S T A T E   O F   N E W   Y O R K
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                                  7130

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                             March 23, 2009
                               ___________

Introduced  by M. of A. MORELLE, SPANO -- Multi-Sponsored by -- M. of A.
  GALEF -- (at request of  the  Thruway  Authority)  --  read  once  and
  referred to the Committee on Insurance

AN  ACT  to  amend the insurance law, the public authorities law and the
  tax law, in relation to authorizing the New York state thruway author-
  ity to form a captive insurance company

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

  Section  1.  Subsections  (e) and (g) of section 7002 of the insurance
law, as amended by chapter 188 of the laws of 2003, are amended to  read
as follows:
  (e) "Industrial insured" means an insured:
  (1) whose net worth exceeds one hundred million dollars;
  (2)  who  is  a  member  of  a  holding company system whose net worth
exceeds one hundred million dollars;
  (3) who is the metropolitan transportation authority and its statutory
subsidiaries. When filing an application to form a pure  captive  insur-
ance  company  the  metropolitan  transportation  authority shall submit
written notice of such filing to the governor, the  temporary  president
of the senate and the speaker of the assembly; [or]
  (4)  WHO IS THE THRUWAY AUTHORITY AND ITS STATUTORY SUBSIDIARIES. WHEN
FILING AN APPLICATION TO FORM A PURE CAPTIVE INSURANCE COMPANY THE THRU-
WAY AUTHORITY SHALL SUBMIT WRITTEN NOTICE OF SUCH FILING TO  THE  GOVER-
NOR, THE TEMPORARY PRESIDENT OF THE SENATE AND THE SPEAKER OF THE ASSEM-
BLY; OR
  (5)  who  is  a  city  with  a population of one million or more. When
filing an application to form a pure captive insurance company,  a  city
with  a population of one million or more shall submit written notice of
such filing to the governor, the temporary president of the  senate  and
the speaker of the assembly.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09380-04-9

              

A. 7130                             2

  (g)  "Industrial insured group" means any group of unaffiliated indus-
trial insureds that are engaged in  similar  or  related  businesses  or
activities, however, the metropolitan transportation authority OR STATU-
TORY  SUBSIDIARY,  THE  THRUWAY  AUTHORITY  OR  STATUTORY SUBSIDIARY and
cities with a population of one million or more shall not be a member of
an industrial insured group, and that collectively:
  (1)  own,  control  or  hold with power to vote all of the outstanding
voting shares of stock of a group captive insurance company incorporated
as a stock insurer; or
  (2) represent one hundred percent of the voting  members  of  a  group
captive insurance company organized as a mutual insurer.
  S  2.  Subdivision  15 of section 354 of the public authorities law is
renumbered subdivision 16 and a new subdivision 15 is added to  read  as
follows:
  15.  THE  AUTHORITY  MAY  ESTABLISH  A  SUBSIDIARY CORPORATION FOR THE
PURPOSE OF FORMING A PURE CAPTIVE INSURANCE COMPANY AS PROVIDED  FOR  IN
SECTION  SEVEN  THOUSAND  TWO  OF THE INSURANCE LAW. THE MEMBERS OF SUCH
SUBSIDIARY CORPORATION OF THE AUTHORITY SHALL BE THE SAME PERSONS  HOLD-
ING  THE  OFFICES  OF  MEMBERS OF THE AUTHORITY.  SUCH SUBSIDIARY CORPO-
RATION SHALL HAVE ALL OF THE PRIVILEGES, IMMUNITIES, TAX EXEMPTIONS  AND
OTHER EXEMPTIONS OF THE AUTHORITY AND OF THE AUTHORITY'S PROPERTY, FUNC-
TIONS  AND ACTIVITIES. THE SUBSIDIARY CORPORATION OF THE AUTHORITY SHALL
BE SUBJECT TO SUIT IN ACCORDANCE WITH SECTION THREE HUNDRED  SIXTY-ONE-B
OF  THIS  TITLE.  THE  EMPLOYEES  OF SUCH SUBSIDIARY CORPORATION, EXCEPT
THOSE WHO ARE ALSO EMPLOYEES OF  THE  AUTHORITY,  SHALL  NOT  BE  DEEMED
EMPLOYEES OF THE AUTHORITY.
  IF  THE  AUTHORITY  SHALL  DETERMINE  THAT A CAPTIVE INSURANCE COMPANY
SHOULD BE IN THE FORM OF A PUBLIC BENEFIT CORPORATION, IT  SHALL  CREATE
EACH  SUCH  PUBLIC  BENEFIT CORPORATION BY EXECUTING AND FILING WITH THE
SECRETARY OF STATE A CERTIFICATE OF INCORPORATION, WHICH MAY BE  AMENDED
FROM  TIME  TO  TIME  BY  FILING, WHICH SHALL SET FORTH THE NAME OF SUCH
PUBLIC BENEFIT SUBSIDIARY CORPORATION, ITS DURATION, THE LOCATION OF ITS
PRINCIPAL OFFICE, AND ITS PURPOSES.    SUCH  PUBLIC  BENEFIT  SUBSIDIARY
CORPORATION  SHALL  BE  A  BODY POLITIC AND CORPORATE AND SHALL HAVE ALL
THOSE POWERS VESTED IN THE AUTHORITY BY THE  PROVISIONS  OF  THIS  TITLE
WHICH  THE  AUTHORITY  SHALL  DETERMINE TO INCLUDE IN ITS CERTIFICATE OF
INCORPORATION EXCEPT THE POWER TO CONTRACT INDEBTEDNESS.
  S 3. Subdivision (a) of section 1500 of the tax  law,  as  amended  by
chapter 188 of the laws of 2003, is amended to read as follows:
  (a)  The  term "insurance corporation" includes a corporation, associ-
ation, joint stock company or association, person, society,  aggregation
or  partnership,  by  whatever  name known, doing an insurance business,
and, notwithstanding the provisions of section fifteen hundred twelve of
this article, shall include (1) a risk retention  group  as  defined  in
subsection  (n)  of section five thousand nine hundred two of the insur-
ance law, (2) the state insurance fund and (3)  a  corporation,  associ-
ation,  joint stock company or association, person, society, aggregation
or partnership doing an insurance business as a member of the  New  York
insurance  exchange described in section six thousand two hundred one of
the  insurance  law.  The  definition  of  the  "state  insurance  fund"
contained  in  this  subdivision  shall  be limited in its effect to the
provisions of this article and the related provisions  of  this  chapter
and  shall  have  no  force  and  effect other than with respect to such
provisions. The  term  "insurance  corporation"  shall  also  include  a
captive insurance company doing a captive insurance business, as defined
in  subsections (c) and (b), respectively, of section seven thousand two

A. 7130                             3

of the insurance law; provided, however, "insurance  corporation"  shall
not  include  the  metropolitan  transportation  authority  OR STATUTORY
SUBSIDIARY OR AFFILIATE, THE THRUWAY AUTHORITY OR  STATUTORY  SUBSIDIARY
OR  AFFILIATE,  or a public benefit corporation or not-for-profit corpo-
ration formed by a city with a population of one million or more  pursu-
ant  to  subsection  (a) of section seven thousand five of the insurance
law, [each of] which is expressly exempt from the payment of fees, taxes
or assessments, whether state or local. The term "insurance corporation"
shall also include an unauthorized  insurer  operating  from  an  office
within  the  state,  pursuant  to  paragraph  five  of subsection (b) of
section one thousand one hundred one and subsection (i) of  section  two
thousand one hundred seventeen of the insurance law.
  S  4.  Subdivision (a) of section 1502-b of the tax law, as separately
amended by section 3 of part H3 of chapter 62 and  chapter  188  of  the
laws of 2003, is amended to read as follows:
  (a) In lieu of the taxes and tax surcharge imposed by sections fifteen
hundred  one, fifteen hundred two-a, fifteen hundred five-a, and fifteen
hundred ten of this article, every captive insurance company licensed by
the superintendent of insurance pursuant to the  provisions  of  article
seventy of the insurance law, other than the metropolitan transportation
authority OR STATUTORY SUBSIDIARY OR AFFILIATE, THE THRUWAY AUTHORITY OR
STATUTORY  SUBSIDIARY  OR  AFFILIATE and a public benefit corporation or
not-for-profit corporation formed by a city with  a  population  of  one
million  or  more  pursuant  to subsection (a) of section seven thousand
five of the insurance law, [each of] which is expressly exempt from  the
payment of fees, taxes or assessments whether state or local, shall, for
the  privilege  of  exercising its corporate franchise, pay a tax on (1)
all gross direct premiums, less  return  premiums  thereon,  written  on
risks  located or resident in this state and (2) all assumed reinsurance
premiums, less return premiums thereon,  written  on  risks  located  or
resident  in  this  state.  The  rate of the tax imposed on gross direct
premiums shall be four-tenths of one percent on all or any part  of  the
first twenty million dollars of premiums, three-tenths of one percent on
all  or  any part of the second twenty million dollars of premiums, two-
tenths of one percent on all or any part of  the  third  twenty  million
dollars of premiums, and seventy-five thousandths of one percent on each
dollar  of  premiums thereafter. The rate of the tax on assumed reinsur-
ance premiums shall  be  two  hundred  twenty-five  thousandths  of  one
percent on all or any part of the first twenty million dollars of premi-
ums, one hundred and fifty thousandths of one percent on all or any part
of  the  second twenty million dollars of premiums, fifty thousandths of
one percent on all or any part of the third twenty  million  dollars  of
premiums  and  twenty-five  thousandths of one percent on each dollar of
premiums thereafter. The tax imposed by this section shall be  equal  to
the  greater  of (i) the sum of the tax imposed on gross direct premiums
and the tax imposed on assumed reinsurance premiums or (ii)  five  thou-
sand dollars.
  S 5. This act shall take effect immediately.