S T A T E   O F   N E W   Y O R K
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                                  4706

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                            February 7, 2011
                               ___________

Introduced  by M. of A. MORELLE, SPANO -- Multi-Sponsored by -- M. of A.
  GALEF -- 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.
  (g) "Industrial insured group" means any group of unaffiliated  indus-
trial  insureds  that  are  engaged  in similar or related businesses or

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07686-01-1
              

A. 4706                             2

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  separately
amended by section 8 of part E-1 and section 1 of part B-1 of chapter 57
of the laws of 2009, 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
of the insurance law; provided, however, "insurance  corporation"  shall

A. 4706                             3

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; and provided further "insurance
corporation" does not  include  any  overcapitalized  captive  insurance
company.  The  term  "insurance corporation" shall also include an unau-
thorized 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.  The term "insurance corporation" also includes a  health
maintenance  organization  required to obtain a certificate of authority
under article forty-four of the public health law.
  S 4. Subdivision (a) of section 1502-b of the tax law, as  amended  by
section  9  of part E-1 of chapter 57 of the laws of 2009, 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, and  other
than an overcapitalized captive insurance company, shall, for the privi-
lege  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 premi-
ums,  and  seventy-five  thousandths  of  one  percent on each dollar of
premiums thereafter. The rate of the tax on assumed reinsurance premiums
shall be two hundred twenty-five thousandths of one percent  on  all  or
any  part  of  the first twenty million dollars of premiums, 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 there-
after.  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 thousand dollars.
  S 5. This act shall take effect immediately.