senate Bill S7310

Relates to admitted assets for annuity risk where a single premium annuity contract has been purchased

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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

  • 02 / May / 2012
    • REFERRED TO INSURANCE
  • 21 / May / 2012
    • 1ST REPORT CAL.844
  • 22 / May / 2012
    • 2ND REPORT CAL.
  • 23 / May / 2012
    • ADVANCED TO THIRD READING
  • 12 / Jun / 2012
    • PASSED SENATE
  • 12 / Jun / 2012
    • DELIVERED TO ASSEMBLY
  • 12 / Jun / 2012
    • REFERRED TO INSURANCE

Summary

Relates to admitted assets for annuity risk where a single premium annuity contract has been purchased.

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Bill Details

See Assembly Version of this Bill:
A10535
Versions:
S7310
Legislative Cycle:
2011-2012
Current Committee:
Assembly Insurance
Law Section:
Insurance Law
Laws Affected:
Amd ยง1110, Ins L

Sponsor Memo

BILL NUMBER:S7310

TITLE OF BILL:
An act
to amend the insurance law, in relation to admitted assets for annuity
risk where a single premium annuity contract has been purchased

PURPOSE:
To allow charities that issue charitable gift annuities
(CGAs) to reduce the amount of required reserves by purchasing an
annuity contract from a New York admitted insurer.

SUMMARY OF PROVISIONS:
Amends section 1110(b) of the insurance law to
specifically provide that CGA reserves may be reduced with the
purchase of a single premium life annuity contract from a life
insurance company authorized to do business in New York State.

JUSTIFICATION:
This legislation amends the insurance law to allow
charities that issue charitable gift annuities to reduce the amount
of required reserves by purchasing an annuity contract from a New
York admitted insurer. This change would encourage CGA issuers to
include commercial annuities among the available tools for risk
management. Enabling prudent management of CGA risk benefits New York
charities that incur obligations to their donors with CGAs.
Encouraging charities to reinsure CGAs with commercial annuities
clearly benefits New York consumers, since they not only will hold an
obligation from an organization employing robust risk management,
they will also be better protected by having not one but two issuers
backing their right to payments, both of which are subject to
supervision by the New York Department of Financial Services.

While the insurance law assumes that some CGAs will be reinsured, and
specifically provides for a deduction for reinsurance in the
calculation of required reserves, the statute anticipates reinsurance
in the technical sense, with a treaty requirement which effectively
makes this insurance alternative unavailable to charities issuing CGAs.
Allowing CGA issuers to reduce required reserves by purchasing a
commercial annuity will provide additional consumer protection to New
York annuitants and enhanced risk management to New York charities.

The proposed change will also bring New York into alignment on this
issue with the other states that regulate CGAs, and with model
legislation adopted by the National Association of Insurance
Commissioners (NAIC).

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
________________________________________________________________________

                                  7310

                            I N  S E N A T E

                               May 2, 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  admitted  assets  for
  annuity  risk  where  a  single  premium  annuity  contract  has  been
  purchased

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

  Section  1.  Subsection  (b)  of section 1110 of the insurance law, as
amended by chapter 419 of the laws  of  2001,  is  amended  to  read  as
follows:
  (b)  Every  such  domestic  corporation  or association shall maintain
admitted assets at least equal to the greater of  (i)  the  sum  of  its
reserves  on  its  outstanding agreements, calculated in accordance with
section four thousand two hundred  seventeen  of  this  chapter,  and  a
surplus  of  ten  per centum of such reserves, or (ii) the amount of one
hundred thousand dollars. In determining such reserves a deduction shall
be made for all or any portion of an annuity risk which is reinsured  by
a  life insurance company authorized to do business in this state OR FOR
ALL OR ANY PORTION OF AN ANNUITY RISK WHERE SUCH CORPORATION OR  ASSOCI-
ATION HAS PURCHASED A SINGLE PREMIUM ANNUITY CONTRACT FROM A LIFE INSUR-
ANCE  COMPANY AUTHORIZED TO DO BUSINESS IN THIS STATE TO FUND SUCH RISK.
The required admitted assets shall be invested in  accordance  with  the
prudent  investor  standard as defined in section 11-2.3 of the estates,
powers and trusts law and shall not be subject to the investment limita-
tions set forth in this chapter. Such  assets  shall  be  segregated  as
separate  and  distinct  funds,  independent  of all other funds of such
corporation or association, and shall not be applied to  pay  its  debts
and  obligations  or  for any purpose except the aforesaid annuity bene-
fits.
  S 2. This act shall take effect immediately.


 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD15567-02-2

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