senate Bill S4043A

Relates to encouraging modernization of mutual and cooperative insurance companies' information systems technology

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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

  • 15 / Mar / 2011
    • REFERRED TO INSURANCE
  • 31 / May / 2011
    • AMEND AND RECOMMIT TO INSURANCE
  • 31 / May / 2011
    • PRINT NUMBER 4043A
  • 06 / Jun / 2011
    • 1ST REPORT CAL.1022
  • 07 / Jun / 2011
    • 2ND REPORT CAL.
  • 13 / Jun / 2011
    • ADVANCED TO THIRD READING
  • 21 / Jun / 2011
    • PASSED SENATE
  • 21 / Jun / 2011
    • DELIVERED TO ASSEMBLY
  • 21 / Jun / 2011
    • REFERRED TO INSURANCE
  • 04 / Jan / 2012
    • DIED IN ASSEMBLY
  • 04 / Jan / 2012
    • RETURNED TO SENATE
  • 04 / Jan / 2012
    • REFERRED TO INSURANCE

Summary

Relates to expenses incurred during the modernization of mutual and cooperative insurance companies' information systems technology.

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Bill Details

Versions:
S4043
S4043A
Legislative Cycle:
2011-2012
Current Committee:
Senate Insurance
Law Section:
Insurance Law
Laws Affected:
Amd ยงยง4110 & 6613, Ins L

Sponsor Memo

BILL NUMBER:S4043A

TITLE OF BILL:
An act
to amend the insurance law, in relation to encouraging modernization of
mutual and cooperative insurance companies' information systems
technology

PURPOSE:
Domestic mutual and co-operative property/casualty insurance
companies are bound by New York law to hold their management expenses
below a certain percentage of their net written premium income. These
caps can inhibit companies from making necessary upgrades and
improvements to their computer systems and software. This bill is
designed to permit both mutuals and cooperative property/casualty
insurers to make such important expenditures by temporarily raising
the management expenses cap when computer upgrade expenses result in
exceeding such cap. An additional protection against excessive costs
being incurred for such upgrades is contained in the bill by
providing that in no event shall the cap be raised by more than 5
percentage points.

SUMMARY OF PROVISIONS:
Section 1. Amend Insurance Law section 4110(a)
to temporarily raise the management expenses limit for domestic
mutual property/casualty insurance companies if they incur expenses
upon making a new system upgrade which places the insurer's total
management expenses over the limit. This temporary increase in the
limit could not exceed 5 percentage points and would be subject to
approval by the superintendent.
In essence, this would allow such expenses to be made even if they
cause the mutual insurer to exceed the statute's management expenses
cap.

Section 2. Amend Insurance Law section 6613(a) to similarly increase
the management expenses limit for cooperative property/casualty
insurance companies if they incur expenses upon making a new system
upgrade which places their total management expenses over the limit.
This temporary increase in the limit could not exceed 5 percentage
points. In essence, this would allow such expenses to be made even if
they cause the cooperative insurer to exceed the statute's management
expenses cap.

Section 3. Effective date is immediately upon enactment.

JUSTIFICATION:
Domestic mutual property/casualty insurance companies
are important drivers of the New York state economy, employing well
over 2,000 New Yorkers. In addition, they provide important
property/casualty coverage to numerous New York businesses and
individuals as well as businesses and individuals in other states.
This legislation would assist mutual insurers by encouraging these
companies to acquire state of the art, modem computer and information
technology systems for purposes of maximizing customer service. In
today's world, insurance consumers increasingly want "24/1" access to
their insurer and its services, whether reporting a claim or filling


out a renewal for their policy. Since the vast majority of these
mutual insurance companies are providing services to residents and
businesses in other states, this measure helps keep these insurers
thriving in New York as they engage in competition with non-New York
domiciled property/casualty insurers to keep those other states'
residents and businesses using insurance products created, sold and
managed by New York domestic companies employing New Yorkers.

In a similar vein, this bill would also help cooperative insurance
companies to continue to serve their vital role in the New York
property/casualty insurance market. Cooperatives are the major
insurance writers of farm owners' coverage and agricultural-related
small businesses, small contractors' liability insurance, seasonal
businesses, as
well as small diners and taverns. 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.
Furthermore, New York cooperative insurance companies provide
necessary property/casualty coverage to over 70,000 New York State
small businesses.

In sum, this proposed legislation would help both domestic mutual
insurance companies and cooperative insurance companies to upgrade
their computer hardware and software in order to provide their
customers with the most efficient and effective means of doing
business.

LEGISLATIVE HISTORY:
New bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately.

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

                                 4043--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 15, 2011
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee  on  Insurance  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN ACT to amend the insurance law, in relation to encouraging moderniza-
  tion  of  mutual  and  cooperative  insurance  companies'  information
  systems technology

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

  Section  1.  Subsection  (a)  of section 4110 of the insurance law, as
amended by chapter 527 of the laws  of  2006,  is  amended  to  read  as
follows:
  (a) No domestic mutual property/casualty insurance company licensed to
write  a  kind  of  insurance specified in paragraph seven, eight, nine,
ten, eleven,  thirteen,  fourteen,  fifteen,  sixteen  or  seventeen  of
subsection  (a)  of  section  one  thousand one hundred thirteen of this
chapter shall expend in any one calendar year for management expenses  a
greater  amount than thirty percent of the sum of its net premium income
and seventy-five  percent  of  its  investment  income  for  such  year;
provided  that  any  insurer whose principal line of business is medical
malpractice liability insurance or any insurer who is the subject  of  a
proceeding  pursuant  to  article seventy-four of this chapter shall not
expend in any one calendar  year  for  management  expenses,  a  greater
amount  than  thirty  percent  of  its net premium income for such year.
Management expenses shall be held to include all expenses of the company
except expenses incurred in the investigation, adjustment and settlement
of claims, taxes, fees and expenses of examination, and  taxes,  repairs
and  expenses on real estate. In applying the provisions of this section
the net premium income of, and expenses of, boiler and machinery  insur-
ance or elevator insurance shall not be included.  IN THE EVENT EXPENSES
INCURRED  IN  MAKING  A  NEW  SYSTEM UPGRADE RESULT IN THIS SUBSECTION'S

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10052-02-1

S. 4043--A                          2

MANAGEMENT EXPENSES LIMIT BEING EXCEEDED, THEN THE INSURER SHALL  INFORM
THE  SUPERINTENDENT  SIXTY  DAYS  IN  ADVANCE OF THE EXPENSE LIMIT BEING
EXCEEDED. SUBJECT TO APPROVAL BY THE SUPERINTENDENT, THE LIMIT SHALL  BE
TEMPORARILY  RAISED TO THE AMOUNT NECESSARY TO ENCOMPASS THE AFORESTATED
NEW SYSTEM UPGRADE, PROVIDED THAT IN NO EVENT SHALL THE LIMIT BE  RAISED
MORE  THAN  FIVE  PERCENTAGE  POINTS AND SHALL NOT BE IN EFFECT FOR MORE
THAN SIX YEARS. FOR PURPOSES OF THIS SUBSECTION, A NEW SYSTEM UPGRADE IS
DEFINED AS THE ACQUISITION OF ELECTRONIC DATA PROCESSING  APPARATUS  AND
RELATED  EQUIPMENT  CONSTITUTING  A  DATA  PROCESSING, RECORD KEEPING OR
ACCOUNTING SYSTEM AND OPERATING AND NON-OPERATING SOFTWARE.
  S 2. Subsection (a) of section 6613 of the insurance law,  as  amended
by chapter 284 of the laws of 1989, is amended to read as follows:
  (a)  The  expenses of management of any co-operative property/casualty
insurance company shall not exceed in any one  calendar  year  forty-two
and one-half percent of its net premiums written for such year. The term
"net  premiums  written"  means direct premiums written plus reinsurance
assumed less return premiums  and  reinsurance  ceded.    IN  THE  EVENT
EXPENSES  INCURRED  IN  MAKING  A  NEW  SYSTEM  UPGRADE  RESULT  IN THIS
SUBSECTION'S MANAGEMENT EXPENSES LIMIT BEING EXCEEDED, THEN THE  INSURER
SHALL  INFORM  THE  SUPERINTENDENT  SIXTY DAYS IN ADVANCE OF THE EXPENSE
LIMIT BEING EXCEEDED. THE LIMIT  SHALL  BE  TEMPORARILY  RAISED  TO  THE
AMOUNT  NECESSARY  TO  ENCOMPASS  THE  AFORESTATED  NEW  SYSTEM UPGRADE,
PROVIDED THAT IN NO EVENT SHALL THE  LIMIT  BE  RAISED  MORE  THAN  FIVE
PERCENTAGE  POINTS  AND  SHALL NOT BE IN EFFECT FOR MORE THAN SIX YEARS.
FOR PURPOSES OF THIS SUBSECTION, A NEW SYSTEM UPGRADE IS DEFINED AS  THE
ACQUISITION  OF  ELECTRONIC DATA PROCESSING APPARATUS AND RELATED EQUIP-
MENT CONSTITUTING A DATA PROCESSING, RECORD KEEPING OR ACCOUNTING SYSTEM
AND OPERATING AND NON-OPERATING SOFTWARE.
  S 3. This act shall take effect immediately.

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