senate Bill S3548

Relates to the duties of excess line brokers in selecting unauthorized insurers

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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

  • 05 / Feb / 2013
    • REFERRED TO INSURANCE
  • 08 / Jan / 2014
    • REFERRED TO INSURANCE

Summary

Relates to the duties of excess lines brokers in selecting unauthorized insurers where the full amount of insurance required could not be procured from authorized insurers.

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Bill Details

Versions:
S3548
Legislative Cycle:
2013-2014
Current Committee:
Senate Insurance
Law Section:
Insurance Law
Laws Affected:
Amd ยง2118, Ins L
Versions Introduced in 2011-2012 Legislative Cycle:
S6552

Sponsor Memo

BILL NUMBER:S3548

TITLE OF BILL: An act to amend the insurance law, in relation to duties
of excess line brokers

PURPOSE: To modernize certain aspects of New York's Insurance Law
pertaining to the placement of risks in the excess line market.

SUMMARY OF PROVISIONS: This bill amends section 2118 of the insurance
law to recognize that where a quote for coverage from an authorized
insurer exceeds by twenty-five percent or more a quote for comparable
coverage from the excess line market, the licensed insurer quote may be
regarded as a declination from the authorized insurer.

The bill further expands the authority of the Superintendent of Insur-
ance to waive the diligent effort requirement and declare certain cover-
ages eligible for export to the excess line market based upon the best
interests of the insureds seeking coverage

Finally, the bill also relieves an excess line broker's diligent effort
obligation in the circumstances in which the diligent effort standard
would not apply is where a policy is renewed with the same insurer for a
second or third consecutive one year term.

Section 3 of the bill provides for an effective date.

EXISTING LAW: Current law grants the Superintendent discretion to waive
the diligent effort, but in limited circumstances

Expanding the authority of the Superintendent to waive the diligent
effort will confer a degree of commercial flexibility required for
excess line brokers to meet New York insurance consumers' coverage needs
in an efficient manner. This bill amends the insurance law to remediate
redundancies that add expenses and unnecessary delay to the procurement
of insurance from the excess line market.

JUSTIFICATION: The excess line market is an important segment of New
York's insurance marketplace The excess line market provides a source of
additional insurance capacity and an avenue for coverage in situations
involving hard-to-place risks that the licensed market cannot or will
not write. This bill seeks to modernize the excess line law with
tailored reforms aimed at ameliorating the burdens and costs of certain
reporting requirements that are currently an unnecessary element of New
York's regulatory compliance regime, but in a manner that preserves
consumer protections extant in the insurance law

LEGISLATIVE. HISTORY: S.6552 of 2012.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediately, with provisions.

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

                                  3548

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            February 5, 2013
                               ___________

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 duties of excess  line
  brokers

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

  Section 1. Subparagraph (D)  of  paragraph  3  of  subsection  (b)  of
section 2118 of the insurance law, as amended by chapter 684 of the laws
of 1993, is amended to read as follows:
  (D)  (I)  Declinations  obtained  from  authorized  insurers which are
affiliates of, or, as defined in article fifteen of this chapter,  under
common  control  with,  each other or the unauthorized insurer shall not
meet the requirements of this subsection unless  such  related  insurers
operate  as  distinct  and  autonomous  entities,  and  for underwriting
purposes, compete with each other for the same type of coverage or class
of insurance.
  (II) ANY QUOTE FOR COVERAGE FROM AN AUTHORIZED INSURER WHERE THE GROSS
PREMIUM EXCEEDS BY TWENTY-FIVE PERCENT OR MORE, A QUOTE  FOR  COMPARABLE
COVERAGE  ACQUIRED BY AN EXCESS LINE BROKER MAY BE SUBMITTED AS A DECLI-
NATION BY THE EXCESS LINE BROKER OR AFFIRMING BROKER.
  S 2. Paragraph 4 of subsection (b) of section 2118  of  the  insurance
law,  as  amended by chapter 630 of the laws of 1988, is amended to read
as follows:
  (4) (A) The number of declinations  constituting  diligent  effort  in
regard to placement of coverage with authorized insurers for purposes of
paragraph  three  of  this  subsection shall be three, unless the super-
intendent after a hearing, on a record, upon findings  and  conclusions,
determines  that  another  number of such declinations is appropriate in
regard to particular  coverages.  In  making  such  determinations,  the
superintendent  shall  consider  relevant  market  conditions, including
[unavailability of particular coverages from  authorized  insurers,  and

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08137-01-3

S. 3548                             2

may  conduct  market  surveys] WHAT IS IN THE BEST INTERESTS OF INSUREDS
SEEKING INSURANCE, THE NECESSITY FOR MANUSCRIPTED POLICIES WHERE  STAND-
ARD  FORMS  ARE  INADEQUATE  OR UNAVAILABLE, FOSTERING INSURANCE PRODUCT
INNOVATION  AND  DEVELOPMENT,  AND  WHERE  PARTICULAR  COVERAGES ARE NOT
REASONABLY AND WIDELY AVAILABLE. THE SUPERINTENDENT MAY  CONDUCT  MARKET
SURVEYS TO DETERMINE MARKET CONDITIONS.  Any such determination shall be
reviewed at least annually by the superintendent.
  (B)  THE  DILIGENT  EFFORT  MADE BY AN EXCESS LINE BROKER OR AFFIRMING
BROKER FOR ANY NEW POLICY WHICH PROVIDES COVERAGE FOR A POLICY  TERM  OF
ONE  YEAR, SHALL BE DEEMED VALID FOR THE FIRST AND SECOND ANNUAL RENEWAL
THEREOF WHEN THE SAME INSURER PROVIDES SUCH RENEWAL COVERAGE.
  S 3. This act shall take effect immediately; provided that the  amend-
ments  to  subsection  (b)  of section 2118 of the insurance law made by
sections one and two of this act shall not affect the expiration of such
subsection and shall be deemed to expire therewith.

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