S. 4188 2
5. The current approach to dealing with catastrophes is an after-the-
fact response model that is inadequate to protect New Yorkers from
catastrophic loss. New York consumers need a public/private partnership
which improves the means to provide financial assistance to families
that are victims of catastrophes, enhances prevention and mitigation
measures, improves recovery and rebuilding processes and educates home-
owners on issues surrounding catastrophe management;
6. The result of unprecedented levels of insured losses from natural
catastrophes in recent years, as evidenced by Hurricane Andrew, the 2004
four-storm hurricane season in Florida, tsunamis in Asia, the Northridge
earthquake in California and the most recent devastation in Louisiana,
Mississippi, Alabama and Texas from Katrina and Rita, have resulted in
numerous insurers determining that in order to protect their solvency,
it is necessary for them to reduce their exposure to catastrophic loss-
es. The instability of the global reinsurance market, also caused in
part by these events, has also increased the pressure on insurers to
reduce their exposure to catastrophic loss;
7. Mortgages require reliable property insurance, and the unavailabil-
ity of reliable property insurance would therefore make most real estate
transactions impossible. In addition, the public health, safety, and
welfare demand that structures damaged or destroyed in a catastrophe be
repaired or reconstructed as soon as possible. Therefore, the potential
inability of the private sector insurance and reinsurance markets to
maintain sufficient capacity to enable residents of this state to obtain
property insurance coverage in the private sector endangers the economy
of the state and endangers the public health, safety, and welfare.
Accordingly, state action to correct for this inability of the private
sector constitutes a valid and necessary public and governmental
purpose;
8. Insolvencies and financial impairments resulting from Hurricane
Andrew and other events demonstrate that many property insurers have not
collected and retained premiums sufficient to maintain reserves,
surplus, and reinsurance in amounts to enable the insurers to pay all
claims in full in the event of a major catastrophe. State action is
therefore necessary to protect the public so that all covered
catastrophic losses can be paid;
9. A public/private partnership that strengthens and builds on the
existing private insurance market through the creation of a state catas-
trophe fund will result in additional insurance capacity sufficient to
ameliorate the current dangers to the state's economy and to the public
health, safety, and welfare;
10. Successful public/private partnerships recognize that government
has an important and appropriate role to take reasonable steps to
enhance the ability of the private sector to meet critical public needs;
11. It is essential to the efficient functioning of a state program to
increase insurance capacity that revenues received by a state catastro-
phe fund be exempt from federal taxation. It is therefore the intent of
the legislature that this program be structured as a state trust fund
under the direction and control of the comptroller and operate exclu-
sively for the purpose of protecting and advancing the state's interest
in maintaining insurance capacity in this state; and
12. It is therefore appropriate for the legislature to supplement and
amend New York state law to better prepare and protect New York state
residents from the perils of catastrophes by creating a public/private
partnership to protect the economic integrity of the homeowners insur-
ance marketplace; ensure proper consumer education; improve rebuilding
S. 4188 3
and recovery processes; and recognize the need for continuous recogni-
tion and implementation of improved catastrophe management programs.
S 3. The insurance law is amended by adding a new article 60 to read
as follows:
ARTICLE 60
NEW YORK CONSUMERS CATASTROPHE
PREPAREDNESS AND PROTECTION ACT
SECTION 6001. DEFINITIONS.
6002. REIMBURSEMENT CONTRACTS.
6003. REIMBURSEMENT PREMIUMS.
6004. REVENUE BONDS.
6005. ADDITIONAL POWERS AND DUTIES.
6006. ADVISORY COUNCIL.
6007. FEDERAL OR MULTISTATE CATASTROPHIC FUNDS.
6008. REVERSION OF FUND ASSETS UPON TERMINATION.
S 6001. DEFINITIONS. THE TERMS USED IN THIS ARTICLE SHALL HAVE THE
MEANINGS SET FORTH IN THIS CHAPTER, EXCEPT TO THE EXTENT ADDED OR MODI-
FIED BY THE FOLLOWING:
(A) "ACTUARIALLY INDICATED" MEANS, WITH RESPECT TO PREMIUMS PAID BY
INSURERS FOR REIMBURSEMENT PROVIDED BY THE FUND, AN AMOUNT DETERMINED
ACCORDING TO PRINCIPLES OF ACTUARIAL SCIENCE TO BE ADEQUATE, BUT NOT
EXCESSIVE, IN THE AGGREGATE, TO PAY CURRENT AND FUTURE OBLIGATIONS AND
EXPENSES OF THE FUND, INCLUDING ADDITIONAL AMOUNTS IF NEEDED TO RETIRE
REVENUE BONDS ISSUED UNDER SECTION SIX THOUSAND FOUR OF THIS ARTICLE,
AND DETERMINED ACCORDING TO PRINCIPLES OF ACTUARIAL SCIENCE TO REFLECT
EACH INSURER'S RELATIVE EXPOSURE TO LOSSES FROM COVERED EVENTS.
(B) "COVERED LOSS" MEANS:
(1) ALL STORMS, REGARDLESS OF QUANTITY, THAT OCCUR IN A CALENDAR YEAR,
THAT ARE DECLARED TO BE HURRICANES BY THE NATIONAL HURRICANE CENTER,
WHICH STORMS CAUSE INSURED LOSSES IN THIS STATE;
(2) ALL EARTHQUAKES, REGARDLESS OF QUANTITY, THAT OCCUR IN A CALENDAR
YEAR, THAT ARE DECLARED TO BE EARTHQUAKES BY THE UNITED STATES GEOLOGI-
CAL SURVEY, WHICH EARTHQUAKES CAUSE INSURED LOSSES IN THIS STATE;
(3) ALL TERRORIST ATTACKS, REGARDLESS OF QUANTITY, THAT OCCUR IN A
CALENDAR YEAR, THAT ARE DECLARED TO BE TERRORIST ATTACKS BY THE GOVER-
NOR, WHICH TERRORIST ATTACKS CAUSE INSURED LOSSES IN THIS STATE; AND
(4) ALL ICE STORMS, REGARDLESS OF QUANTITY, THAT OCCUR IN A CALENDAR
YEAR, WHICH STORMS CAUSE INSURED LOSSES IN THIS STATE.
(C) "COVERED POLICY" MEANS ANY INSURANCE POLICY COVERING RESIDENTIAL
PROPERTY IN THIS STATE, INCLUDING, BUT NOT LIMITED TO, ANY HOMEOWNER'S,
MOBILE HOME OWNER'S, FARM OWNER'S, CONDOMINIUM ASSOCIATION, CONDOMINIUM
UNIT OWNER'S, TENANT'S, OR APARTMENT BUILDING POLICY, OR ANY OTHER POLI-
CY COVERING A RESIDENTIAL STRUCTURE OR ITS CONTENTS ISSUED BY ANY
AUTHORIZED INSURER, INCLUDING THE NEW YORK PROPERTY INSURANCE UNDERWRIT-
ING ASSOCIATION OR SIMILAR ENTITY CREATED PURSUANT TO LAW. "COVERED
POLICY" DOES NOT INCLUDE ANY REINSURANCE AGREEMENT OR ANY POLICY THAT
EXCLUDES COVERAGE FOR THE PERILS REFERRED TO IN SUBSECTION (B) OF THIS
SECTION.
(D) "FUND" MEANS THE NEW YORK CATASTROPHE FUND ESTABLISHED IN SECTION
NINETY-SEVEN-JJJJ OF THE STATE FINANCE LAW.
(E) "LOSSES" MEANS DIRECT INCURRED LOSSES UNDER COVERED POLICIES IN A
CALENDAR YEAR, INCLUDING LOSSES ATTRIBUTABLE TO ADDITIONAL LIVING
EXPENSE COVERAGE NOT TO EXCEED FORTY PERCENT OF THE INSURED VALUE OF A
RESIDENTIAL STRUCTURE OR ITS CONTENTS, AND EXCLUDING LOSS ADJUSTMENT
EXPENSES AND FAIR RENTAL VALUE LOSSES AND BUSINESS INTERRUPTION LOSSES.
S. 4188 4
(F) "RETENTION" MEANS THE AMOUNT OF LOSSES BELOW WHICH AN INSURER IS
NOT ENTITLED TO REIMBURSEMENT FROM THE FUND. AN INSURER'S RETENTION
SHALL BE CALCULATED AS FOLLOWS:
(1) THE COMPTROLLER SHALL CALCULATE AND REPORT TO EACH INSURER THE
RETENTION MULTIPLES FOR THAT YEAR. FOR THE CONTRACT YEAR BEGINNING IN
TWO THOUSAND ELEVEN THE RETENTION MULTIPLE SHALL BE EQUAL TO TWO BILLION
DOLLARS, DIVIDED BY THE TOTAL ESTIMATED REIMBURSEMENT PREMIUM FOR THE
CONTRACT YEAR; FOR SUBSEQUENT YEARS, THE RETENTION MULTIPLE SHALL BE
EQUAL TO TWO BILLION DOLLARS, ADJUSTED TO REFLECT THE PERCENTAGE GROWTH
IN INSURED VALUES FOR COVERED POLICIES SINCE TWO THOUSAND ELEVEN,
DIVIDED BY THE TOTAL ESTIMATED REIMBURSEMENT PREMIUM FOR THE CONTRACT
YEAR.
(2) THE RETENTION MULTIPLE DETERMINED UNDER PARAGRAPH ONE OF THIS
SUBSECTION SHALL BE ADJUSTED TO REFLECT THE COVERAGE LEVEL ELECTED BY
THE INSURER. FOR INSURERS ELECTING THE NINETY PERCENT COVERAGE LEVEL,
THE ADJUSTED RETENTION MULTIPLE IS ONE HUNDRED PERCENT OF THE AMOUNT
DETERMINED UNDER PARAGRAPH ONE OF THIS SUBSECTION. FOR INSURERS ELECTING
THE SEVENTY-FIVE PERCENT COVERAGE LEVEL, THE RETENTION MULTIPLE IS ONE
HUNDRED TWENTY PERCENT OF THE AMOUNT DETERMINED UNDER PARAGRAPH ONE OF
THIS SUBSECTION. FOR INSURERS ELECTING THE FORTY-FIVE PERCENT COVERAGE
LEVEL, THE ADJUSTED RETENTION MULTIPLE IS TWO HUNDRED PERCENT OF THE
AMOUNT DETERMINED UNDER PARAGRAPH ONE OF THIS SUBSECTION.
(3) AN INSURER SHALL DETERMINE ITS PROVISIONAL RETENTION BY MULTIPLY-
ING ITS PROVISIONAL REIMBURSEMENT PREMIUM BY THE APPLICABLE ADJUSTED
RETENTION MULTIPLE, AND SHALL DETERMINE ITS ACTUAL RETENTION BY MULTI-
PLYING ITS ACTUAL REIMBURSEMENT PREMIUM BY THE APPLICABLE ADJUSTED
RETENTION MULTIPLE.
S 6002. REIMBURSEMENT CONTRACTS. (A) THE COMPTROLLER SHALL ENTER INTO
AN ANNUAL, CALENDAR YEAR CONTRACT WITH EACH INSURER WRITING COVERED
POLICIES IN THIS STATE TO PROVIDE TO THE INSURER THE REIMBURSEMENT
DESCRIBED IN SUBSECTION (B) OF THIS SECTION, IN EXCHANGE FOR THE
REIMBURSEMENT PREMIUM PAID TO THE FUND UNDER SECTION SIX THOUSAND THREE
OF THIS ARTICLE. AS A CONDITION OF DOING BUSINESS IN THIS STATE, EACH
SUCH INSURER SHALL ENTER INTO SUCH A CONTRACT.
(B) (1) THE CONTRACT SHALL CONTAIN A PROMISE BY THE COMPTROLLER TO
REIMBURSE THE INSURER FOR FORTY-FIVE PERCENT, SEVENTY-FIVE PERCENT, OR
NINETY PERCENT OF ITS LOSSES FROM EACH COVERED LOSS IN EXCESS OF THE
INSURER'S RETENTION, PLUS TEN PERCENT OF THE REIMBURSED LOSSES TO COVER
LOSS ADJUSTMENT EXPENSES.
(2) THE INSURER MUST ELECT ONE OF THE PAYMENT PERCENTAGES SPECIFIED IN
THIS SUBSECTION AND MAY, UPON RENEWAL OF A REIMBURSEMENT CONTRACT:
(I) ELECT A LOWER PAYMENT PERCENTAGE IF NO REVENUE BONDS ISSUED UNDER
SUBSECTION (A) OF SECTION SIX THOUSAND FOUR OF THIS ARTICLE AFTER A
COVERED EVENT ARE OUTSTANDING; OR
(II) ELECT A HIGHER PAYMENT PERCENTAGE IF IT PAYS TO THE FUND AN ACTU-
ARIALLY APPROPRIATE EQUALIZATION CHARGE AS DETERMINED BY THE COMP-
TROLLER.
(3) ALL MEMBERS OF AN INSURER GROUP MUST ELECT THE SAME PAYMENT
PERCENTAGE THE NEW YORK PROPERTY INSURANCE UNDERWRITING ASSOCIATION OR
ANY OTHER SIMILAR TYPE PLAN OR OTHER RESIDUAL MARKET ENTITY MUST ELECT
THE NINETY PERCENT PAYMENT PERCENTAGE.
(4) THE CONTRACT SHALL PROVIDE THAT REIMBURSEMENT AMOUNTS SHALL NOT
BE REDUCED BY REINSURANCE PAID OR PAYABLE TO THE INSURER FROM OTHER
SOURCES; HOWEVER, RECOVERIES FROM SUCH OTHER SOURCES, TAKEN TOGETHER
WITH REIMBURSEMENTS UNDER THE CONTRACT, MAY NOT EXCEED ONE HUNDRED
PERCENT OF THE INSURER'S LOSSES FROM COVERED EVENTS. IF SUCH RECOVERIES
S. 4188 5
AND REIMBURSEMENTS EXCEED ONE HUNDRED PERCENT OF THE INSURER'S LOSSES
FROM COVERED EVENTS, AND IF THERE IS NO AGREEMENT BETWEEN THE INSURER
AND THE REINSURER TO THE CONTRARY, ANY AMOUNT IN EXCESS OF ONE HUNDRED
PERCENT OF THE INSURER'S LOSSES SHALL BE RETURNED TO THE FUND.
(C) THE CONTRACT SHALL ALSO PROVIDE THAT THE OBLIGATION OF THE COMP-
TROLLER WITH RESPECT TO ALL CONTRACTS COVERING A PARTICULAR YEAR SHALL
NOT EXCEED THE CURRENT BALANCE OF THE FUND, TOGETHER WITH THE MAXIMUM
AMOUNT THAT THE COMPTROLLER IS ABLE TO RAISE THROUGH THE ISSUANCE OF
REVENUE BONDS UNDER SECTION SIX THOUSAND FOUR OF THIS ARTICLE. THE
CONTRACT SHALL REQUIRE THE COMPTROLLER TO ANNUALLY NOTIFY INSURERS OF
THE FUND'S ANTICIPATED BORROWING CAPACITY FOR THE NEXT YEAR, THE CURRENT
BALANCE OF THE FUND, AND THE INSURER'S ESTIMATED SHARE OF TOTAL
REIMBURSEMENT TO BE PAID TO THE FUND. FOR ALL REGULATORY AND REINSUR-
ANCE PURPOSES, AN INSURER MAY CALCULATE ITS PROJECTED PAYOUT FROM THE
FUND AS ITS SHARE OF THE TOTAL FUND PREMIUM MULTIPLIED BY THE SUM OF
CURRENT FUND BALANCE AND BONDING CAPACITY AS REPORTED UNDER THIS
SUBSECTION. IN MAY AND OCTOBER OF EACH YEAR, THE COMPTROLLER SHALL
PUBLISH IN THE STATE REGISTER A STATEMENT OF THE FUND'S ANTICIPATED
BORROWING CAPACITY AND THE CURRENT BALANCE OF THE FUND.
(D) (1) THE CONTRACT SHALL REQUIRE THE INSURER TO REPORT TO THE COMP-
TROLLER ON DECEMBER THIRTY-FIRST OF EACH YEAR, AND QUARTERLY THEREAFTER,
THE INSURER'S LOSSES FROM COVERED EVENTS FOR THE YEAR. THE CONTRACT
SHALL REQUIRE THE COMPTROLLER TO DETERMINE AND PAY, AS SOON AS PRACTICA-
BLE AFTER RECEIVING THESE REPORTS, THE INITIAL AMOUNT OF REIMBURSEMENT
DUE AND ADJUSTMENTS TO THIS AMOUNT BASED ON LATER LOSS INFORMATION. THE
ADJUSTMENTS TO REIMBURSEMENT AMOUNTS SHALL REQUIRE THE COMPTROLLER TO
PAY, OR THE INSURER TO RETURN, AMOUNTS REFLECTING THE MOST RECENT CALCU-
LATION OF LOSSES.
(2) IF THE COMPTROLLER DETERMINES THAT THE CURRENT BALANCE OF THE
FUND, TOGETHER WITH THE AMOUNT THAT THE COMPTROLLER DETERMINES THAT IT
IS POSSIBLE TO RAISE THROUGH REVENUE BONDS ISSUED UNDER SECTION SIX
THOUSAND FOUR OF THIS ARTICLE, ARE INSUFFICIENT TO PAY REIMBURSEMENT TO
ALL INSURERS AT THE LEVEL PROMISED IN THE CONTRACT, THE COMPTROLLER
SHALL:
(I) PAY TO EACH INSURER THE AMOUNT OF REIMBURSEMENT IT IS OWED, UP TO
AN AMOUNT EQUAL TO THE PROJECTED PAYOUT DETERMINED UNDER SUBSECTION (B)
OF THIS SECTION; AND
(II) THEREAFTER, ESTABLISH THE PRORATED REIMBURSEMENT LEVEL AT THE
HIGHEST LEVEL FOR WHICH ANY REMAINING FUND BALANCE OR BOND PROCEEDS ARE
SUFFICIENT.
(E) THE CONTRACT SHALL PROVIDE THAT IF AN INSURER DEMONSTRATES TO THE
COMPTROLLER THAT IT IS LIKELY TO QUALIFY FOR REIMBURSEMENT UNDER THE
CONTRACT, AND DEMONSTRATES TO THE COMPTROLLER THAT THE IMMEDIATE RECEIPT
OF MONEYS IS LIKELY TO PREVENT THE INSURER FROM BECOMING INSOLVENT, THE
COMPTROLLER SHALL LOAN THE INSURER, AT MARKET INTEREST RATES, THE
AMOUNTS NECESSARY TO MAINTAIN THE SOLVENCY OF THE INSURER, UP TO FIFTY
PERCENT OF THE COMPTROLLER'S ESTIMATE OF THE REIMBURSEMENT DUE THE
INSURER. THE INSURER'S REIMBURSEMENT SHALL BE REDUCED BY AN AMOUNT EQUAL
TO THE AMOUNT OF THE LOAN AND INTEREST THEREON.
(F) THE CONTRACT SHALL PROVIDE THAT IN THE EVENT OF THE INSOLVENCY OF
AN INSURER, THE FUND SHALL PAY DIRECTLY TO NEW YORK STATE GUARANTY ASSO-
CIATION FOR THE BENEFIT OF THE INSURER'S POLICYHOLDERS IN THIS STATE THE
NET AMOUNT OF REIMBURSEMENT MONEYS OWED TO THE INSURER. AS USED IN THIS
SUBSECTION, THE "NET AMOUNT OF ALL REIMBURSEMENT MONEYS" MEANS THAT
AMOUNT WHICH REMAINS AFTER REIMBURSEMENT FOR PRELIMINARY OR DUPLICATE
PAYMENTS OWED TO PRIVATE REINSURERS OR OTHER INURING REINSURANCE
S. 4188 6
PAYMENTS TO PRIVATE REINSURERS THAT SATISFY STATUTORY OR CONTRACTUAL
OBLIGATIONS OF THE INSOLVENT INSURER ATTRIBUTABLE TO COVERED EVENTS TO
SUCH REINSURERS. SUCH PRIVATE REINSURERS SHALL BE REIMBURSED OR OTHER-
WISE PAID PRIOR TO PAYMENT TO THE NEW YORK PROPERTY/CASUALTY INSURANCE
SECURITY FUND AS PROVIDED IN SECTION SEVEN THOUSAND SIX HUNDRED THREE OF
THIS CHAPTER NOTWITHSTANDING ANY LAW TO THE CONTRARY. THE SECURITY FUND
SHALL PAY ALL CLAIMS UP TO THE MAXIMUM AMOUNT PERMITTED BY ARTICLE
SEVENTY-SIX OF THIS CHAPTER; THEREAFTER, ANY REMAINING MONEYS SHALL BE
PAID PRO RATA TO CLAIMS NOT FULLY SATISFIED.
(G) THE COMPTROLLER MUST ADOPT THE INITIAL CONTRACT FORM NO LATER THAN
SEPTEMBER FIRST, TWO THOUSAND ELEVEN AND MUST ADOPT THE INITIAL PREMIUM
FORMULA NO LATER THAN OCTOBER FIRST, TWO THOUSAND ELEVEN. INITIAL
REIMBURSEMENT CONTRACTS UNDER THIS ARTICLE MUST BE ENTERED INTO NO
EARLIER THAN NOVEMBER FIRST, TWO THOUSAND ELEVEN AND NO LATER THAN
DECEMBER FIFTEENTH, TWO THOUSAND ELEVEN.
S 6003. REIMBURSEMENT PREMIUMS. (A) EACH REIMBURSEMENT CONTRACT SHALL
REQUIRE THE INSURER TO ANNUALLY PAY TO THE FUND AN ACTUARIALLY INDICATED
PREMIUM FOR THE REIMBURSEMENT PROMISED.
(B) THE COMPTROLLER SHALL SELECT AN INDEPENDENT CONSULTANT TO DEVELOP
A FORMULA FOR DETERMINING THE ACTUARIALLY INDICATED PREMIUM TO BE PAID
TO THE FUND. THE FORMULA SHALL SPECIFY, FOR EACH ZIP CODE OR OTHER
LIMITED GEOGRAPHICAL AREA, THE AMOUNT TO BE PAID BY AN INSURER FOR EACH
ONE THOUSAND DOLLARS OF INSURED VALUE UNDER COVERED POLICIES IN THAT ZIP
CODE OR OTHER AREA. IN ESTABLISHING PREMIUMS, THE COMPTROLLER SHALL
CONSIDER THE COVERAGE LEVEL ELECTED UNDER SUBSECTION (B) OF SECTION SIX
THOUSAND TWO OF THIS ARTICLE AND ANY FACTORS THAT TEND TO ENHANCE THE
ACTUARIAL SOPHISTICATION OF RATEMAKING FOR THE FUND, INCLUDING DEDUCT-
IBLES, TYPE OF CONSTRUCTION, TYPE OF COVERAGE PROVIDED, RELATIVE CONCEN-
TRATION OF RISKS, A FACTOR PROVIDING FOR MORE RAPID CASH BUILDUP IN THE
FUND UNTIL THE FUND CAPACITY FOR A SINGLE COVERED SEASON IS FULLY FUNDED
AND OTHER SUCH FACTORS DEEMED BY THE COMPTROLLER TO BE APPROPRIATE. THE
COMPTROLLER MAY, AT ANY TIME, REVISE THE FORMULA PURSUANT TO THE PROCE-
DURE PROVIDED IN THIS SUBSECTION.
(C) NO LATER THAN SEPTEMBER FIRST OF EACH YEAR, EACH INSURER SHALL
NOTIFY THE COMPTROLLER OF ITS INSURED VALUES UNDER COVERED POLICIES BY
ZIP CODE, AS OF JUNE THIRTIETH OF THAT YEAR. ON THE BASIS OF THESE
REPORTS, THE COMPTROLLER SHALL CALCULATE THE PREMIUM DUE FROM THE INSUR-
ER, BASED ON THE FORMULA ADOPTED UNDER SUBSECTION (B) OF THIS SECTION.
THE INSURER SHALL PAY THE REQUIRED ANNUAL PREMIUM PURSUANT TO A PERIODIC
PAYMENT PLAN SPECIFIED IN THE CONTRACT. THE COMPTROLLER SHALL PROVIDE
FOR PAYMENT OF REIMBURSEMENT PREMIUM IN PERIODIC INSTALLMENTS AND FOR
THE ADJUSTMENT OF PROVISIONAL PREMIUM INSTALLMENTS COLLECTED PRIOR TO
SUBMISSION OF THE EXPOSURE REPORT TO REFLECT DATA IN THE EXPOSURE
REPORT.
(D) ALL PREMIUMS PAID TO THE FUND UNDER REIMBURSEMENT CONTRACTS SHALL
BE TREATED AS PREMIUM FOR APPROVED REINSURANCE FOR ALL ACCOUNTING AND
REGULATORY PURPOSES.
(E) IN ORDER TO PROVIDE STARTUP MONEYS FOR THE ADMINISTRATION OF THE
FUND, EACH INSURER SUBJECT TO THIS SECTION SHALL PAY TO THE FUND AN
ADVANCE PREMIUM PAYMENT OF ONE THOUSAND DOLLARS NO LATER THAN MARCH
THIRTY-FIRST, TWO THOUSAND ELEVEN. THE DEPARTMENT SHALL COLLECT THE
ADVANCE PREMIUM PAYMENTS REQUIRED BY THIS SUBSECTION ON BEHALF OF THE
COMPTROLLER. THE INSURER SHALL RECEIVE A CREDIT AGAINST FUTURE PREMIUMS
FOR THE ADVANCE PAYMENT.
S 6004. REVENUE BONDS. (A) UPON THE OCCURRENCE OF A COVERED EVENT AND
A DETERMINATION, THAT THE MONEYS IN THE FUND ARE OR WILL BE INSUFFICIENT
S. 4188 7
TO PAY REIMBURSEMENT AT THE LEVELS PROMISED IN THE REIMBURSEMENT
CONTRACTS, THE DIVISION OF THE BUDGET, UPON AUTHORIZATION OF THE GOVER-
NOR, SHALL ENTER INTO AGREEMENTS WITH THE DORMITORY AUTHORITY FOR THE
ISSUANCE OF REVENUE BONDS FOR THE BENEFIT OF THE FUND.
(B) ANY AGREEMENT ENTERED INTO OR ANY PAYMENTS MADE OR TO BE MADE
THEREUNDER MAY BE ASSIGNED AND PLEDGED BY THE DORMITORY AUTHORITY AS
SECURITY FOR ITS BONDS, NOTES, OR OTHER OBLIGATIONS.
(C) ANY SUCH AGREEMENTS SHALL PROVIDE THAT THE OBLIGATION OF THE
DIRECTOR OF THE BUDGET OR OF THE STATE TO FUND OR TO PAY THE AMOUNTS
THEREIN PROVIDED FOR SHALL NOT CONSTITUTE A DEBT OF THE STATE WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION IN THE EVENT THE
DORMITORY AUTHORITY ASSIGNS OR PLEDGES THE SERVICE CONTRACT PAYMENTS AS
SECURITY FOR ITS BONDS, NOTES, OR OTHER OBLIGATIONS AND SHALL BE DEEMED
EXECUTORY ONLY TO THE EXTENT MONEYS ARE AVAILABLE AND THAT NO LIABILITY
SHALL BE INCURRED BY THE STATE BEYOND THE MONEYS AVAILABLE FOR THE
PURPOSE, AND THAT SUCH OBLIGATION IS SUBJECT TO ANNUAL APPROPRIATIONS BY
THE LEGISLATURE.
(D) ANY AGREEMENT ENTERED INTO PURSUANT TO THIS SECTION SHALL PROVIDE
FOR STATE COMMITMENTS TO PROVIDE ANNUALLY TO THE DORMITORY AUTHORITY A
SUM OR SUMS, UPON SUCH TERMS AND CONDITIONS AS SHALL BE DEEMED APPROPRI-
ATE BY THE DIRECTOR OF THE BUDGET, TO FUND THE PRINCIPAL, INTEREST, OR
OTHER RELATED PAYMENTS REQUIRED FOR ANY BONDS, NOTES, OR OTHER OBLI-
GATIONS OF THE DORMITORY AUTHORITY ISSUED PURSUANT TO THIS SECTION.
(E) TO OBTAIN FUNDS FOR THE PURPOSES OF THIS SECTION, THE AUTHORITY
SHALL HAVE POWER FROM TIME TO TIME TO ISSUE NEGOTIABLE BONDS OR NOTES.
UNLESS THE CONTEXT SHALL CLEARLY INDICATE OTHERWISE, WHENEVER THE WORD
"BOND" OR "BONDS" ARE USED IN THIS SECTION, SUCH WORDS SHALL INCLUDE A
NOTE OR NOTES OF AUTHORITY.
(F) THE STATE HEREBY COVENANTS WITH THE PURCHASERS, HOLDERS, AND
OWNERS FROM TIME TO TIME OF THE BONDS OF THE AUTHORITY ISSUED PURSUANT
TO THIS SECTION THAT IT WILL NOT REPEAL, REVOKE, RESCIND, MODIFY, OR
AMEND THE PROVISIONS OF THIS SECTION WHICH RELATE TO THE MAKING OF ANNU-
AL AGREEMENT PAYMENTS TO THE AUTHORITY WITH RESPECT TO SUCH BONDS AS TO
LIMIT, IMPAIR, OR IMPEDE THE RIGHTS AND REMEDIES GRANTED TO BONDHOLDERS
UNDER TITLE FOUR OF ARTICLE EIGHT OF THE PUBLIC AUTHORITIES LAW OR
OTHERWISE DIMINISH THE SECURITY PLEDGED TO SUCH PURCHASERS, HOLDERS, AND
OWNERS OR SIGNIFICANTLY IMPAIR THE PROSPECT OF PAYMENT OF ANY SUCH BOND.
(G) IF THE COMPTROLLER DETERMINES THAT THE AMOUNT OF REVENUE PRODUCED
UNDER SECTION SIX THOUSAND THREE OF THIS ARTICLE IS INSUFFICIENT TO FUND
REVENUE BONDS TO PAY REIMBURSEMENT AT THE LEVELS PROMISED IN THE
REIMBURSEMENT CONTRACTS, THE COMPTROLLER SHALL DIRECT THE DEPARTMENT TO
LEVY AN EMERGENCY ASSESSMENT ON DIRECT PREMIUMS FOR ALL PROPERTY AND
CASUALTY LINES OF BUSINESS IN THIS STATE, EXCEPT FOR POLICIES WRITTEN
UNDER THE NATIONAL FLOOD INSURANCE PROGRAM, MEDICAL MALPRACTICE, WORK-
ERS' COMPENSATION AND ACCIDENT AND HEALTH INSURANCE. THE ASSESSMENT
SHALL BE SPECIFIED AS A PERCENTAGE OF FUTURE PREMIUM COLLECTIONS AND IS
SUBJECT TO ANNUAL ADJUSTMENTS BY THE COMPTROLLER TO REFLECT CHANGES IN
PREMIUMS SUBJECT TO ASSESSMENTS COLLECTED UNDER THIS SUBSECTION IN ORDER
TO MEET DEBT OBLIGATIONS. THE SAME PERCENTAGE SHALL APPLY TO ALL POLI-
CIES IN LINES OF BUSINESS SUBJECT TO THE ASSESSMENT ISSUED OR RENEWED
DURING THE TWELVE-MONTH PERIOD BEGINNING ON THE EFFECTIVE DATE OF THE
ASSESSMENT. A PREMIUM IS NOT SUBJECT TO AN ANNUAL ASSESSMENT UNDER THIS
SUBSECTION IN EXCESS OF SIX PERCENT OF PREMIUM WITH RESPECT TO OBLI-
GATIONS ARISING OUT OF LOSSES ATTRIBUTABLE TO ANY ONE CONTRACT YEAR, AND
A PREMIUM IS NOT SUBJECT TO AN AGGREGATE ANNUAL ASSESSMENT UNDER THIS
SUBSECTION IN EXCESS OF TEN PERCENT OF PREMIUM. AN ANNUAL ASSESSMENT
S. 4188 8
UNDER THIS SUBSECTION SHALL CONTINUE UNTIL THE REVENUE BONDS ISSUED WITH
RESPECT TO WHICH THE ASSESSMENT WAS IMPOSED ARE OUTSTANDING, INCLUDING
ANY BONDS THE PROCEEDS OF WHICH WERE USED TO REFUND THE REVENUE BONDS,
UNLESS ADEQUATE PROVISION HAS BEEN MADE FOR THE PAYMENT OF THE BONDS
UNDER THE DOCUMENTS AUTHORIZING ISSUANCE OF THE BONDS. WITH RESPECT TO
EACH INSURER COLLECTING PREMIUMS THAT ARE SUBJECT TO THE ASSESSMENT, THE
INSURER SHALL COLLECT THE ASSESSMENT AT THE SAME TIME AS IT COLLECTS THE
PREMIUM PAYMENT FOR EACH POLICY AND SHALL REMIT THE ASSESSMENT COLLECTED
TO THE FUND OR CORPORATION AS PROVIDED IN THE ORDER ISSUED BY THE
DEPARTMENT. THE DEPARTMENT SHALL VERIFY THE ACCURATE AND TIMELY
COLLECTION AND REMITTANCE OF EMERGENCY ASSESSMENTS AND SHALL MAINTAIN
REPORTS AND REPORT THEIR FINDINGS TO THE COMPTROLLER. EACH INSURER
COLLECTING ASSESSMENTS SHALL PROVIDE THE INFORMATION WITH RESPECT TO
PREMIUMS AND COLLECTIONS AS MAY BE REQUIRED BY THE DEPARTMENT TO ENABLE
THE OFFICE TO MONITOR AND VERIFY COMPLIANCE WITH THIS SUBSECTION.
S 6005. ADDITIONAL POWERS AND DUTIES. (A) THE COMPTROLLER MAY PROCURE
REINSURANCE FROM LICENSED REINSURERS FOR THE PURPOSE OF MAXIMIZING THE
CAPACITY OF THE FUND.
(B) IN ADDITION TO BORROWING UNDER SECTION SIX THOUSAND FOUR OF THIS
ARTICLE, THE COMPTROLLER MAY ALSO BORROW FROM ANY MARKET SOURCES AT
PREVAILING INTEREST RATES.
(C) EACH FISCAL YEAR, THE LEGISLATURE SHALL APPROPRIATE FROM THE
INVESTMENT INCOME OF THE FUND AN AMOUNT NO LESS THAN TEN PERCENT AND NO
MORE THAN THIRTY-FIVE PERCENT OF THE INVESTMENT INCOME FROM THE PRIOR
FISCAL YEAR FOR THE PURPOSE OF PROVIDING FUNDING FOR LOCAL GOVERNMENTS,
STATE AGENCIES, PUBLIC AND PRIVATE EDUCATIONAL INSTITUTIONS, AND NONPRO-
FIT ORGANIZATIONS TO SUPPORT PROGRAMS INTENDED TO IMPROVE CATASTROPHE
PREPAREDNESS, PREVENT AND REDUCE POTENTIAL LOSSES FROM A COVERED LOSS,
PROVIDE RESEARCH INTO MEANS TO PREVENT AND REDUCE SUCH LOSSES, EDUCATE
OR INFORM THE PUBLIC AS TO MEANS TO REDUCE LOSSES FROM COVERED EVENTS,
ASSIST THE PUBLIC IN DETERMINING THE APPROPRIATENESS OF PARTICULAR
UPGRADES TO STRUCTURES OR IN THE FINANCING OF SUCH UPGRADES, PROVIDING
FUNDING FOR THE ENFORCEMENT OF CATASTROPHE APPROPRIATE BUILDING CODES,
OR PROTECT LOCAL INFRASTRUCTURE FROM POTENTIAL DAMAGE FROM A COVERED
LOSS. MONEYS SHALL FIRST BE AVAILABLE FOR APPROPRIATION UNDER THIS
SUBSECTION IN FISCAL YEAR TWO THOUSAND TWELVE. MONEYS IN EXCESS OF THE
TEN PERCENT SPECIFIED IN THIS SUBSECTION SHALL NOT BE AVAILABLE FOR
APPROPRIATION UNDER THIS SUBSECTION IF THE COMPTROLLER APPROPRIATION OF
INVESTMENT INCOME FROM THE FUND WOULD JEOPARDIZE THE ACTUARIAL SOUNDNESS
OF THE FUND.
(D) THE COMPTROLLER MAY ALLOW INSURERS TO COMPLY WITH REPORTING
REQUIREMENTS AND REPORTING FORMAT REQUIREMENTS USING ALTERNATIVE METHODS
OF REPORTING IF THE PROPER ADMINISTRATION OF THE FUND IS NOT THEREBY
IMPAIRED AND IF THE ALTERNATIVE METHODS PRODUCE DATA THAT IS CONSISTENT
FOR THE PURPOSES OF THIS ARTICLE.
(E) IN ORDER TO ASSURE THE EQUITABLE OPERATION OF THE FUND, THE COMP-
TROLLER MAY IMPOSE A REASONABLE FEE ON AN INSURER TO RECOVER COSTS
INVOLVED IN REPROCESSING INACCURATE, INCOMPLETE, OR UNTIMELY EXPOSURE
DATA SUBMITTED BY THE INSURER.
S 6006. ADVISORY COUNCIL. THE GOVERNOR, IN CONSULTATION WITH THE
SPEAKER OF THE ASSEMBLY AND THE TEMPORARY PRESIDENT OF THE SENATE, SHALL
APPOINT A THIRTEEN MEMBER ADVISORY COUNCIL. THE ADVISORY COUNCIL SHALL
CONSIST OF AN ACTUARY, A METEOROLOGIST, AN ENGINEER, A REPRESENTATIVE OF
INSURERS, A REPRESENTATIVE OF INSURANCE AGENTS, A REPRESENTATIVE OF
REINSURERS, A CONSUMER REPRESENTATIVE, A LABOR REPRESENTATIVE, A REPRE-
SENTATIVE FROM LAW ENFORCEMENT, A REPRESENTATIVE FROM FIREFIGHTERS, A
S. 4188 9
REPRESENTATIVE FROM THE DIVISION OF CODE ENFORCEMENT AND ADMINISTRATION,
A REPRESENTATIVE OF STATE EMERGENCY MANAGEMENT OFFICE, AND ONE ADDI-
TIONAL AT-LARGE REPRESENTATIVE, TO PROVIDE THE COMPTROLLER WITH INFORMA-
TION AND ADVICE IN CONNECTION WITH ITS DUTIES UNDER THIS ARTICLE.
MEMBERS OF THE ADVISORY COUNCIL SHALL SERVE AT THE PLEASURE OF THE
GOVERNOR AND ARE ELIGIBLE FOR ALL ACTUAL AND NECESSARY EXPENSES ASSOCI-
ATED WITH SERVING ON THE ADVISORY COUNCIL. IN ADDITION TO PROVIDING THE
COMPTROLLER WITH INFORMATION AND ADVICE IN CONNECTION WITH ITS DUTIES,
THE ADVISORY COUNCIL SHALL BE SPECIFICALLY CHARGED WITH DEVELOPING
PREVENTION AND MITIGATION STANDARDS TO INCLUDE:
(A) THE DEVELOPMENT AND IMPLEMENTATION OF STATE MANDATED BUILDING
CODES APPROPRIATE FOR THE RISK WITH NO ALLOWANCE FOR WEAKER CODES TO BE
ADOPTED BY LOCAL COMMUNITIES;
(B) ADEQUATE ENFORCEMENT OF RISK APPROPRIATE BUILDING CODES;
(C) BUILDING MATERIALS THAT PREVENT OR SIGNIFICANTLY LESSEN POTENTIAL
DAMAGE FROM THE NATURAL OR MANMADE COVERED LOSS;
(D) BUILDING METHODS THAT PREVENT OR SIGNIFICANTLY LESSEN THE POTEN-
TIAL DAMAGE FROM THE NATURAL OR MANMADE COVERED LOSS; AND
(E) FOCUS ON PREVENTION AND MITIGATION FOR ANY SUBSTANTIALLY DAMAGED
STRUCTURE, AS WELL AS DEVELOPING AND RECOMMENDING IDEAS THAT WILL AID IN
THE RECOVERY, REBUILDING AND RENEWAL PROCESS, AND IN ANALYZING AND
DEVELOPING WAYS TO CONTINUOUSLY IMPROVE THE ADMINISTRATION AND PURPOSE
OF THE FUND. FURTHERMORE, THE ADVISORY COUNCIL SHALL ANALYZE, STUDY AND
DEVELOP ACTUARIALLY APPROPRIATE INSURANCE DISCOUNTS TO BE OFFERED TO
INDIVIDUALS SHOULD THEY PERFORM MITIGATION AND PREVENTION IMPROVEMENTS
TO STRUCTURES. THE ADVISORY COUNCIL SHALL REPORT ITS FINDINGS TO THE
COMPTROLLER, WHO SHALL, IN CONSULTATION WITH THE SUPERINTENDENT, IMPLE-
MENT SAID DISCOUNTS. FURTHERMORE, THE COMPTROLLER SHALL CONSIDER, AND
TO THE EXTENT POSSIBLE IMPLEMENT SAID FINDINGS, AND ANNUALLY REPORT TO
THE LEGISLATURE ON ANY AND ALL RECOMMENDATIONS OF THE ADVISORY COUNCIL
THAT ARE CONSISTENT WITH THE PURPOSES AND GOALS OF THIS ARTICLE.
S 6007. FEDERAL OR MULTISTATE CATASTROPHIC FUNDS. UPON THE CREATION
OF A FEDERAL OR MULTISTATE CATASTROPHIC INSURANCE OR REINSURANCE PROGRAM
INTENDED TO SERVE PURPOSES SIMILAR TO THE PURPOSES OF THE FUND CREATED
PURSUANT TO SECTION NINETY-SEVEN-JJJJ OF THE STATE FINANCE LAW, THE
COMPTROLLER SHALL PROMPTLY MAKE RECOMMENDATIONS TO THE LEGISLATURE FOR
HOW THE FUND CAN COORDINATE WITH THE FEDERAL OR MULTISTATE PROGRAM AND
FOR SUCH OTHER ACTIONS AS THE COMPTROLLER FINDS APPROPRIATE IN THE
CIRCUMSTANCES.
S 6008. REVERSION OF FUND ASSETS UPON TERMINATION. THE FUND AND THE
DUTIES OF THE COMPTROLLER UNDER THIS ARTICLE MAY BE TERMINATED ONLY BY
LAW. UPON TERMINATION OF THE FUND, ALL ASSETS OF THE FUND SHALL REVERT
TO THE STATE GENERAL REVENUE FUND.
S 4. The state finance law is amended by adding a new section 97-jjjj
to read as follows:
S 97-JJJJ. NEW YORK STATE CATASTROPHE FUND. 1. THERE IS HEREBY ESTAB-
LISHED IN THE JOINT CUSTODY OF THE COMPTROLLER AND THE SUPERINTENDENT OF
INSURANCE A SPECIAL FUND TO BE KNOWN AS THE "NEW YORK STATE CATASTROPHE
FUND".
2. SUCH FUND SHALL CONSIST OF ALL MONEYS CREDITED OR APPROPRIATED FOR
TRANSFER THERETO FROM ANY SOURCE ACCORDING TO LAW.
3. MONEYS OF THE FUND SHALL BE AVAILABLE ONLY TO PAY OBLIGATIONS OF
SUCH FUND ARISING OUT OF REIMBURSEMENT CONTRACTS ENTERED INTO PURSUANT
TO SECTION SIX THOUSAND TWO OF THE INSURANCE LAW, PAYMENT OF DEBTS
INCLUDING OBLIGATIONS ARISING OUT OF REVENUE BONDS ISSUED PURSUANT TO
SECTION SIX THOUSAND FOUR OF THE INSURANCE LAW, COSTS OF THE MITIGATION
S. 4188 10
PROGRAM ESTABLISHED IN SECTION SIX THOUSAND SIX OF THE INSURANCE LAW,
COSTS OF PROCURING REINSURANCE AND OTHER COSTS RELATED TO THE ADMINIS-
TRATION OF THE FUND.
4. THE COMPTROLLER MAY EMPLOY OR CONTRACT WITH SUCH STAFF AND PROFES-
SIONALS HE DEEMS NECESSARY FOR THE ADMINISTRATION OF THE FUND AND SHALL
DEVELOP THE RULES AND REGULATIONS NECESSARY TO ESTABLISH THIS FUND AND
TO ENHANCE SUCH FUND'S POTENTIAL ABILITY TO RESPOND TO CLAIMS FOR
COVERED CATASTROPHIC EVENTS. SUCH RULES AND REGULATIONS SHALL BE ESTAB-
LISHED WITH SUFFICIENT FLEXIBILITY SO AS TO ACCOMMODATE INSURERS IN
SITUATIONS OF AN UNUSUAL NATURE OR WHERE UNDUE HARDSHIP MAY RESULT,
EXCEPT THAT SUCH FLEXIBILITY MAY NOT IN ANY WAY IMPAIR, OVERRIDE, SUPER-
SEDE OR CONSTRAIN THE PUBLIC PURPOSE OF THE FUND AND MUST BE CONSISTENT
WITH SOUND INSURANCE PRACTICES.
5. MONEYS OF THE FUND SHALL BE KEPT SEPARATE AND SHALL NOT BE COMMIN-
GLED WITH ANY OTHER MONEYS IN THE CUSTODY OF THE COMPTROLLER. ANY SUCH
MONEYS IN THE FUND MAY, IN THE DISCRETION OF THE COMPTROLLER, BE
INVESTED IN OBLIGATIONS IN WHICH THE COMPTROLLER IS AUTHORIZED TO INVEST
PURSUANT TO SECTION NINETY-EIGHT-A OF THIS ARTICLE. ANY INCOME OR INTER-
EST FROM SUCH INVESTMENT SHALL BE CREDITED TO SUCH FUND.
6. ALL PAYMENTS OF MONEYS FROM THE FUND SHALL BE MADE ON THE AUDIT AND
WARRANT OF THE COMPTROLLER.
S 5. The sum of ten million dollars ($10,000,000), or so much thereof
as may be necessary, is hereby appropriated to the New York catastrophe
fund from any moneys in the state treasury in the general fund to the
credit of the state purposes account not otherwise appropriated for
services and expenses of the insurance department for the purposes of
carrying out the provisions of this act. Such sum shall be payable on
the audit and warrant of the state comptroller on vouchers certified or
approved by the superintendent of the department of insurance, or his or
her duly designated representative in the manner provided by law. No
expenditure shall be made from this appropriation until a certificate of
approval of availability shall have been issued by the director of the
budget and filed with the state comptroller and a copy filed with the
chairman of the senate finance committee and the chairman of the assem-
bly ways and means committee. Such certificate may be amended from time
to time by the director of the budget and a copy of each such amendment
shall be filed with the state comptroller, the chairman of the senate
finance committee and the chairman of the assembly ways and means
committee.
S 6. This act shall take effect on the one hundred twentieth day after
it shall have become a law. Effective immediately, the addition, amend-
ment and/or repeal of any rule or regulation necessary for the implemen-
tation of this act on its effective date is authorized to be made on or
before such effective date.
