2012
    • VOTE RECONSIDERED - RESTORED TO THIRD READING
  • 16 / May / 2012
    • AMENDED ON THIRD READING 2874B
  • 30 / May / 2012
    • SUBSTITUTED BY A8627B

Summary

Relates to the incorporation of co-operative property/casualty insurance companies and to the keeping of records by such companies.

do you support this bill?

Bill Details

Versions:
S2874
S2874A
S2874B
Legislative Cycle:
2011-2012
Law Section:
Insurance Law
Laws Affected:
Amd ยงยง6603 & 6611, Ins L

Sponsor Memo

BILL NUMBER:S2874A

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.

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

                                 2874--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                            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

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.