Senate Bill S5374

2009-2010 Legislative Session

Provides an exemption to certain provisions relating to risk-based capital for property/casualty insurance companies and to financial regulation of medical malpractice; repealer

download bill text pdf

Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to insurance
Jun 26, 2009	print number 5374b
Jun 26, 2009	amend and recommit to insurance
Jun 19, 2009	print number 5374a
Jun 19, 2009	amend and recommit to insurance
Apr 27, 2009	referred to insurance

Bill Amendments

Original

B (Active)

2009-S5374 - Details

Current Committee:: Senate Insurance
Laws Affected:: Amd §§1301, 1311, 2343, 6108, & 6111, rpld & add §1325, add §1326, Ins L

2009-S5374 - Summary

Provides an exemption to certain provisions relating to risk-based capital for property/casualty insurance companies and repeals certain provisions relating thereto, and to financial regulation of medical malpractice insurance liability companies.

2009-S5374 - Sponsor Memo

                                 BILL NUMBER:  S5374

 TITLE OF BILL :
An act to amend the insurance law, in relation to an exemption to
certain provisions of law relating to risk-based capital for
property/casualty insurance companies; and in relation to the
financial regulation of medical malpractice liability insurance
companies; and to repeal certain provisions of such law relating
thereto


 SUMMARY OF PROVISIONS :
Section one of the bill amends section 1301 of the insurance law to
allow medical malpractice insurers to apply the value of surcharges or
assessments to admitted asset calculations without having to collect
such surcharges or assessments.

Section two of the bill amends section 1311 of the insurance law to
provide for the inclusion of admitted assets allowed under this
legislation into the calculation of required surplus.

Section three of the bill amends section 1325 of the insurance law by
permanently exemption medical malpractice insurance companies from the
provisions of law relating to the risk based financial standards
applying to all property casualty insurance companies pursuant to
section 1324 of the insurance law, and directs the superintendent of

insurance to develop a new financial standards framework for medical
malpractice insurers operating in the state that are primarily
single-state and mono-line carriers. The new standards are to be
created by June 2011 and put into effect in January 2012.  The
standards created are to be based upon cash flow and claims reserve
standards.

 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 predominantly single-state, mono-line insurance carriers,
most of which are mutuals or reciprocals.

The bill modernized s the insurance law as it relates to medical
malpractice insurance by recognizing the unique place that medial
malpractice insurance holds in new York health care and the unique
financial realities of the carriers as mono-line, doctor owned
entities where the premium cost controls and assured availability of
coverage are primary business objectives.

 FISCAL IMPLICATIONS :
None to the state.

 EFFECTIVE DATE :
Immediately.

2009-S5374 - Bill Text download pdf

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

                                  5374

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                             April 27, 2009
                               ___________

Introduced  by  Sen.  KLEIN  -- 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  an  exemption  to
  certain   provisions   of  law  relating  to  risk-based  capital  for
  property/casualty insurance companies; and in relation to  the  finan-
  cial  regulation of medical malpractice liability insurance companies;
  and to repeal certain provisions of such law relating thereto

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

  Section  1.  Subsection  (a)  of  section 1301 of the insurance law is
amended by adding two new paragraphs 19 and 20 to read as follows:
  (19) 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 APPLY, THE AMOUNT OF THE SURCHARGE ON PREMI-
UMS TO SATISFY A PROJECTED DEFICIENCY THAT IS ATTRIBUTABLE TO THE PREMI-
UM LEVELS ESTABLISHED PURSUANT TO SECTION FORTY OF CHAPTER  TWO  HUNDRED
SIXTY-SIX  OF THE LAWS OF NINETEEN HUNDRED EIGHTY-SIX, AS SUCH SURCHARGE
IS PROVIDED IN SUCH CHAPTER, WHETHER OR NOT SUCH SURCHARGE  IS  ACTUALLY
IMPOSED BY THE SUPERINTENDENT.
  (20)  FOR RECIPROCAL INSURERS ORGANIZED AND LICENSED PURSUANT TO ARTI-
CLE SIXTY-ONE OF THIS CHAPTER TO WRITE MEDICAL MALPRACTICE INSURANCE  AS
THAT  TERM  IS  DEFINED  IN SUBSECTION (B) OF SECTION FIVE THOUSAND FIVE
HUNDRED ONE OF THIS CHAPTER, THE AMOUNT OF ANY ASSESSMENT AUTHORIZED  BY
SUBSECTIONS  (A)  AND  (B)  OF SECTION SIX THOUSAND ONE HUNDRED EIGHT OF
THIS CHAPTER.
  S 2. Section 1311 of the insurance law is  amended  by  adding  a  new
subsection (e) to read as follows:
  (E)  IN DETERMINING THE TOTAL ADMITTED ASSETS OF AN INSURER THE SUPER-
INTENDENT SHALL INCLUDE IN SUCH  DETERMINATION  ALL  ASSETS  ALLOWED  AS
ADMITTED ASSETS PURSUANT TO SUBSECTION (A) OF SECTION ONE THOUSAND THREE
HUNDRED ONE OF THIS ARTICLE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11667-01-9

S. 5374                             2

  S  3.  Section 1325 of the insurance law is REPEALED and a new section
1325 is added to read as follows:
  S 1325. EXEMPTION. (A) FOR THE PURPOSES OF EXEMPTING CERTAIN INSURANCE
COMPANIES  FROM  THE  PROVISIONS  OF  SECTION ONE THOUSAND THREE HUNDRED
TWENTY-FOUR OF THIS ARTICLE, THE SUPERINTENDENT SHALL EXEMPT THOSE STOCK
AND NON-STOCK INSURANCE COMPANIES TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH
TWO OF SUBSECTION (B) OF SUCH SECTION APPLIES.
  (B) THE SUPERINTENDENT SHALL NO LATER THAN JUNE THIRTIETH,  TWO  THOU-
SAND  ELEVEN  PROMULGATE,  FOR  APPLICATION  DURING  THE NEXT SUCCEEDING
CALENDAR YEAR, AND AFTER  CONSULTATION WITH THE COMMISSIONER  OF  HEALTH
AND  DOMESTIC  MEDICAL  MALPRACTICE INSURERS WRITING MEDICAL MALPRACTICE
INSURANCE IN THIS STATE, A REGULATION WHICH PROVIDES A  SEPARATE  FINAN-
CIAL  SECURITY  STANDARD  AND  RATE APPROVAL PROCESS FOR THOSE STOCK AND
NON-STOCK INSURANCE COMPANIES TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH TWO
OF SUBSECTION (B) OF SECTION ONE THOUSAND THREE HUNDRED  TWENTY-FOUR  OF
THIS  CHAPTER  APPLY. SUCH STANDARD SHALL TAKE INTO ACCOUNT THE SPECIAL-
IZED NATURE OF THE COVERAGE PROVIDED BY SUCH COMPANIES  AND  THE  UNIQUE
OBLIGATIONS  IMPOSED  ON  SUCH  COMPANIES  BY STATUE AND REGULATION, AND
SHALL BE BASED UPON THE CASH FLOW CONDITION OF THE INSURER AND ITS ABIL-
ITY TO PAY CLAIMS BASED UPON CLAIMS RESERVE ANALYSES. FURTHER, THE REGU-
LATION SHALL INCLUDE NEW STATUTORY FINANCIAL STATEMENT BLANKS AND  EXAM-
INATION PROTOCOLS CONSISTENT WITH THE NEW STANDARD.
  (C)  UNTIL  SUCH TIME AS THE SUPERINTENDENT PROMULGATES REGULATIONS IN
ACCORDANCE  WITH  SUBSECTION  (B)  OF  THIS  SECTION,  THOSE  STOCK  AND
NON-STOCK INSURANCE COMPANIES TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH TWO
OF  SUBSECTION  (B) OF SECTION ONE THOUSAND THREE HUNDRED TWENTY-FOUR OF
THIS CHAPTER APPLIED, AND NOTWITHSTANDING ANY OTHER PROVISION OF LAW  TO
THE  CONTRARY,  MAY  FILE FOR AND USE A RATE INCREASE OR DECREASE NOT TO
EXCEED FIVE PERCENT UPON A FILING WITH THE SUPERINTENDENT, EFFECTIVE THE
NEXT JULY FIRST, IF SUCH SUBMISSION IS FILED WITH THE SUPERINTENDENT  NO
LATER  THAN MARCH FIRST. IF A CARRIER DOES NOT FILE SUCH RATE ADJUSTMENT
WITHIN SUCH TIME FRAME, THEN SUCH INSURER SHALL BE SUBJECT TO  THE  RATE
APPROVAL  PROCESS  IN  PLACE AT THE TIME THIS SECTION SHALL TAKE EFFECT.
THE SUPERINTENDENT MAY, UPON A REVIEW OF SUCH FILING MADE BY AN INSURER,
REJECT SUCH A FILING UPON WRITTEN NOTICE TO THE CARRIER  NOT  LESS  THAN
THIRTY  DAYS PRIOR TO SUCH TIME THAT THE FILED RATES ARE TO TAKE EFFECT,
AT WHICH TIME THE SUBJECT INSURER SHALL  FILE  FOR  USE  AN  ALTERNATIVE
RATING PLAN.
  S  4.  Subsection (c) of section 2343 of the insurance law, as amended
by section 27 of part B of chapter 58 of the laws of 2008, is amended to
read as follows:
  (c) Notwithstanding any other provision of this chapter,  no  applica-
tion for an order of rehabilitation or liquidation of a domestic insurer
whose  primary liability arises from the business of medical malpractice
insurance, as that term is defined in subsection  (b)  of  section  five
thousand  five hundred one of this chapter, shall be made on the grounds
specified in subsection (a)  or  (c)  of  section  seven  thousand  four
hundred  two  of  this chapter at any time [prior to June thirtieth, two
thousand eleven].
  S 5. Subsection (b) of section 6108 of the insurance law is amended to
read as follows:
  (b) If the admitted assets of any such insurer are at any time  insuf-
ficient  for  the payment of losses and expenses after providing for all
other liabilities of such insurer and the minimum surplus to policyhold-
ers required by this chapter, the advisory committee shall, within thir-
ty days thereafter, order an assessment for the amount necessary to  pay

S. 5374                             3

such  losses and expenses, and authorize the attorney-in-fact to collect
from each subscriber liable therefor a pro rata share of the  amount  of
such  assessment, subject to the limit specified in the contract of such
subscriber  and to maintain an action therefor in the name of the attor-
ney-in-fact. FOR THE PURPOSES OF THIS SUBSECTION, ADMITTED ASSETS  SHALL
INCLUDE A PRESUMPTION OF A SURCHARGE OR ASSESSMENT, WHERE APPLICABLE, OR
BOTH,  HAVING BEEN AUTHORIZED BY THE ADVISORY COUNCIL OR DIRECTED BY THE
SUPERINTENDENT CONSISTENT WITH THE TERMS OF THE  SUBSCRIBERS'  CONTRACTS
AND COLLECTED BY AN INSURER.
  S 6. Subsection (c) of section 6111 of the insurance law is amended to
read as follows:
  (c) The contingent liability of subscribers for additional premiums or
assessments  shall [not] be included as an asset in the financial state-
ment of a reciprocal insurer.
  S 7. This act shall take effect immediately.

2009-S5374A - Details

Current Committee:: Senate Insurance
Laws Affected:: Amd §§1301, 1311, 2343, 6108, & 6111, rpld & add §1325, add §1326, Ins L

2009-S5374A - Summary

2009-S5374A - Sponsor Memo

                                 BILL NUMBER:  S5374A

 TITLE OF BILL :  An act to amend the insurance law, in relation to an
exemption to certain provisions of law relating to risk-based capital
for property/casualty insurance companies; and in relation to the
financial regulation of medical malpractice liability insurance
companies; and to repeal certain provisions of such law relating
thereto

 SUMMARY OF PROVISIONS :  Section 1: Amends Insurance Law section 1301
to allow medical malpractice insurance to apply the value of
surcharges or assessments to admitted asset calculations without
having to collect such surcharges or assessments, except on a schedule
and subject to limitations already provided for in law.

Section 2: Amends Insurance Law section 1311 to provide for the
inclusion of admitted assets allowed under this legislation into the
calculation of required surplus.

Section 3: Amends Insurance Law section 1325 to permanently exempt
medical malpractice insurance companies from the provisions of law
relating to the risk based financial standards applying to all
property casualty insurance companies pursuant to section 1324 of the
insurance law; and directs the superintendent of insurance to develop
a new financial standards framework for medical malpractice insurers
operating in the state that are primarily single-state and mono-line

carriers. The new standards are to be created by June 2011 and put
into effect in January 2012. The standards created are to include
consideration of claims reserve analyses and should be based on
consultations with insurers and the commissioner of health.

Section 4: Creates Insurance Law section 1326 to limit the application
of contingent liabilities to the financial statements of medical
malpractice insurers. Three of the bill also provides authority for
insurers to adjust rates upward no more than five percent per year on
a file and use basis.

Section 5: Amends Insurance Law section 2343 to make permanent certain
prohibitions on requests for orders of rehabilitation or liquidation
for medical malpractice insurance carriers.

Section 6: Amends Insurance Law section 6108 to create a presumption
for reciprocal insurers that surcharges or assessments are components
of admitted assets.

Section 7: Amends Insurance Law section 6111 to allow for contingent
liabilities of subscribers to be included in the calculation of
admitted assets for the purpose of completion of the financial
statement.

 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 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. Further, the unique financial realities of these carriers which
are mono-line, doctor-owned entities where premium cost controls and
continuity in the availability of coverage are primary business
objectives.

 FISCAL INFORMATION :  None of the state.

 EFFECTIVE DATE :  Immediately.

2009-S5374A - Bill Text download pdf

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

                                 5374--A

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                             April 27, 2009
                               ___________

Introduced  by  Sens.  KLEIN, HASSELL-THOMPSON -- read twice and ordered
  printed, and when printed to be committed to the Committee  on  Insur-
  ance  --  committee  discharged,  bill  amended,  ordered reprinted as
  amended and recommitted to said committee

AN ACT to amend the insurance  law,  in  relation  to  an  exemption  to
  certain   provisions   of  law  relating  to  risk-based  capital  for
  property/casualty insurance companies; and in relation to  the  finan-
  cial  regulation of medical malpractice liability insurance companies;
  and to repeal certain provisions of such law relating thereto

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

  Section  1.  Subsection  (a)  of  section 1301 of the insurance law is
amended by adding two new paragraphs 19 and 20 to read as follows:
  (19) 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 APPLY, THE AMOUNT OF THE SURCHARGE ON PREMI-
UMS TO SATISFY A PROJECTED DEFICIENCY THAT IS ATTRIBUTABLE TO THE PREMI-
UM LEVELS ESTABLISHED PURSUANT TO SECTION FORTY OF CHAPTER  TWO  HUNDRED
SIXTY-SIX  OF THE LAWS OF NINETEEN HUNDRED EIGHTY-SIX, AS SUCH SURCHARGE
IS PROVIDED IN SUCH CHAPTER, WHETHER OR NOT SUCH SURCHARGE  IS  ACTUALLY
IMPOSED  BY THE SUPERINTENDENT; PROVIDED, HOWEVER, THAT SUCH SURCHARGES,
IF IMPOSED, WILL BE SUBJECT TO THE  LIMITATIONS  PROVIDED  FOR  IN  THIS
CHAPTER RELATING TO THE AMOUNTS TO BE COLLECTED IN A GIVEN POLICY YEAR.
  (20)  FOR RECIPROCAL INSURERS ORGANIZED AND LICENSED PURSUANT TO ARTI-
CLE SIXTY-ONE OF THIS CHAPTER TO WRITE MEDICAL MALPRACTICE INSURANCE  AS
THAT  TERM  IS  DEFINED  IN SUBSECTION (B) OF SECTION FIVE THOUSAND FIVE
HUNDRED ONE OF THIS CHAPTER, THE AMOUNT OF ANY ASSESSMENT AUTHORIZED  BY
SUBSECTIONS  (A)  AND  (B)  OF SECTION SIX THOUSAND ONE HUNDRED EIGHT OF
THIS CHAPTER; PROVIDED, HOWEVER, THAT SUCH ASSESSMENTS, IF IMPOSED, WILL
BE SUBJECT TO THE LIMITATIONS PROVIDED FOR IN THIS CHAPTER  RELATING  TO
THE AMOUNTS TO BE COLLECTED IN A GIVEN POLICY YEAR.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11667-04-9

S. 5374--A                          2

  S  2.  Section  1311  of  the insurance law is amended by adding a new
subsection (e) to read as follows:
  (E)  IN DETERMINING THE TOTAL ADMITTED ASSETS OF AN INSURER THE SUPER-
INTENDENT SHALL INCLUDE IN SUCH  DETERMINATION  ALL  ASSETS  ALLOWED  AS
ADMITTED ASSETS PURSUANT TO SUBSECTION (A) OF SECTION ONE THOUSAND THREE
HUNDRED ONE OF THIS ARTICLE.
  S  3.  Section 1325 of the insurance law is REPEALED and a new section
1325 is added to read as follows:
  S 1325. EXEMPTION. (A) FOR THE PURPOSES OF EXEMPTING CERTAIN INSURANCE
COMPANIES FROM THE PROVISIONS OF  SECTION  ONE  THOUSAND  THREE  HUNDRED
TWENTY-FOUR OF THIS ARTICLE, THE SUPERINTENDENT SHALL EXEMPT THOSE STOCK
AND NON-STOCK INSURANCE COMPANIES TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH
TWO OF SUBSECTION (B) OF SUCH SECTION APPLIES.
  (B)  THE  SUPERINTENDENT SHALL NO LATER THAN JUNE THIRTIETH, TWO THOU-
SAND ELEVEN PROMULGATE,  FOR  APPLICATION  DURING  THE  NEXT  SUCCEEDING
CALENDAR  YEAR,  AND AFTER  CONSULTATION WITH THE COMMISSIONER OF HEALTH
AND DOMESTIC MEDICAL MALPRACTICE INSURERS  WRITING  MEDICAL  MALPRACTICE
INSURANCE  IN  THIS STATE, A REGULATION WHICH PROVIDES A SEPARATE FINAN-
CIAL SECURITY STANDARD AND RATE APPROVAL PROCESS  FOR  THOSE  STOCK  AND
NON-STOCK INSURANCE COMPANIES TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH TWO
OF  SUBSECTION  (B) OF SECTION ONE THOUSAND THREE HUNDRED TWENTY-FOUR OF
THIS CHAPTER APPLY. SUCH STANDARD SHALL TAKE INTO ACCOUNT  THE  SPECIAL-
IZED NATURE OF THE COVERAGE PROVIDED BY SUCH COMPANIES, THE MONOLINE AND
SINGLE  STATE STATUS OF SUCH CARRIERS AND THE UNIQUE OBLIGATIONS IMPOSED
ON SUCH COMPANIES BY STATUTE AND REGULATION, AND SHALL BE BASED  ON  ITS
ABILITY  TO  PAY CLAIMS BASED UPON CLAIMS RESERVE ANALYSES. FURTHER, THE
REGULATION SHALL INCLUDE NEW STATUTORY FINANCIAL  STATEMENT  BLANKS  AND
EXAMINATION PROTOCOLS CONSISTENT WITH THE NEW STANDARD.
  (C)  UNTIL  SUCH TIME AS THE SUPERINTENDENT PROMULGATES REGULATIONS IN
ACCORDANCE  WITH  SUBSECTION  (B)  OF  THIS  SECTION,  THOSE  STOCK  AND
NON-STOCK INSURANCE COMPANIES TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH TWO
OF  SUBSECTION  (B) OF SECTION ONE THOUSAND THREE HUNDRED TWENTY-FOUR OF
THIS CHAPTER APPLIED, AND NOTWITHSTANDING ANY OTHER PROVISION OF LAW  TO
THE  CONTRARY,  A  CARRIER  MAY  FILE FOR AND USE A RATE INCREASE NOT TO
EXCEED FIVE PERCENT OF THE CARRIER'S CURRENT RATE UPON A FILING WITH THE
SUPERINTENDENT FOR THE NEXT SUCCEEDING POLICY YEAR IF SUCH SUBMISSION IS
FILED WITH THE SUPERINTENDENT NO LATER THAN JULY FIFTEENTH OF  THE  YEAR
PRIOR  TO  WHICH  IT  IS TO BE APPLIED.  IF A CARRIER DOES NOT FILE SUCH
RATE ADJUSTMENT WITHIN SUCH TIME  FRAME,  THEN  SUCH  INSURER  SHALL  BE
SUBJECT  TO  THE RATE APPROVAL PROCESS IN PLACE AT THE TIME THIS SECTION
SHALL TAKE EFFECT.
  S 4. The insurance law is amended by adding a new section 1326 to read
as follows:
  S 1326.  STATUTORY  ASSOCIATION  MEMBERSHIP.    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 APPLY, NO LIABILITIES ARISING FROM ANY MEMBERSHIP IN ANY  STATU-
TORY  ASSOCIATION  SHALL BE DUE AND OWING FROM SUCH COMPANIES UNLESS AND
UNTIL SUCH LIABILITIES CAN ONLY BE SATISFIED BY A CONTRIBUTION FROM  THE
INSURER,  AND  THE  INSURER  IS  NOTIFIED OF SAME NOT LESS THAN ONE YEAR
PRIOR TO THE EXPECTED DATE THAT SUCH OBLIGATION WILL BE DUE  AND  OWING.
SUCH  LIABILITIES  SHALL NOT BE AGGREGATED AND SHALL NOT INCLUDE CONTIN-
GENT LIABILITIES, BUT REFLECT SPECIFIC CLAIMS LIABILITIES  ACTUALLY  DUE
AND  OWING  OR EXPECTED TO BE DUE AND OWING IN THAT YEAR FOR WHICH THERE
ARE NO OTHER ASSOCIATION OR POOL RESOURCES,  INCLUDING  CURRENT  PREMIUM
INCOME, TO SATISFY SUCH OBLIGATIONS; FURTHER, COMPANIES, UPON RECEIPT OF

S. 5374--A                          3

NOTICE  OF SUCH OBLIGATION, SHALL HAVE THE RIGHT TO AUDIT ANY SUCH ASSO-
CIATION AND ITS REQUEST FOR COVERAGE OF SUCH LIABILITIES.
  S  5.  Subsection (c) of section 2343 of the insurance law, as amended
by section 27 of part B of chapter 58 of the laws of 2008, is amended to
read as follows:
  (c) Notwithstanding any other provision of this chapter,  no  applica-
tion for an order of rehabilitation or liquidation of a domestic insurer
whose  primary liability arises from the business of medical malpractice
insurance, as that term is defined in subsection  (b)  of  section  five
thousand  five hundred one of this chapter, shall be made on the grounds
specified in subsection (a)  or  (c)  of  section  seven  thousand  four
hundred  two  of  this chapter at any time [prior to June thirtieth, two
thousand eleven].
  S 6. Subsection (b) of section 6108 of the insurance law is amended to
read as follows:
  (b) If the admitted assets of any such insurer are at any time  insuf-
ficient  for  the payment of losses and expenses after providing for all
other liabilities of such insurer and the minimum surplus to policyhold-
ers required by this chapter, the advisory committee shall, within thir-
ty days thereafter, order an assessment for the amount necessary to  pay
such  losses and expenses, and authorize the attorney-in-fact to collect
from each subscriber liable therefor a pro rata share of the  amount  of
such  assessment, subject to the limit specified in the contract of such
subscriber and to maintain an action therefor in the name of the  attor-
ney-in-fact.  FOR THE PURPOSES OF THIS SUBSECTION, ADMITTED ASSETS SHALL
INCLUDE A PRESUMPTION OF A SURCHARGE OR ASSESSMENT, WHERE APPLICABLE, OR
BOTH, HAVING BEEN AUTHORIZED BY THE ADVISORY COUNCIL OR DIRECTED BY  THE
SUPERINTENDENT  CONSISTENT  WITH THE TERMS OF THE SUBSCRIBERS' CONTRACTS
AND COLLECTED BY AN INSURER.
  S 7. Subsection (c) of section 6111 of the insurance law is amended to
read as follows:
  (c) The contingent liability of subscribers for additional premiums or
assessments shall [not] be included as an asset in the financial  state-
ment of a reciprocal insurer.
  S 8. This act shall take effect immediately.

co-Sponsors

2009-S5374B (ACTIVE) - Details

Current Committee:: Senate Insurance
Laws Affected:: Amd §§1301, 1311, 2343, 6108, & 6111, rpld & add §1325, add §1326, Ins L

2009-S5374B (ACTIVE) - Summary

2009-S5374B (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S5374B

 TITLE OF BILL :

An act to amend the insurance law, in relation to an exemption to
certain provisions of law relating to risk-based capital for
property/casualty insurance companies; and in relation to the
financial regulation of medical malpractice liability insurance
companies; and to repeal certain provisions of such law relating
thereto


 SUMMARY OF PROVISIONS :

Section 1: Amends Insurance Law section 1301 to allow medical
malpractice insurance to apply the value of surcharges or assessments
to admitted asset calculations without having to collect such
surcharges or assessments, except on a schedule and subject to
limitations already provided for in law.

Section 2: Amends Insurance Law section 1311 to provide for the
inclusion of admitted assets allowed under this legislation into the
calculation of required surplus.

Section 3: Amends Insurance Law section 1325 to permanently exempt
medical malpractice insurance companies from the provisions of law

relating to the risk based financial standards applying to all
property casualty insurance companies pursuant to section 1324 of the
insurance law. It also directs the superintendent of insurance to
develop a new financial standards framework for medical malpractice
insurers operating in the state. The new standards are to be created
by June 2011 and put into effect in January 2012. The new financial
standards to be developed by the Department should be based on
consultations with insurers and other interested parties.

Section 4: Creates Insurance Law section 1326 to limit the application
of contingent liabilities to the financial statements of medical
malpractice insurers. Three of the bill also provides authority for
insurers to adjust rates upward no more than five percent per year on
a file and use basis.

Section 5: Amends Insurance Law section 2343 to make permanent certain
prohibitions on requests for orders of rehabilitation or liquidation
for medical malpractice insurance carriers.

Section 6: Amends Insurance Law section 6108 to create a presumption
for reciprocal insurers that surcharges or assessments are components
of admitted assets.

Section 7: Amends Insurance Law section 6111 to allow for contingent
liabilities of subscribers to be included in the calculation of
admitted assets for the purpose of completion of the financial
statement.

 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 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.  Further, the unique financial realities of these carriers which
are mono-line, doctor-owned entities where premium cost controls and
continuity in the availability of coverage are primary business
objectives.

 FISCAL INFORMATION :

None to the State.

 EFFECTIVE DATE :
Immediately.

2009-S5374B (ACTIVE) - Bill Text download pdf

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

                                 5374--B

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                             April 27, 2009
                               ___________

Introduced  by  Sens.  KLEIN, HASSELL-THOMPSON -- read twice and ordered
  printed, and when printed to be committed to the Committee  on  Insur-
  ance  --  committee  discharged,  bill  amended,  ordered reprinted as
  amended and recommitted to said  committee  --  committee  discharged,
  bill  amended,  ordered  reprinted  as amended and recommitted to said
  committee

AN ACT to amend the insurance  law,  in  relation  to  an  exemption  to
  certain   provisions   of  law  relating  to  risk-based  capital  for
  property/casualty insurance companies; and in relation to  the  finan-
  cial  regulation of medical malpractice liability insurance companies;
  and to repeal certain provisions of such law relating thereto

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

  Section  1.  Subsection  (a)  of  section 1301 of the insurance law is
amended by adding two new paragraphs 19 and 20 to read as follows:
  (19) 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 APPLY, THE AMOUNT OF THE SURCHARGE ON PREMI-
UMS TO SATISFY A PROJECTED DEFICIENCY THAT IS ATTRIBUTABLE TO THE PREMI-
UM LEVELS ESTABLISHED PURSUANT TO SECTION FORTY OF CHAPTER  TWO  HUNDRED
SIXTY-SIX  OF THE LAWS OF NINETEEN HUNDRED EIGHTY-SIX, AS SUCH SURCHARGE
IS PROVIDED IN SUCH CHAPTER, WHETHER OR NOT SUCH SURCHARGE  IS  ACTUALLY
IMPOSED  BY THE SUPERINTENDENT; PROVIDED, HOWEVER, THAT SUCH SURCHARGES,
IF IMPOSED, WILL BE SUBJECT TO THE  LIMITATIONS  PROVIDED  FOR  IN  THIS
CHAPTER RELATING TO THE AMOUNTS TO BE COLLECTED IN A GIVEN POLICY YEAR.
  (20)  FOR RECIPROCAL INSURERS ORGANIZED AND LICENSED PURSUANT TO ARTI-
CLE SIXTY-ONE OF THIS CHAPTER TO WRITE MEDICAL MALPRACTICE INSURANCE  AS
THAT  TERM  IS  DEFINED  IN SUBSECTION (B) OF SECTION FIVE THOUSAND FIVE
HUNDRED ONE OF THIS CHAPTER, THE AMOUNT OF ANY ASSESSMENT AUTHORIZED  BY
SUBSECTIONS  (A)  AND  (B)  OF SECTION SIX THOUSAND ONE HUNDRED EIGHT OF
THIS CHAPTER; PROVIDED, HOWEVER, THAT SUCH ASSESSMENTS, IF IMPOSED, WILL

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11667-06-9

S. 5374--B                          2

BE SUBJECT TO THE LIMITATIONS PROVIDED FOR IN THIS CHAPTER  RELATING  TO
THE AMOUNTS TO BE COLLECTED IN A GIVEN POLICY YEAR.
  S  2.  Section  1311  of  the insurance law is amended by adding a new
subsection (e) to read as follows:
  (E) IN DETERMINING THE TOTAL ADMITTED ASSETS OF AN INSURER THE  SUPER-
INTENDENT  SHALL  INCLUDE  IN  SUCH  DETERMINATION ALL ASSETS ALLOWED AS
ADMITTED ASSETS PURSUANT TO SUBSECTION (A) OF SECTION ONE THOUSAND THREE
HUNDRED ONE OF THIS ARTICLE.
  S 3. Section 1325 of the insurance law is REPEALED and a  new  section
1325 is added to read as follows:
  S 1325. EXEMPTION. (A) FOR THE PURPOSES OF EXEMPTING CERTAIN INSURANCE
COMPANIES  FROM  THE  PROVISIONS  OF  SECTION ONE THOUSAND THREE HUNDRED
TWENTY-FOUR OF THIS ARTICLE, THE SUPERINTENDENT SHALL EXEMPT THOSE STOCK
AND NON-STOCK INSURANCE COMPANIES TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH
TWO OF SUBSECTION (B) OF SUCH SECTION APPLIES.
  (B) THE SUPERINTENDENT SHALL NO LATER THAN JUNE THIRTIETH,  TWO  THOU-
SAND  ELEVEN  PROMULGATE,  FOR  APPLICATION  DURING  THE NEXT SUCCEEDING
CALENDAR YEAR, AND AFTER  CONSULTATION WITH THE COMMISSIONER  OF  HEALTH
AND  DOMESTIC  MEDICAL  MALPRACTICE INSURERS WRITING MEDICAL MALPRACTICE
INSURANCE IN THIS STATE, A REGULATION WHICH PROVIDES A  SEPARATE  FINAN-
CIAL  SECURITY  STANDARD  AND  RATE APPROVAL PROCESS FOR THOSE STOCK AND
NON-STOCK INSURANCE COMPANIES TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH TWO
OF SUBSECTION (B) OF SECTION ONE THOUSAND THREE HUNDRED  TWENTY-FOUR  OF
THIS  CHAPTER  APPLY.  SUCH STANDARD SHALL BE SUFFICIENTLY DISTINCT FROM
THAT PROVIDED FOR IN THIS CHAPTER OR RELATED REGULATION OR  UTILIZED  BY
THE  SUPERINTENDENT IN THE EXAMINATION OF PROPERTY AND CASUALTY CARRIERS
SO AS TO REFLECT THE UNIQUE  MARKET,  FINANCIAL  AND  LEGAL  OBLIGATIONS
IMPOSED UPON MEDICAL MALPRACTICE INSURANCE CARRIERS.  FURTHER, THE REGU-
LATION  SHALL INCLUDE NEW STATUTORY FINANCIAL STATEMENT BLANKS AND EXAM-
INATION PROTOCOLS CONSISTENT WITH THE NEW STANDARD.
  (C) UNTIL SUCH TIME AS THE SUPERINTENDENT PROMULGATES  REGULATIONS  IN
ACCORDANCE  WITH  SUBSECTION  (B)  OF  THIS  SECTION,  THOSE  STOCK  AND
NON-STOCK INSURANCE COMPANIES TO WHICH SUBPARAGRAPH (B) OF PARAGRAPH TWO
OF SUBSECTION (B) OF SECTION ONE THOUSAND THREE HUNDRED  TWENTY-FOUR  OF
THIS  CHAPTER APPLIED, AND NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO
THE CONTRARY, A CARRIER MAY FILE FOR AND USE  A  RATE  INCREASE  NOT  TO
EXCEED FIVE PERCENT OF THE CARRIER'S CURRENT RATE UPON A FILING WITH THE
SUPERINTENDENT FOR THE NEXT SUCCEEDING POLICY YEAR IF SUCH SUBMISSION IS
FILED  WITH  THE SUPERINTENDENT NO LATER THAN JULY FIFTEENTH OF THE YEAR
PRIOR TO WHICH IT IS TO BE APPLIED.   IF A CARRIER DOES  NOT  FILE  SUCH
RATE  ADJUSTMENT  WITHIN  SUCH  TIME  FRAME,  THEN SUCH INSURER SHALL BE
SUBJECT TO THE RATE APPROVAL PROCESS IN PLACE AT THE TIME  THIS  SECTION
SHALL TAKE EFFECT.
  S 4. The insurance law is amended by adding a new section 1326 to read
as follows:
  S  1326.  STATUTORY  ASSOCIATION  MEMBERSHIP.    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  APPLY, NO LIABILITIES ARISING FROM ANY MEMBERSHIP IN ANY STATU-
TORY ASSOCIATION SHALL BE DUE AND OWING FROM SUCH COMPANIES  UNLESS  AND
UNTIL  SUCH LIABILITIES CAN ONLY BE SATISFIED BY A CONTRIBUTION FROM THE
INSURER, AND THE INSURER IS NOTIFIED OF SAME  NOT  LESS  THAN  ONE  YEAR
PRIOR  TO  THE EXPECTED DATE THAT SUCH OBLIGATION WILL BE DUE AND OWING.
SUCH LIABILITIES SHALL NOT BE AGGREGATED AND SHALL NOT  INCLUDE  CONTIN-
GENT  LIABILITIES,  BUT REFLECT SPECIFIC CLAIMS LIABILITIES ACTUALLY DUE
AND OWING OR EXPECTED TO BE DUE AND OWING IN THAT YEAR FOR  WHICH  THERE

S. 5374--B                          3

ARE  NO  OTHER  ASSOCIATION OR POOL RESOURCES, INCLUDING CURRENT PREMIUM
INCOME, TO SATISFY SUCH OBLIGATIONS; FURTHER, COMPANIES, UPON RECEIPT OF
NOTICE OF SUCH OBLIGATION, SHALL HAVE THE RIGHT TO AUDIT ANY SUCH  ASSO-
CIATION AND ITS REQUEST FOR COVERAGE OF SUCH LIABILITIES.
  S  5.  Subsection (c) of section 2343 of the insurance law, as amended
by section 27 of part B of chapter 58 of the laws of 2008, is amended to
read as follows:
  (c) Notwithstanding any other provision of this chapter,  no  applica-
tion for an order of rehabilitation or liquidation of a domestic insurer
whose  primary liability arises from the business of medical malpractice
insurance, as that term is defined in subsection  (b)  of  section  five
thousand  five hundred one of this chapter, shall be made on the grounds
specified in subsection (a)  or  (c)  of  section  seven  thousand  four
hundred  two  of  this chapter at any time [prior to June thirtieth, two
thousand eleven].
  S 6. Subsection (b) of section 6108 of the insurance law is amended to
read as follows:
  (b) If the admitted assets of any such insurer are at any time  insuf-
ficient  for  the payment of losses and expenses after providing for all
other liabilities of such insurer and the minimum surplus to policyhold-
ers required by this chapter, the advisory committee shall, within thir-
ty days thereafter, order an assessment for the amount necessary to  pay
such  losses and expenses, and authorize the attorney-in-fact to collect
from each subscriber liable therefor a pro rata share of the  amount  of
such  assessment, subject to the limit specified in the contract of such
subscriber and to maintain an action therefor in the name of the  attor-
ney-in-fact.  FOR THE PURPOSES OF THIS SUBSECTION, ADMITTED ASSETS SHALL
INCLUDE A PRESUMPTION OF A SURCHARGE OR ASSESSMENT, WHERE APPLICABLE, OR
BOTH, HAVING BEEN AUTHORIZED BY THE ADVISORY COUNCIL OR DIRECTED BY  THE
SUPERINTENDENT  CONSISTENT  WITH THE TERMS OF THE SUBSCRIBERS' CONTRACTS
AND COLLECTED BY AN INSURER.
  S 7. Subsection (c) of section 6111 of the insurance law is amended to
read as follows:
  (c) The contingent liability of subscribers for additional premiums or
assessments shall [not] be included as an asset in the financial  state-
ment of a reciprocal insurer.
  S 8. This act shall take effect immediately.

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Sponsored By

Jeffrey D. Klein

Archive: Last Bill Status - In Senate Committee Insurance Committee

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Ruth Hassell-Thompson

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