senate Bill S6552

2011-2012 Legislative Session

Relates to the duties of excess line brokers in selecting unauthorized insurers

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Archive: Last Bill Status - Passed Senate


  • 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 26, 2012 referred to insurance
delivered to assembly
passed senate
Mar 21, 2012 advanced to third reading
Mar 20, 2012 2nd report cal.
Mar 19, 2012 1st report cal.373
Feb 27, 2012 referred to insurance

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Co-Sponsors

S6552 - Bill Details

Current Committee:
Law Section:
Insurance Law
Laws Affected:
Amd ยง2118, Ins L

S6552 - Bill Texts

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Relates to the duties of excess lines brokers in selecting unauthorized insurers where the full amount of insurance required could not be procured from authorized insurers.

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BILL NUMBER:S6552

TITLE OF BILL:
An act to amend the insurance law, in relation to duties of excess line
brokers

PURPOSE:
To modernize certain aspects of New York's Insurance Law pertaining to
the placement of risks in the excess line market.

SUMMARY OF PROVISIONS:
This bill amends section 2118 of the insurance law to recognize that
where a quote for coverage from an authorized insurer exceeds by twen-
ty-five percent or more a quote for comparable coverage from the excess
line market, the licensed insurer quote may be regarded as a declination
from the authorized insurer.

The bill further expands the authority of the Superintendent of Insur-
ance to waive the diligent effort requirement and declare certain cover-
ages eligible for export to the excess line market based upon the best
interests of the insureds seeking coverage.

Finally, the bill also relieves an excess line broker's diligent effort
obligation in the circumstances in which the diligent effort standard
would not apply is where a policy is renewed with the same insurer for a
second or third consecutive one year term.

Section 2 of the bill provides for an effective date

EXISTING LAW:
Current law grants the Superintendent discretion to waive the diligent
effort, but in limited circumstances.

Expanding the authority of the Superintendent to waive the diligent
effort will confer a degree of commercial flexibility required for
excess line brokers to meet New York insurance consumers' coverage needs
in an efficient manner. This bill amends the insurance law to remediate
redundancies that add expenses and unnecessary delay to the procurement
of insurance from the excess line market.

JUSTIFICATION:
The excess line market is an important segment of New York's insurance
marketplace. The excess line market provides a source of additional
insurance capacity and an avenue for coverage in situations involving
hard-to-place risks that the licensed market cannot or will not write.
This bill seeks to modernize the excess line law with tailored reforms
aimed at ameliorating the burdens and costs of certain reporting
requirements that are currently an unnecessary element of New York's
regulatory compliance regime, but in a manner that preserves consumer
protections extant in the insurance law.

LEGISLATIVE HISTORY:
New bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately; provided that the amendments to subsection (b) of section
2118 of the insurance law made by sections one and two of this act shall
not affect the expiration of such subsection and shall be deemed to
expire therewith.

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

                                  6552

                            I N  S E N A T E

                            February 27, 2012
                               ___________

Introduced  by  Sen.  SEWARD -- 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 duties of excess  line
  brokers

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

  Section 1. Subparagraph (D)  of  paragraph  3  of  subsection  (b)  of
section 2118 of the insurance law, as amended by chapter 684 of the laws
of 1993, is amended to read as follows:
  (D)  (I)  Declinations  obtained  from  authorized  insurers which are
affiliates 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.
  (II) 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 AN EXCESS LINE BROKER MAY BE SUBMITTED AS A DECLI-
NATION BY THE EXCESS LINE BROKER OR AFFIRMING BROKER.
  S 2. Paragraph 4 of subsection (b) of section 2118  of  the  insurance
law,  as  amended by chapter 630 of the laws of 1988, is amended to read
as follows:
  (4) (A) The number of declinations  constituting  diligent  effort  in
regard to placement of coverage with authorized insurers for purposes of
paragraph  three  of  this  subsection shall be three, unless the super-
intendent after a hearing, on a record, upon findings  and  conclusions,
determines  that  another  number of such declinations is appropriate in
regard to particular  coverages.  In  making  such  determinations,  the
superintendent  shall  consider  relevant  market  conditions, 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  STAND-
ARD  FORMS  ARE  INADEQUATE  OR UNAVAILABLE, FOSTERING INSURANCE PRODUCT

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD14565-01-2

S. 6552                             2

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.
  (B)  THE  DILIGENT  EFFORT  MADE BY AN EXCESS LINE BROKER OR AFFIRMING
BROKER FOR ANY NEW POLICY WHICH PROVIDES COVERAGE FOR A POLICY  TERM  OF
ONE  YEAR, SHALL BE DEEMED VALID FOR THE FIRST AND SECOND ANNUAL RENEWAL
THEREOF WHEN THE SAME INSURER PROVIDES SUCH RENEWAL COVERAGE.
  S 3. This act shall take effect immediately; provided that the  amend-
ments  to  subsection  (b)  of section 2118 of the insurance law made by
sections one and two of this act shall not affect the expiration of such
subsection and shall be deemed to expire therewith.

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