Senate Bill S7219

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

                                  7219

                            I N  S E N A T E

                             March 24, 2010
                               ___________

Introduced  by  Sen. BRESLIN -- 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 excess line brokers

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

  Section 1. Paragraphs 3 and 4 of subsection (b) of section 2118 of the
insurance  law,  paragraph  3  as  amended by chapter 684 of the laws of
1993, subparagraph (A) of paragraph 3 as amended by chapter 498  of  the
laws  of  1996, and paragraph 4 as amended by chapter 630 of the laws of
1988, are amended to read as follows:
  (3) (A) The submission of insurance documents to the excess line asso-
ciation shall be accompanied by a statement subscribed to, and  affirmed
by,  the  licensee or sublicensee as true under the penalties of perjury
that, after diligent effort, the full amount of insurance required could
not be procured, from authorized insurers, each of which  is  authorized
to  write  insurance  of  the  kind requested and which the licensee has
reason to believe might consider writing the type of coverage  or  class
of  insurance involved, and further showing that the amount of insurance
procured from an unauthorized insurer is only the excess over the amount
procurable from an authorized insurer. The licensee, however,  shall  be
excused  from  affirming  that  a diligent effort, as defined above, was
made to procure the coverage from authorized insurers if the  licensee's
affidavit  is accompanied by the affidavit of another broker involved in
the placement affirming as true under the  penalties  of  perjury  that,
after  diligent  effort  by the affirming broker, the required insurance
could not be procured from an authorized  insurer  which  the  affirming
broker had reason to believe might consider writing the type of coverage
or  class  of  insurance involved. The licensee and the affirming broker
shall be excused from affirming that a diligent effort was made (I)  FOR
TRANSACTIONS  DEFINED  IN SUBPARAGRAPH (F) OF THIS PARAGRAPH, OR (II) if
the superintendent  determines,  pursuant  to  paragraph  four  of  this
subsection, that no declinations are required.
  (B)  A  licensee  or  affirming broker shall be considered to have the
reason to believe required by subparagraph (A) of this paragraph if  the

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

                                                           LBD16053-02-0

S. 7219                             2

decision to offer the risk to the authorized insurer was based on any of
the following:
  (i)  Recent acceptance by the authorized insurer of a type of coverage
or class of insurance similar to that for which  coverage  is  presently
being sought;
  (ii)  Advertising  by  the  authorized insurer or its agent indicating
that the authorized insurer is willing to consider acceptance of this or
a similar type of coverage or class of insurance;
  (iii) Media communications  (i.e.,  newspaper  or  magazine  articles,
trade  publications,  television  and radio programming) indicating that
the authorized insurer is writing, or is considering writing, this  type
of coverage or class of insurance;
  (iv) Communications with other insurance professionals, risk managers,
trade associations, the excess line association or the insurance depart-
ment, which indicates that the authorized insurer might consider writing
this type of coverage or class of insurance; or
  (v) Any other valid basis for making such decision.
  (C) Every licensee, or affirming broker, in connection with the place-
ment  of each risk pursuant to this section, shall record on the affida-
vit required pursuant to subparagraph (A) of this paragraph the informa-
tion relied upon that formed the basis of such licensee's  or  affirming
broker's  reason  to  believe that the authorized insurer might consider
writing the type of coverage or class of insurance involved.
  (D) Declinations obtained from authorized insurers  which  are  affil-
iates  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.
  (E)  (I)  The  superintendent,  in a regulation, may determine whether
there are circumstances where it may be appropriate, due to the unavail-
ability from an authorized insurer of the leading type  of  coverage  or
the  leading  class  of  insurance required by the insured, to waive the
requirement in subparagraph (A) of this paragraph that  a  licensee  may
procure  from an unauthorized insurer only the amount of insurance which
is excess over the amount procurable from an authorized insurer, and  to
instead  permit the licensee to procure from an unauthorized insurer the
full amount of insurance required by the insured.
  (II) WITH RESPECT TO 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 A LICENSEE MAY BE SUBMITTED AS A
DECLINATION BY THE LICENSEE OR AFFIRMING BROKER.
  (F) NO DILIGENT EFFORT SHALL BE REQUIRED WHERE THE POLICY PROCURED:
  (I) INSURES A PUBLICLY TRADED ENTITY,
  (II) INSURES AN ENTITY WHICH PAYS AGGREGATE  ANNUAL  PREMIUMS  ON  ALL
RISKS  TOTALING AT LEAST ONE HUNDRED THOUSAND DOLLARS FOR POLICIES WRIT-
TEN EXCLUSIVE OF PREMIUM FOR WORKERS' COMPENSATION AND HEALTH  INSURANCE
BENEFITS,  EMPLOYS,  UTILIZES OR RETAINS A RISK MANAGER TO ASSIST IN THE
NEGOTIATION AND PURCHASE OF A POLICY; AND  IN  ADDITION,  IN  ALL  CASES
MEETS  ANY  ONE  OF  THE FOLLOWING CRITERIA: HAS A NET WORTH OF AT LEAST
TWENTY-FIVE MILLION DOLLARS, IS A FOR-PROFIT BUSINESS ENTITY THAT GENER-
ATES ANNUAL GROSS REVENUES OF FIFTY MILLION DOLLARS, IS A NOT-FOR-PROFIT
ORGANIZATION  OR  PUBLIC  ENTITY  WITH  AN   ANNUAL   BUDGET   EXCEEDING
TWENTY-FIVE  MILLION  DOLLARS  OR IS A MUNICIPALITY WITH A POPULATION OF
NOT LESS THAN FIFTY THOUSAND PERSONS, OR

S. 7219                             3

  (III) RENEWS A POLICY WITH THE SAME INSURER FOR A  SECOND  CONSECUTIVE
ONE  YEAR  TERM,  OR  RENEWS THE POLICY FOR A THIRD CONSECUTIVE ONE YEAR
TERM.
  (4)  The number of declinations constituting diligent effort in regard
to placement of coverage with authorized insurers for purposes of  para-
graph  three  of this subsection shall be three, unless (A) THE DILIGENT
EFFORT IS EXCUSED  BY  SUBPARAGRAPH  (F)  OF  PARAGRAPH  THREE  OF  THIS
SUBSECTION, OR (B) the superintendent after a hearing, on a record, upon
findings  and conclusions, determines that another number of such decli-
nations is appropriate in regard to particular coverages. In making such
determinations, the superintendent shall consider relevant market condi-
tions, including [unavailability of particular coverages from authorized
insurers, and may conduct market surveys] WHAT IS IN THE BEST  INTERESTS
OF  INSUREDS  SEEKING INSURANCE, THE NECESSITY FOR MANUSCRIPTED POLICIES
WHERE STANDARD 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.
  S 2. This act shall take effect on the ninetieth day  after  it  shall
have  become a law; provided, however, that the amendments to subsection
(b) of section 2118 of the insurance law made by section one of this act
shall not affect the expiration of such subsection and shall  be  deemed
to expire therewith.