senate Bill S3104A

Provides for a review of rating territory definitions for non-business automobile insurance policies

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Bill Status


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

  • 08 / Feb / 2011
    • REFERRED TO INSURANCE
  • 04 / Jan / 2012
    • REFERRED TO INSURANCE
  • 05 / Mar / 2012
    • AMEND AND RECOMMIT TO INSURANCE
  • 05 / Mar / 2012
    • PRINT NUMBER 3104A

Summary

Establishes as a distinct territory for purposes of rating private passenger nonbusiness automobile insurance policies, a certain city with a population between 19,040 and 25,000 which is geographically contiguous to a city with a population between 292,648 and 350,000; provides that the superintendent may require insurers to adjust existing or establish new territory definitions based on such review.

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Bill Details

Versions:
S3104
S3104A
Legislative Cycle:
2011-2012
Current Committee:
Senate Insurance
Law Section:
Insurance Law
Laws Affected:
Amd ยง2307, Ins L
Versions Introduced in 2009-2010 Legislative Cycle:
S1965

Sponsor Memo

BILL NUMBER:S3104A

TITLE OF BILL:
An act
to amend the insurance law, in relation to
providing for a review of certain existing rating territory definitions
for non-business automobile insurance policies

PURPOSE:
To provide for a thorough review of private passenger auto insurance
rating territory definitions and rate implications of such
definitions, and to authorize the superintendent to require insurers
to use adjusted or new territory definitions and rating factors.

SUMMARY OF PROVISIONS:
Section one would require the superintendent of the state insurance
department to conduct a thorough review of rating territory
definitions in use in this state and the rate implications of such
definitions for non-business private passenger automobile insurance.
Based on the review, the superintendent may require insurers to
adjust existing or establish new territory definitions and related
rating factors. The superintendent shall first focus on the long
recognized problems with the City of Lackawanna in conducting the
review and requiring any insurers actions. The superintendent shall
report to the legislature and governor on the conclusions of the
review and any actions taken based on the findings.

Section two would authorize the superintendent to impose prior
approval of private passenger auto territorial relativities and
rating factors and to require revisions of such relativities and
factors which have been put in effect under the flex rating law.

JUSTIFICATION:
All private passenger automobile insurers group risks into geographic
territories as a way to achieve a homogeneous group of insurers with
similar loss experience for rating purposes. Traffic patterns and
insurance claims experience are taken into account in setting the
territorial boundaries. The rating territories in use today have
remained largely unchanged for over three decades. Particularly in
areas around territory borders, notable changes in economic
conditions, population trends, traffic patterns and insurance claims
experience, which are acute in some areas like the City of Lackawanna
in the Buffalo area, lead many residents to question whether their
rates are accurate or fair. For instance, the City of Lackawanna,
which is grouped with the City of Buffalo for insurance rating
purposes, has undergone a substantial decrease in heavy
industry-related jobs and population -- losing 28,000
jobs and one-third of its population since 1987 -- and has seen
decreases in traffic density and accidents. Yet auto insurance rates
are now approximately 35% higher for Lackawanna residents than for
its other surrounding communities such as Hamburg. The federal

General Accounting Office, in a 1980 study of automobile insurance
rating concluded: "With few exceptions, State insurance departments
have not assured the validity of rating territories despite the fact
that in most cases the existing
territorial boundaries were established long ago and by a process
about which no one has much information."
A complete review of the territorial rating system is
long overdue. The department needs statutory authority to require
insurers to make any adjustments to their territories and rating
factors based on the findings of its review.

LEGISLATIVE HISTORY:
2001-02: S.883/A.1476 Passed Assembly in 2001 & 2002
2003-04: S.658/A.2654 No action
2005-06: S.5271/A.559 Referred to Insurance
2007-08: S.2628/A.4405 Passed Assembly
2009-10: S.1965/A.2238 Referred to Insurance

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately.

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

                                 3104--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                            February 8, 2011
                               ___________

Introduced by Sens. KENNEDY, GALLIVAN -- 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 providing for a review
  of certain existing  rating  territory  definitions  for  non-business
  automobile insurance policies

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 2307 of the insurance law is amended  by  adding  a
new subsection (f) to read as follows:
  (F)  (1)  NOTWITHSTANDING  ANY OTHER PROVISION OF LAW, WITH RESPECT TO
NON-BUSINESS AUTOMOBILE INSURANCE  POLICIES,  THE  SUPERINTENDENT  SHALL
UNDERTAKE  A  THOROUGH  REVIEW  OF RATING TERRITORY DEFINITIONS AND RATE
IMPLICATIONS OF CURRENT TERRITORIAL DEFINITIONS IN USE  IN  THIS  STATE,
WITH  PARTICULAR  FOCUS  ON CHANGING DEMOGRAPHICS, BORDERLINE ZIP CODES,
TERRITORIAL GROUPINGS, AND ALTERNATIVE APPROACHES TO ACHIEVING HOMOGENE-
ITY.
  (2) BASED ON SUCH REVIEW, THE SUPERINTENDENT MAY REQUIRE  INSURERS  TO
ADJUST  EXISTING  OR ESTABLISH NEW TERRITORY DEFINITIONS AND TO USE SUCH
ADJUSTED OR NEW TERRITORIES IN RELATION TO SUCH POLICIES.
  (3) WITH RESPECT TO SUCH REVIEW AND ANY REQUIREMENTS MADE PURSUANT  TO
THIS  SECTION,  THE  SUPERINTENDENT  SHALL  FIRST FOCUS ON CITIES WITH A
POPULATION  OF  MORE  THAN  NINETEEN  THOUSAND  FORTY  BUT   LESS   THAN
TWENTY-FIVE  THOUSAND HAVING HAD A DECREASE IN TRAFFIC DENSITY AND ACCI-
DENTS, WHICH ARE GEOGRAPHICALLY CONTIGUOUS WITH A CITY WITH A POPULATION
OF MORE THAN TWO HUNDRED NINETY-TWO THOUSAND SIX HUNDRED FORTY-EIGHT BUT
LESS THAN THREE HUNDRED FIFTY THOUSAND.
  (4) THE SUPERINTENDENT SHALL REPORT TO THE GOVERNOR AND  THE  LEGISLA-
TURE ON SUCH REVIEW AND ACTIONS TAKEN PURSUANT TO THIS SUBSECTION.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06774-02-2

S. 3104--A                          2

  S 2. The review required by section one of this act shall be completed
by  July  first  in  the year next succeeding the year in which it shall
have become law, and the report required by  section  one  of  this  act
shall  be submitted no later than December thirty-first in the year next
succeeding the year in which it shall have become law.
  S 3. This act shall take effect immediately.

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