senate Bill S3104A

2011-2012 Legislative Session

Provides for a review of rating territory definitions for non-business automobile insurance policies

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Mar 05, 2012 print number 3104a
amend and recommit to insurance
Jan 04, 2012 referred to insurance
Feb 08, 2011 referred to insurance

Bill Amendments

Original
A (Active)
Original
A (Active)

Co-Sponsors

S3104 - Bill Details

Current Committee:
Law Section:
Insurance Law
Laws Affected:
Amd §2307, Ins L
Versions Introduced in 2009-2010 Legislative Session:
S1965

S3104 - Bill Texts

view summary

Establishes as a distinct territory for purposes of rating private passenger nonbusiness automobile insurance policies, a certain city with a population between 19,040 and 25,000 which is geographically contiguous to a city with a population between 292,648 and 350,000; provides that the superintendent may require insurers to adjust existing or establish new territory definitions based on such review.

view sponsor memo
BILL NUMBER:S3104 REVISED 03/05/12

TITLE OF BILL:
An act to amend the insurance law, in relation to providing for a review
of certain existing rating territory definitions for non-business auto-
mobile insurance policies

To provide for a thorough review of private passenger auto insurance
rating territory definitions and rate implications of such definitions,
and to authorize the Superintendent to require insurers to use adjusted
or new territory definitions and rating factors.

SUMMARY OF PROVISIONS:
Section one would require the superintendent of the state insurance
department to conduct a thorough review of rating territory definitions
in Use in this state and the rate implications of such definitions for
non-business private passenger automobile insurance. Based on the
review, the superintendent may require insurers to adjust existing or
establish new territory definitions and related rating factors. The
superintendent shall first focus on the long recognized problems with
the City of Lackawanna in conducting the review and requiring any insur-
ers actions. The superintendent shall report to the legislature and
governor on the conclusions of the review and any actions taken based on
the findings.

Section two would authorize the superintendent to impose prior approval
of private passenger auto territorial relativities and rating factors
and to require revisions of such relativities and factors which have
been put in effect under the flex rating law.

JUSTIFICATION:
All private passenger automobile insurers group risks into geographic
territories as a way to achieve a homogeneous group of insurers with
similar loss experience for rating purposes. Traffic patterns and insur-
ance claims experience are taken into account in setting the territorial
boundaries. The rating territories in use today have remained largely
unchanged for over three decades. Particularly in areas around territory
borders notable changes in economic conditions, population trends:
traffic patterns and insurance claims experience, which are acute In
some areas like the City of Lackawanna in the Buffalo area, lead many
residents to question whether their rates are accurate or fair. For
instance, the City of Lackawanna, which is grouped with the City of
Buffalo for insurance rating purposes, has undergone a substantial
decrease in heavy industry-related jobs and population -- losing 28,000
decreases in traffic density and accidents. Yet auto insurance rates are
now approximately 35% higher for Lackawanna residents than for its other
surrounding communities such as Hamburg. The federal General Accounting
Office, in a 1980 study of automobile insurance rating concluded: "With
few exceptions, State insurance departments have not assured the validi-
ty of rating territories despite the fact that in most cases the exist-
ing territorial boundaries were established long ago and by a process

about which no one has much information." A complete review of the
territorial rating system is long overdue. The department needs statuto-
ry authority to require insurers to make any adjustments to their terri-
tories and rating factors based on the findings of its review.

LEGISLATIVE HISTORY:
2001-02: S.883/A.1476 Passed Assembly in 2001 & 2002.
2003-04: S.658/A.2654 No action
2005-06: S.5271/A.559 Referred to Insurance
2007-08: S.2628/A.4405 Passed Assembly
2009-10: S.1965/A.2238 Referred to Insurance

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately.

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

                                  3104

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                            February 8, 2011
                               ___________

Introduced  by  Sen. KENNEDY -- 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 providing for a review
  of certain existing  rating  territory  definitions  for  non-business
  automobile insurance policies

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

  Section 1. Section 2307 of the insurance law is amended  by  adding  a
new subsection (e) to read as follows:
  (E)  (1)  NOTWITHSTANDING  ANY OTHER PROVISION OF LAW, WITH RESPECT TO
NON-BUSINESS AUTOMOBILE INSURANCE  POLICIES,  THE  SUPERINTENDENT  SHALL
UNDERTAKE  A  THOROUGH  REVIEW  OF RATING TERRITORY DEFINITIONS AND RATE
IMPLICATIONS OF CURRENT TERRITORIAL DEFINITIONS IN USE  IN  THIS  STATE,
WITH  PARTICULAR  FOCUS  ON CHANGING DEMOGRAPHICS, BORDERLINE ZIP CODES,
TERRITORIAL GROUPINGS, AND ALTERNATIVE APPROACHES TO ACHIEVING HOMOGENE-
ITY.
  (2) BASED ON SUCH REVIEW, THE SUPERINTENDENT MAY REQUIRE  INSURERS  TO
ADJUST  EXISTING  OR ESTABLISH NEW TERRITORY DEFINITIONS AND TO USE SUCH
ADJUSTED OR NEW TERRITORIES IN RELATION TO SUCH POLICIES.
  (3) WITH RESPECT TO SUCH REVIEW AND ANY REQUIREMENTS MADE PURSUANT  TO
THIS  SECTION,  THE  SUPERINTENDENT  SHALL  FIRST FOCUS ON CITIES WITH A
POPULATION  OF  MORE  THAN  NINETEEN  THOUSAND  FORTY  BUT   LESS   THAN
TWENTY-FIVE  THOUSAND HAVING HAD A DECREASE IN TRAFFIC DENSITY AND ACCI-
DENTS, WHICH ARE GEOGRAPHICALLY CONTIGUOUS WITH A CITY WITH A POPULATION
OF MORE THAN TWO HUNDRED NINETY-TWO THOUSAND SIX HUNDRED FORTY-EIGHT BUT
LESS THAN THREE HUNDRED FIFTY THOUSAND.
  (4) THE SUPERINTENDENT SHALL REPORT TO THE GOVERNOR AND  THE  LEGISLA-
TURE ON SUCH REVIEW AND ACTIONS TAKEN PURSUANT TO THIS SUBSECTION.
  S 2. The review required by section one of this act shall be completed
by  July  first  in  the year next succeeding the year in which it shall
have become law, and the report required by  section  one  of  this  act
shall  be submitted no later than December thirty-first in the year next
succeeding the year in which it shall have become law.
  S 3. This act shall take effect immediately.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06774-01-1

Co-Sponsors

S3104A (ACTIVE) - Bill Details

Current Committee:
Law Section:
Insurance Law
Laws Affected:
Amd §2307, Ins L
Versions Introduced in 2009-2010 Legislative Session:
S1965

S3104A (ACTIVE) - Bill Texts

view summary

Establishes as a distinct territory for purposes of rating private passenger nonbusiness automobile insurance policies, a certain city with a population between 19,040 and 25,000 which is geographically contiguous to a city with a population between 292,648 and 350,000; provides that the superintendent may require insurers to adjust existing or establish new territory definitions based on such review.

view sponsor memo
BILL NUMBER:S3104A

TITLE OF BILL:
An act
to amend the insurance law, in relation to
providing for a review of certain existing rating territory definitions
for non-business automobile insurance policies

PURPOSE:
To provide for a thorough review of private passenger auto insurance
rating territory definitions and rate implications of such
definitions, and to authorize the superintendent to require insurers
to use adjusted or new territory definitions and rating factors.

SUMMARY OF PROVISIONS:
Section one would require the superintendent of the state insurance
department to conduct a thorough review of rating territory
definitions in use in this state and the rate implications of such
definitions for non-business private passenger automobile insurance.
Based on the review, the superintendent may require insurers to
adjust existing or establish new territory definitions and related
rating factors. The superintendent shall first focus on the long
recognized problems with the City of Lackawanna in conducting the
review and requiring any insurers actions. The superintendent shall
report to the legislature and governor on the conclusions of the
review and any actions taken based on the findings.

Section two would authorize the superintendent to impose prior
approval of private passenger auto territorial relativities and
rating factors and to require revisions of such relativities and
factors which have been put in effect under the flex rating law.

JUSTIFICATION:
All private passenger automobile insurers group risks into geographic
territories as a way to achieve a homogeneous group of insurers with
similar loss experience for rating purposes. Traffic patterns and
insurance claims experience are taken into account in setting the
territorial boundaries. The rating territories in use today have
remained largely unchanged for over three decades. Particularly in
areas around territory borders, notable changes in economic
conditions, population trends, traffic patterns and insurance claims
experience, which are acute in some areas like the City of Lackawanna
in the Buffalo area, lead many residents to question whether their
rates are accurate or fair. For instance, the City of Lackawanna,
which is grouped with the City of Buffalo for insurance rating
purposes, has undergone a substantial decrease in heavy
industry-related jobs and population -- losing 28,000
jobs and one-third of its population since 1987 -- and has seen
decreases in traffic density and accidents. Yet auto insurance rates
are now approximately 35% higher for Lackawanna residents than for
its other surrounding communities such as Hamburg. The federal

General Accounting Office, in a 1980 study of automobile insurance
rating concluded: "With few exceptions, State insurance departments
have not assured the validity of rating territories despite the fact
that in most cases the existing
territorial boundaries were established long ago and by a process
about which no one has much information."
A complete review of the territorial rating system is
long overdue. The department needs statutory authority to require
insurers to make any adjustments to their territories and rating
factors based on the findings of its review.

LEGISLATIVE HISTORY:
2001-02: S.883/A.1476 Passed Assembly in 2001 & 2002
2003-04: S.658/A.2654 No action
2005-06: S.5271/A.559 Referred to Insurance
2007-08: S.2628/A.4405 Passed Assembly
2009-10: S.1965/A.2238 Referred to Insurance

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 3104--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                            February 8, 2011
                               ___________

Introduced by Sens. KENNEDY, GALLIVAN -- read twice and ordered printed,
  and  when  printed  to  be  committed to the Committee on Insurance --
  recommitted to the Committee on Insurance in  accordance  with  Senate
  Rule  6,  sec.  8  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

AN ACT to amend the insurance law, in relation to providing for a review
  of certain existing  rating  territory  definitions  for  non-business
  automobile insurance policies

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

  Section 1. Section 2307 of the insurance law is amended  by  adding  a
new subsection (f) to read as follows:
  (F)  (1)  NOTWITHSTANDING  ANY OTHER PROVISION OF LAW, WITH RESPECT TO
NON-BUSINESS AUTOMOBILE INSURANCE  POLICIES,  THE  SUPERINTENDENT  SHALL
UNDERTAKE  A  THOROUGH  REVIEW  OF RATING TERRITORY DEFINITIONS AND RATE
IMPLICATIONS OF CURRENT TERRITORIAL DEFINITIONS IN USE  IN  THIS  STATE,
WITH  PARTICULAR  FOCUS  ON CHANGING DEMOGRAPHICS, BORDERLINE ZIP CODES,
TERRITORIAL GROUPINGS, AND ALTERNATIVE APPROACHES TO ACHIEVING HOMOGENE-
ITY.
  (2) BASED ON SUCH REVIEW, THE SUPERINTENDENT MAY REQUIRE  INSURERS  TO
ADJUST  EXISTING  OR ESTABLISH NEW TERRITORY DEFINITIONS AND TO USE SUCH
ADJUSTED OR NEW TERRITORIES IN RELATION TO SUCH POLICIES.
  (3) WITH RESPECT TO SUCH REVIEW AND ANY REQUIREMENTS MADE PURSUANT  TO
THIS  SECTION,  THE  SUPERINTENDENT  SHALL  FIRST FOCUS ON CITIES WITH A
POPULATION  OF  MORE  THAN  NINETEEN  THOUSAND  FORTY  BUT   LESS   THAN
TWENTY-FIVE  THOUSAND HAVING HAD A DECREASE IN TRAFFIC DENSITY AND ACCI-
DENTS, WHICH ARE GEOGRAPHICALLY CONTIGUOUS WITH A CITY WITH A POPULATION
OF MORE THAN TWO HUNDRED NINETY-TWO THOUSAND SIX HUNDRED FORTY-EIGHT BUT
LESS THAN THREE HUNDRED FIFTY THOUSAND.
  (4) THE SUPERINTENDENT SHALL REPORT TO THE GOVERNOR AND  THE  LEGISLA-
TURE ON SUCH REVIEW AND ACTIONS TAKEN PURSUANT TO THIS SUBSECTION.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06774-02-2

S. 3104--A                          2

  S 2. The review required by section one of this act shall be completed
by  July  first  in  the year next succeeding the year in which it shall
have become law, and the report required by  section  one  of  this  act
shall  be submitted no later than December thirty-first in the year next
succeeding the year in which it shall have become law.
  S 3. This act shall take effect immediately.

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