senate Bill S5440

Relates to an exemption for certain stock and non-stock insurance 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

  • 23 / May / 2011
    • REFERRED TO INSURANCE
  • 06 / Jun / 2011
    • 1ST REPORT CAL.1024
  • 07 / Jun / 2011
    • 2ND REPORT CAL.
  • 13 / Jun / 2011
    • ADVANCED TO THIRD READING
  • 24 / Jun / 2011
    • COMMITTED TO RULES
  • 04 / Jan / 2012
    • REFERRED TO INSURANCE
  • 09 / Jan / 2012
    • RECOMMIT, ENACTING CLAUSE STRICKEN

Summary

Relates to an exemption for certain stock and non-stock insurance companies.

do you support this bill?

Bill Details

See Assembly Version of this Bill:
A8256
Versions:
S5440
Legislative Cycle:
2011-2012
Current Committee:
Senate Insurance
Law Section:
Insurance Law
Laws Affected:
Add ยง1326, Ins L

Votes

8
3
8
Aye
3
Nay
6
aye with reservations
1
absent
0
excused
0
abstained
show Insurance committee vote details

Sponsor Memo

BILL NUMBER:S5440

TITLE OF BILL:
An act
to amend the insurance law, in relation to exemption for certain stock
and non-stock insurance companies

PURPOSE OR GENERAL IDEA OF BILL:
This bill will positively affect the balance sheets of all medical
malpractice carriers in the state and prevent the unregulated Risk
Retention Groups from using the pool obligation as a competitive
argument against the state carriers.

SUMMARY OF SPECIFIC PROVISIONS:
Section one of the bill adds a new section 1326 to the Insurance Law
to allow carriers to limit the application of contingent liabilities
to the financial statements of medical malpractice insurers.

JUSTIFICATION:
Medical malpractice insurance is a unique business in New York. The
vast majority of the state's medical malpractice insurance capacity
is provided by admitted, single-state, mono-line insurance. carriers,
most of which are mutuals or reciprocal insurers that are owned or
controlled by physicians which provide medical malpractice coverage
to physicians. However, in addition to financial challenges, these
insurers, admitted in New York State, have been confronted with
mounting competition from Federally sanctioned out-of-state Risk
Retention Groups which are less-regulated than New York admitted
carriers. These Risk Retention groups may be able to provide cheaper
medical malpractice coverage in the short term, but may not have the
financial wherewithal to pay claims over the long term.

This bill changes the way carriers have to ledger the obligations of
the Medical Malpractice Insurance Pool as liabilities to the
carriers, removing gross (aggregated) liabilities in favor of posting
obligations only within a year of when they become due. Carriers will
be required to maintain a reserve of not less than 10% of their
respective and proportionate liabilities of the pool. ALL carriers
will see an immediate benefit to surplus as a result, thus improving
the balance sheet and the annual statement to be filed in March.

This bill modernizes the Insurance Law as it relates to medical
malpractice insurance. It recognizes the unique place that medical
malpractice insurance holds in the provision of health care in New
York.

PURPOSE OR GENERAL IDEA OF BILL:
This bill will positively affect the balance sheets of all medical
malpractice carriers in the state and prevent the unregulated Risk
Retention Groups from using the pool obligation as a competitive
argument against the state carriers.

SUMMARY OF SPECIFIC PROVISIONS:
Section one of the bill adds a new section 1326 to the Insurance Law
to allow carriers to limit the application of contingent liabilities
to the financial statements of medical malpractice insurers.


JUSTIFICATION:
Medical malpractice insurance is a unique business in New York. The
vast majority of the state's medical malpractice insurance capacity
is provided by admitted, single-state, mono-line insurance. carriers,
most of which are mutuals or reciprocal insurers that are owned or
controlled by physicians which provide medical malpractice coverage
to physicians. However, in addition to financial challenges, these
insurers, admitted in New York State, have been confronted with
mounting competition from Federally sanctioned out-of-state Risk
Retention Groups which are less-regulated than New York admitted
carriers. These Risk Retention groups may be able to provide cheaper
medical malpractice coverage in the short term, but may not have the
financial wherewithal to pay claims over the long term.

This bill changes the way carriers have to ledger the obligations of
the Medical Malpractice Insurance Pool as liabilities to the
carriers, removing gross (aggregated) liabilities in favor of posting
obligations only within a year of when they become due. Carriers will
be required to maintain a reserve of not less than 10% of their
respective and proportionate liabilities of the pool. ALL carriers
will see an immediate benefit to surplus as a result, thus improving
the balance sheet and the annual statement to be filed in March.

This bill modernizes the Insurance Law as it relates to medical
malpractice insurance. It recognizes the unique place that medical
malpractice insurance holds in the provision of health care in New
York.

PRIOR LEGISLATIVE HISTORY:
New bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This act shall take effect immediately.

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

                                  5440

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                              May 23, 2011
                               ___________

Introduced  by  Sen.  DeFRANCISCO -- 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 exemption for  certain
  stock and non-stock insurance companies

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

  Section 1.  The insurance law is amended by adding a new section  1326
to read as follows:
  S 1326. STATUTORY ASSOCIATION MEMBERSHIP; OBLIGATIONS. FOR THOSE STOCK
AND  NON-STOCK  COMPANIES  TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH TWO OF
SUBSECTION (B) OF SECTION ONE THOUSAND THREE HUNDRED TWENTY-FOUR OF THIS
ARTICLE APPLIES, NO LIABILITIES ARISING FROM THE OBLIGATIONS OF AN ASSO-
CIATION AUTHORIZED PURSUANT TO SUBPARAGRAPH  (D)  OF  PARAGRAPH  TWO  OF
SUBSECTION (C) OF SECTION FIVE THOUSAND FIVE HUNDRED TWO OF THIS CHAPTER
SHALL  BE  DUE AND OWING FROM SUCH COMPANIES UNLESS AND UNTIL SUCH OBLI-
GATIONS CAN ONLY BE SATISFIED, AFTER CONSIDERATION OF ALL  RESOURCES  OF
THE ASSOCIATION, INCLUDING BUT NOT LIMITED TO CURRENT PREMIUM INCOME, BY
A  CONTRIBUTION  FROM  SUCH  COMPANIES AND THE COMPANIES ARE NOTIFIED OF
SAME BY SUCH ASSOCIATION NOT LESS THAN  THREE  HUNDRED  SIXTY-FIVE  DAYS
PRIOR  TO  THE  DATE UPON WHICH SUCH OBLIGATIONS SHALL BE DUE AND OWING,
AND SHALL ONLY RELATE TO OBLIGATIONS OF THE ASSOCIATION THAT ARE ACTUAL-
LY DUE AND OWING BY THE ASSOCIATION IN THAT YEAR IN  WHICH  CONTRIBUTION
IS TO BE MADE BY THE COMPANIES. SUCH OBLIGATIONS SHALL NOT BE AGGREGATED
FOR ANY OTHER YEAR EXCEPT THAT IN WHICH CONTRIBUTION IS DUE AND OWING OR
PREVIOUS  YEARS IN WHICH CONTRIBUTIONS HAVE NOT BEEN SATISFIED; FURTHER,
SUCH LIABILITIES AND THE CONTRIBUTIONS THEREFOR SHALL  NOT  INCLUDE  ANY
CONTINGENT  LIABILITIES  OF  THE  ASSOCIATION  FOR  THE  YEAR  FOR WHICH
CONTRIBUTIONS ARE REQUESTED; PROVIDED,  HOWEVER,  THAT  COMPANIES  SHALL
MAINTAIN  AT  ALL  TIMES A RESERVE OF NOT LESS THAN TEN PERCENT OF THEIR
RESPECTIVE AND PROPORTIONATE LIABILITIES OF THE AGGREGATE DEFICIT OF THE
ASSOCIATION, AS SUCH RESPECTIVE AND  PROPORTIONATE  LIABILITIES  OF  THE
AGGREGATE  DEFICIT  ARE  REPORTED BY THE ASSOCIATION CONSISTENT WITH THE
PROVISIONS OF THIS SECTION.
  S 2. This act shall take effect immediately.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11724-02-1

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.