| Date of Action |
Assembly Actions -
Lowercase Senate Actions - UPPERCASE |
|---|---|
| Jan 04, 2012 |
referred to insurance |
| Feb 25, 2011 |
print number 3400a |
| Feb 25, 2011 |
amend and recommit to insurance |
| Feb 18, 2011 |
referred to insurance |
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Senate Bill S3400A
2011-2012 Legislative Session
Amends the insurance and tax law in relation to excess line insurance
download bill text pdfShare this bill
Sponsored By
(R, C, IP, RFM) Senate District
Archive: Last Bill Status - In Senate Committee Insurance Committee
- Introduced
-
- In Committee Assembly
- In Committee Senate
-
- On Floor Calendar Assembly
- On Floor Calendar Senate
-
- Passed Assembly
- Passed Senate
- Delivered to Governor
- Signed By Governor
Actions
Bill Amendments
2011-S3400 - Details
- Current Committee:
- Senate Insurance
- Law Section:
- Insurance Law
- Laws Affected:
- Amd Ins L, generally; amd §§1550, 1551 & 1552, Tax L
2011-S3400 - Sponsor Memo
BILL NUMBER:S3400
TITLE OF BILL:
An act
to amend the insurance law and the tax law, in relation to excess line
insurance
PURPOSE:
To conform New York Insurance Law to the mandatory
provisions of the Nonadmitted and Reinsurance Reform Act of 2010
("NRRA") which is contained within portions of the Dodd-Frank Wall
Street Reform and Consumer Protection Act dealing with the
regulation of insurance procured from the excess line market, and
preempting state law.
SUMMARY OF PROVISIONS:
Section one of the bill amends
Insurance Law § 107(a)(4), (16) and (39)to modify the
definitions of "affiliate," "control" and "state" to conform
such definitions with those set forth in the NRRA.
Section two of the bill amends Insurance Law § 2101(1) and adds new
subsections (w), (x), (y), (z) and (aa). Section 2101(1) changes
the current term of "home state" to "resident state" with respect to
an insurance producer, distinguishing and thereby clarifying that
definition from the NRRA definition of "home state." Section 2101(w)
adds a new, NRRA-conforming definition for the term "affiliate." Section 2101(x) adds a new conforming definition of the term "control." Section 2101(y) adds a new conforming definition for the term "home state." Section 2101(z) adds the definition for the term "exempt commercial purchaser." Section (aa) adds a definition for the term "qualified risk manager." Section three of the bill amends Insurance Law § 2103(g)(11) to replace the term "home state" with the clarifying term "resident state" to distinguish it from the definition of the term "home state" as used in the NRRA. Section four of the bill amends Insurance Law § 2104(e)(3)(G), again replacing the term "home state" as currently used with the new term "resident state" in deference to the NRRA's use of the term "home state." Section five of the bill amends Insurance Law § 2105(a) and (b) to make the conforming change regarding "resident state" and "home state" noted above. Section 2105(a) also reflects the NRRA mandate that no person, firm, association or corporation is required to obtain an excess line broker's license to procure insurance for an insured whose home state is a state other than New York. Section 2105(b) prohibits the charging of excess line broker licensing fees on or subsequent to July 21, 2012, unless New York has in effect laws or regulations authorizing participation in the National Insurance Producer database of the NAIC or any equivalent uniform national database relative to licensure and renewal of excess line broker licenses. Section six of the bill amends Insurance Law § 2106(f)(1)(B) to reflect the clarifying "resident state"/"home state" definition. Section seven of the bill amends Insurance Law * 2110(f)(2) and (4) to reflect the "resident state"/"home state" definition clarification. Section eight of the bill amends Insurance Law § 2118 to add a new §2118(a)(1), renumbers old §2118(a)(1) as § 2118(a)(2), adds a new § 2118(a)(2)(A), adds a new § 2118(b)(3)(F) and amends § 2118(b)(5),(8) and (9) and § 2118(d)(1). Section 2118(a)(1) conforms the Insurance Law to the NRRA's directive that the placement of excess line insurance shall be exclusively subject to the laws and regulations of an insured's home state. Section 2118(a)(2)(A)(i) provides that the Superintendent of Insurance may not prohibit an unauthorized alien insurer from insuring New York excess line risks through a licensed excess line broker if the alien insurer is listed on the most current quarterly listing of alien insurers maintained by the International Insurers Department of the NAIC Section 2118(a)(2)(A)(ii) provides that an unauthorized foreign insurer is eligible to insure risks placed by excess line brokers as long as the insurer furnishes satisfactory proof that it is permitted to write the coverage requested in the insurer's domiciliary jurisdiction and meets the minimum capital requirements (as calculated by its domiciliary jurisdiction) equal to the greater of $15 million, or an amount determined by the Superintendent and set forth in regulation. Section 2118(b)(3)(F) states that an excess line broker shall not be required to undertake a diligent effort to determine whether coverage can be obtained from authorized insurers with respect to an exempt commercial purchaser insured under certain circumstances. Section 2118(b)(5) permits the Superintendent to retain some discretion to allow the placement of coverage with an unauthorized insurer that does not meet the eligibility requirements under certain circumstances, with the provision that no such exception may be made where the unauthorized insurer's capital and surplus is less than $4,500,000.00, Sections 2118(b)(8) and (9) reflect the "resident state"/"home state" definition clarification. Section 2118(d)(1) makes the distinction that the excess line premium tax on policies incepting on or prior to July 20, 2011 must be allocated in accordance with current law, while for policies incepting on or after July 21, 2011, the premium tax shall not be allocated, but collected exclusively by and for New York in connection with excess lines transactions in which the insured's home state is New York. Section nine of the bill amends Insurance Law § 2134(b) with respect to the "resident state"/"home state" definition clarification. Section ten of the bill amends Insurance Law § 2136(a),(b) and (d) with respect to the "resident state"/"home state" definition clarification. Section eleven of the bill amends Insurance Law § 2137(e) with respect to the "resident state"/"home state" definition clarification. Section twelve of the bill amends Insurance Law § 9102(a)(1) and (b) to reaffirm that no allocation of premium tax attributed to excess line placements shall be made where the excess line transaction involves an insured whose home state is New York when coverage incepts on or after July 21, 2011, but requires such allocation with respect to transactions in which coverage incepts on or prior to July 20, 2011. Section thirteen of the bill amends Tax Law § 1550(b) and adds new § 1550(d) and (e) to define the terms "independently procured insurance" and "premium tax" in conformance with the NRRA. Section fourteen of the bill amends Tax Law § 1551 to require that the premium tax collected on independently procured insurance only applies to transactions for insureds whose home state is New York with respect to coverage that incepts on or after July 21, 2011. Section fifteen of the bill amends Tax Law § 1552 to recognize that the tax collected on independently procured insurance in connection with coverage that incepts on or prior to July 20, 2011, is allocable. Section sixteen of the bill recites an effective date of July 21, 2011 and renders the provisions of the bill applicable to all insurance policies procured by excess line licensees with an effective date on or after July 21, 2011. JUSTIFICATION: Last year the NRRA was enacted into law, provisions of which preempted state law in connection with certain aspects of excess line insurance placements. This bill brings into conformity with the NRRA various provisions of New York's Insurance Law and Tax Law relating to excess line insurance and the taxation and distribution of tax revenue garnered in connection with insurance procured from the excess line market. Pursuant to the NRRA, the placement of excess line insurance is subject exclusively to the statutory and regulatory requirements of an insured's home state. While the NRRA permits states to enter into a compact or otherwise establish procedures to allocate among the states premium taxes paid on excess line insurance placements to an insured's home state, absent such a compact, New York would possess the exclusive right to retain the proceeds of excess line premium taxes where the insured's home state is New York. Due to the fact that New York is a high-volume excess line insurance state with many insureds and insureds' businesses located in the state, rendering New York the "home stale" pursuant to the definition of that term under the NRRA, would actually be financially advantageous to New York, as it would have exclusive retention of the tax revenues generated by such placements. Moreover, no compact or system for tax allocation will exist when the NRRA provisions go into effect on July 21, 2011. Continuing the current tax allocation provisions, therefore, will assure that no jurisdiction will tax the portion New York law currently does not tax. As of July 21, 2011, New York will no longer receive premium taxes on excess line policies where New York is not the home state. If New York makes no change to its current law, excess line brokers will only pay tax on the portion of risks existing in New York and only on risks where New York is the home state New York can offset the loss of revenues on risks whose home state is not New York by taxing one hundred percent of the risks where New York is the home state until such time than an interstate tax allocation compact actually begins to share taxes among states. To effectuate that goal, this bill adheres strictly to compliance with the mandates of the NRRA's preemption provisions relative to excess line insurance LEGISLATIVE HISTORY: New bill. FISCAL IMPLICATIONS: New York is one of the top-ranked states in the country with respect to excess line insurance placements in which the insured's home state is New York. As such, pursuant to the NRRA's provisions relating to excess line insurance placements and tax collection, New York stands to benefit from the NRRA's authorization to exclusively collect and retain such taxes. A widely adopted tax allocation compact will permit each participating state to collect taxes on the portion of risk fairly allocated to it. Prior to such a widely adopted compact, New York should tax one hundred percent of the premium on transactions where New York is the home state EFFECTIVE DATE: This act shall take effect on July 21, 2011 and is applicable to all insurance policies procured by excess line licensees in which coverage incepts on or after July 21, 2011.
2011-S3400 - Bill Text download pdf
S T A T E O F N E W Y O R K
________________________________________________________________________
3400
2011-2012 Regular Sessions
I N S E N A T E
February 18, 2011
___________
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 and the tax law, in relation to excess
line insurance
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraphs 4, 16 and 39 of subsection (a) of section 107 of
the insurance law are amended to read as follows:
(4) "Affiliate" means a corporation, a majority of whose shares is
owned or controlled by shareholders, directors or officers of another
corporation, who own or control a majority of the shares of the other
corporation EXCEPT FOR PURPOSES OF INSURANCE PROCURED BY EXCESS LINE
BROKERS LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF
THIS CHAPTER.
(16) "Control". Except for the purposes of article fifteen of this
chapter AND INSURANCE PROCURED BY EXCESS LINE BROKERS LICENSED PURSUANT
TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF THIS CHAPTER, "control",
including the terms "controlling", "controlled by" and "under common
control with", means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of an
institution, whether through the ownership of voting securities, by
contract or otherwise.
(39) "State" means any state of the United States, the commonwealth of
Puerto Rico [and], the District of Columbia, GUAM, THE NORTHERN MARIANA
ISLANDS, THE VIRGIN ISLANDS AND AMERICAN SAMOA.
S 2. Subsection (l) of section 2101 of the insurance law, as added by
chapter 687 of the laws of 2003, is amended and five new subsections
(w), (x), (y), (z) and (aa) are added to read as follows:
(l) In this article, WITH RESPECT TO AN INSURANCE PRODUCER, "[home]
RESIDENT state" means the District of Columbia or any state or territory
of the United States in which an insurance producer maintains his, her
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08824-02-1
S. 3400 2
or its principal place of residence or principal place of business and
is licensed to act as an insurance producer.
(W) IN THIS ARTICLE, FOR PURPOSES OF INSURANCE PROCURED BY EXCESS LINE
BROKERS LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF
THIS CHAPTER, THE TERM "AFFILIATE" MEANS, WITH RESPECT TO AN INSURED,
ANY ENTITY THAT CONTROLS, IS CONTROLLED BY, OR IS UNDER COMMON CONTROL
WITH, THE INSURED. THE TERM "AFFILIATED GROUP" MEANS ANY GROUP OF ENTI-
TIES THAT ARE ALL AFFILIATED.
(X) IN THIS ARTICLE, FOR PURPOSES OF INSURANCE PROCURED BY EXCESS LINE
BROKERS LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF
THIS CHAPTER, AN ENTITY HAS "CONTROL" OVER ANOTHER ENTITY IF:
(1) THE ENTITY DIRECTLY OR INDIRECTLY OR ACTING THROUGH ONE OR MORE
OTHER PERSONS OWNS, CONTROLS, OR HAS THE POWER TO VOTE TWENTY-FIVE
PERCENT OR MORE OF ANY CLASS OF VOTING SECURITIES OF THE OTHER ENTITY;
OR
(2) THE ENTITY CONTROLS IN ANY MANNER THE ELECTION OF A MAJORITY OF
THE DIRECTORS OR TRUSTEES OF THE OTHER ENTITY.
(Y)(1) IN THIS ARTICLE, FOR PURPOSES OF INSURANCE PROCURED BY EXCESS
LINE BROKERS LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE
OF THIS CHAPTER, THE TERM "HOME STATE" WITH RESPECT TO AN INSURED MEANS:
(A) THE STATE IN WHICH AN INSURED MAINTAINS ITS PRINCIPAL PLACE OF
BUSINESS OR, IN THE CASE OF AN INDIVIDUAL, THE INDIVIDUAL'S PRINCIPAL
RESIDENCE; OR
(B) IF ONE HUNDRED PERCENT OF THE INSURED RISK IS LOCATED OUT OF THE
STATE REFERRED TO IN SUBPARAGRAPH (A) OF THIS PARAGRAPH, THE STATE TO
WHICH THE GREATEST PERCENTAGE OF THE INSURED'S TAXABLE PREMIUM FOR THAT
INSURANCE CONTRACT IS ALLOCATED.
(2) IF MORE THAN ONE INSURED FROM AN AFFILIATED GROUP ARE INSURED BY A
SINGLE INSURANCE CONTRACT PROCURED BY AN EXCESS LINE BROKER, THE TERM
"HOME STATE" MEANS THE HOME STATE, AS DETERMINED PURSUANT TO PARAGRAPH
(1) OF THIS SUBSECTION, OF THE MEMBER OF THE AFFILIATED GROUP THAT HAS
THE LARGEST PERCENTAGE OF PREMIUM ATTRIBUTED TO IT UNDER SUCH INSURANCE
CONTRACT.
(Z) IN THIS ARTICLE, FOR PURPOSES OF INSURANCE PROCURED BY EXCESS LINE
BROKERS LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF
THIS CHAPTER, THE TERM "EXEMPT COMMERCIAL PURCHASER" MEANS ANY PERSON
PURCHASING COMMERCIAL INSURANCE THAT, AT THE TIME OF PLACEMENT, MEETS
THE FOLLOWING REQUIREMENTS:
(1) THE PERSON EMPLOYES OR RETAINS A QUALIFIED RISK MANAGER TO NEGOTI-
ATE INSURANCE COVERAGE;
(2) THE PERSON HAS PAID AGGREGATE NATIONWIDE COMMERCIAL PROPERTY AND
CASUALTY INSURANCE PREMIUMS IN EXCESS OF ONE HUNDRED THOUSAND DOLLARS IN
THE IMMEDIATELY PRECEDING TWELVE MONTHS; AND
(3) THE PERSON MEETS AT LEAST ONE OF THE FOLLOWING CRITERIA:
(A) THE PERSON POSSESSES A NET WORTH IN EXCESS OF TWENTY MILLION
DOLLARS, AS SUCH AMOUNT IS ADJUSTED PURSUANT TO PARAGRAPH (2) OF THIS
SUBSECTION;
(B) THE PERSON GENERATES ANNUAL REVENUES IN EXCESS OF FIFTY MILLION
DOLLARS, AS SUCH AMOUNT IS ADJUSTED PURSUANT TO PARAGRAPH (2) OF THIS
SUBSECTION;
(C) THE PERSON EMPLOYS MORE THAN FIVE HUNDRED FULL-TIME OR FULL-TIME
EQUIVALENT EMPLOYEES PER INDIVIDUAL INSURED OR IS A MEMBER OF AN AFFIL-
IATED GROUP EMPLOYING MORE THAN ONE THOUSAND EMPLOYEES IN THE AGGREGATE;
(D) THE PERSON IS A NOT-FOR-PROFIT ORGANIZATION OR PUBLIC ENTITY
GENERATING ANNUAL BUDGETED EXPENDITURES OF AT LEAST THIRTY MILLION
S. 3400 3
DOLLARS, AS SUCH AMOUNT IS ADJUSTED PURSUANT TO PARAGRAPH (2) OF THIS
SUBSECTION;
(E) THE PERSON IS A MUNICIPALITY WITH A POPULATION IN EXCESS OF FIFTY
THOUSAND PERSONS.
(4) EFFECTIVE ON THE FIFTH JANUARY FIRST OCCURRING AFTER THE DATE OF
THE ENACTMENT OF THIS ARTICLE AND EACH FIFTH JANUARY FIRST OCCURRING
THEREAFTER, THE AMOUNTS IN SUBPARAGRAPHS (A), (B), AND (D) OF PARAGRAPH
(3) OF THIS SUBSECTION SHALL BE ADJUSTED TO REFLECT THE PERCENTAGE
CHANGE FOR SUCH FIVE-YEAR PERIOD IN THE CONSUMER PRICE INDEX FOR ALL
URBAN CONSUMERS PUBLISHED BY THE BUREAU OF LABOR STATISTICS OF THE
DEPARTMENT OF LABOR.
(AA) FOR PURPOSES OF INSURANCE PROCURED BY EXCESS LINE BROKERS
LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF THIS CHAP-
TER, THE TERM "QUALIFIED RISK MANAGER" MEANS, WITH RESPECT TO A POLICY-
HOLDER OF COMMERCIAL INSURANCE, A PERSON WHO MEETS ALL OF THE FOLLOWING
REQUIREMENTS:
(1) THE PERSON IS AN EMPLOYEE OF, OR THIRD-PARTY CONSULTANT RETAINED
BY, THE COMMERCIAL POLICYHOLDER;
(2) THE PERSON PROVIDES SKILLED SERVICES IN LOSS PREVENTION, LOSS
REDUCTION, OR RISK AND INSURANCE COVERAGE ANALYSIS, AND PURCHASE OF
INSURANCE;
(3) THE PERSON:
(A) HAS, AT A MINIMUM, A BACHELOR'S DEGREE FROM AN ACCREDITED COLLEGE
OR UNIVERSITY IN RISK MANAGEMENT, BUSINESS ADMINISTRATION, FINANCE,
ECONOMICS, OR ANY OTHER FIELD DETERMINED BY THE SUPERINTENDENT OR OTHER
STATE REGULATORY OFFICIAL OR ENTITY TO DEMONSTRATE MINIMUM COMPETENCE IN
RISK MANAGEMENT; AND
(B) HAS THREE YEARS OF EXPERIENCE IN RISK FINANCING, CLAIMS ADMINIS-
TRATION, LOSS PREVENTION, RISK AND INSURANCE ANALYSIS, OR PURCHASING
COMMERCIAL LINES OF INSURANCE; OR
(C) HAS A DESIGNATION AS A CHARTERED PROPERTY AND CASUALTY UNDERWRITER
("CPCU") ISSUED BY THE AMERICAN INSTITUTE FOR CPCU/INSURANCE INSTITUTE
OF AMERICA;
(D) HAS A DESIGNATION AS AN ASSOCIATE IN RISK MANAGEMENT ("ARM")
ISSUED BY THE AMERICAN INSTITUTE FOR CPCU/INSURANCE INSTITUTE OF AMERI-
CA;
(E) HAS A DESIGNATION AS CERTIFIED RISK MANAGER ("CRM") ISSUED BY THE
NATIONAL ALLIANCE FOR INSURANCE EDUCATION & RESEARCH;
(F) HAS A DESIGNATION AS A RIMS FELLOW ("RF") ISSUED BY THE GLOBAL
RISK MANAGEMENT INSTITUTE; OR
(G) HAS ANY OTHER DESIGNATION, CERTIFICATION, OR LICENSE DETERMINED BY
THE SUPERINTENDENT OR OTHER STATE INSURANCE REGULATORY OFFICIAL OR ENTI-
TY TO DEMONSTRATE MINIMUM COMPETENCY IN RISK MANAGEMENT;
(4) HAS AT LEAST SEVEN YEARS OF EXPERIENCE IN RISK FINANCING, CLAIMS
ADMINISTRATION, LOSS PREVENTION, RISK AND INSURANCE COVERAGE ANALYSIS,
OR PURCHASING COMMERCIAL LINES OF INSURANCE; AND
(A) HAS ANY ONE OF THE DESIGNATIONS SPECIFIED IN SUBPARAGRAPHS (A)
THROUGH (G) OF PARAGRAPH (3) OF SUBSECTION (AA) OF THIS SECTION;
(B) HAS AT LEAST TEN YEARS OF EXPERIENCE IN RISK FINANCING, CLAIMS
ADMINISTRATION, LOSS PREVENTION, RISK AND INSURANCE COVERAGE ANALYSIS,
OR PURCHASING COMMERCIAL LINES OF INSURANCE; OR
(C) HAS A GRADUATE DEGREE FROM AN ACCREDITED COLLEGE OR UNIVERSITY IN
RISK MANAGEMENT, BUSINESS ADMINISTRATION, FINANCE, ECONOMICS, OR ANY
OTHER FIELD DETERMINED BY THE SUPERINTENDENT OR OTHER STATE REGULATORY
OFFICIAL OR ENTITY TO DEMONSTRATE MINIMUM COMPETENCE IN RISK MANAGEMENT.
S. 3400 4
S 3. Paragraph 11 of subsection (g) of section 2103 of the insurance
law, as added by chapter 687 of the laws of 2003, is amended to read as
follows:
(11) of any individual who applies for an insurance agent license in
this state who was previously licensed for the same line or lines of
authority in another state, provided, however, that the applicant's
[home] RESIDENT state grants non-resident licenses to residents of this
state on the same basis. Such individual shall also not be required to
complete any prelicensing education. This exemption is only available if
the person is currently licensed in that state or if the application is
received within ninety days of the date of cancellation of the appli-
cant's previous license and if the prior state issues a certification
that, at the time of cancellation, the applicant was in good standing in
that state or the state's producer database records, maintained by the
National Association of Insurance Commissioners, its affiliates or
subsidiaries, indicate that the producer is or was licensed in good
standing for the line of authority requested. An individual or entity
licensed in another state who moves to this state shall make an applica-
tion within ninety days of establishing legal residence to become a
resident licensee. No prelicensing education or examination shall be
required of that person to obtain any line of authority previously held
in the prior state except where the superintendent determines otherwise
by regulation.
S 4. Subparagraph (G) of paragraph 3 of subsection (e) of section 2104
of the insurance law, as amended by chapter 687 of the laws of 2003, is
amended to read as follows:
(G) was previously licensed for the same line or lines of authority in
another state, provided, however, that the applicant's [home] RESIDENT
state grants non-resident licenses to residents of this state on the
same basis. Such individual shall also not be required to complete any
prelicensing education. This exemption is only available if the person
is currently licensed in that state or if the application is received
within ninety days of the date of cancellation of the applicant's previ-
ous license and if the prior state issues a certification that, at the
time of cancellation, the applicant was in good standing in that state
or the state's producer database records, maintained by the National
Association of Insurance Commissioners, its affiliates or subsidiaries,
indicate that the producer is or was licensed in good standing for the
line of authority requested. An individual or entity licensed in another
state who moves to this state shall make an application within ninety
days of establishing legal residence to become a resident licensee. No
prelicensing education or examination shall be required of that person
to obtain any line of authority previously held in the prior state
except where the superintendent determines otherwise by regulation.
S 5. Subsections (a) and (b) of section 2105 of the insurance law,
subsection (a) as amended by chapter 626 of the laws of 2006 and
subsection (b) as amended by chapter 687 of the laws of 2003, are
amended and a new subsection (i) is added to read as follows:
(a) The superintendent may issue an excess line broker's license to
any person, firm, association or corporation who or which is domiciled
or maintains an office in this state and is licensed as an insurance
broker under section two thousand one hundred four of this article, or
who or which is licensed as an excess line broker in the licensee's
[home] RESIDENT state, provided, however, that the applicant's [home]
RESIDENT state grants non-resident licenses to residents of this state
on the same basis, except that reciprocity is not required in regard to
S. 3400 5
the placement of liability insurance on behalf of a purchasing group or
any of its members; authorizing such person, firm, association or corpo-
ration to procure, subject to the restrictions herein provided, policies
of insurance from insurers which are not authorized to transact business
in this state of the kind or kinds of insurance specified in paragraphs
four through fourteen, sixteen, seventeen, nineteen, twenty, twenty-two,
twenty-seven, twenty-eight and thirty-one of subsection (a) of section
one thousand one hundred thirteen of this chapter and in subsection (h)
of this section, provided, however, that the provisions of this section
and section two thousand one hundred eighteen of this article shall not
apply to ocean marine insurance and other contracts of insurance enumer-
ated in subsections (b) and (c) of section two thousand one hundred
seventeen of this article. Such license may be suspended or revoked by
the superintendent whenever in his OR HER judgment such suspension or
revocation will best promote the interests of the people of this state.
NOTWITHSTANDING ANYTHING IN THIS CHAPTER TO THE CONTRARY, NO PERSON,
FIRM, ASSOCIATION OR CORPORATION IS REQUIRED TO OBTAIN AN EXCESS LINE
BROKER'S LICENSE TO PROCURE INSURANCE FOR AN INSURED WHOSE HOME STATE IS
A STATE OTHER THAN NEW YORK.
(b) Before the superintendent issues any such license or renewal,
there shall be filed in the superintendent's office an application by
the person, firm, association or corporation desiring such license, in
such form or forms, and supplements thereto, and containing information
the superintendent prescribes. For each business entity, the sub-licen-
see or sub-licensees named in the application shall be designated
responsible for the business entity's compliance with the insurance
laws, rules and regulations of this state. A person or entity licensed
as an excess line broker in his, her or its [home] RESIDENT state may
receive a non-resident excess line broker license pursuant to subsection
(a) of this section with the submission of the application.
(I) ON AND AFTER JULY 21, 2012, NO FEES RELATING TO THE LICENSING OF
AN INDIVIDUAL OR ENTITY AS AN EXCESS LINE BROKER ARE PERMITTED TO BE
CHARGED UNLESS THE STATE HAS IN EFFECT AT SUCH TIME LAWS OR REGULATIONS
THAT PROVIDE FOR PARTICIPATION BY THE STATE IN THE NATIONAL INSURANCE
PRODUCER DATABASE OF THE NATIONAL ASSOCIATION OF INSURANCE COMMISSION-
ERS, OR ANY OTHER EQUIVALENT UNIFORM NATIONAL DATABASE, FOR THE LICEN-
SURE OF EXCESS LINE BROKERS AND THE RENEWAL OF SUCH LICENSES.
S 6. Subparagraph (B) of paragraph 1 of subsection (f) of section 2106
of the insurance law, as amended by chapter 687 of the laws of 2003, is
amended to read as follows:
(B) A "non-resident reinsurance intermediary" means a person who is a
non-resident of this state and who is licensed to act as a reinsurance
intermediary in their [home] RESIDENT state.
S 7. Paragraphs 2 and 4 of subsection (f) of section 2110 of the
insurance law, as amended by chapter 687 of the laws of 2003, are
amended to read as follows:
(2) A non-resident insurance producer's license or sub-license may be
summarily revoked in the event that the licensee's license as an agent,
broker, adjuster or in any other capacity under the insurance law of the
licensee's [home] RESIDENT state of domicile or such license of the firm
or association of which the licensee is a member, employee or sub-licen-
see, or such license of the corporation of which the licensee is an
officer, director, employee or sub-licensee has been suspended or
revoked or renewal thereof denied in the licensee's [home] RESIDENT
state of domicile by a procedure affording to the licensee or it a stat-
utory right to a hearing, for action or conduct which, if it had been
S. 3400 6
established upon a hearing before the superintendent, would have consti-
tuted grounds for revocation of a license under subsection (a) of this
section.
(4) Upon submission to the superintendent of satisfactory proof that a
suspension or revocation of a license issued by a [home] RESIDENT state
to act as an insurance agent, insurance broker, adjuster or in another
licensed capacity under the insurance law of such other state or a
denial of renewal thereof has been duly withdrawn, set aside, reversed
or voided, the superintendent shall thereupon reinstate and restore any
and all licenses revoked in accordance with the provisions of this
subsection.
S 8. Subsection (a) of section 2118 of the insurance law, as amended
by chapter 220 of the laws of 1986, and paragraph 2 as amended by chap-
ter 663 of the laws of 1993, is amended to read as follows:
(a) (1) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER TO THE CONTRARY,
THE PLACEMENT OF EXCESS LINE INSURANCE SHALL BE EXCLUSIVELY SUBJECT TO
THE LAWS OF THE INSURED'S HOME STATE AS DEFINED IN SUBSECTION (Y) OF
SECTION TWO THOUSAND ONE HUNDRED ONE OF THIS ARTICLE. ANY LAW, REGU-
LATION, PROVISION OR ACTION OF ANY STATE THAT PURPORTS TO APPLY TO
EXCESS LINE INSURANCE SOLD TO, SOLICITED BY, OR NEGOTIATED WITH AN
INSURED WHOSE HOME STATE IS ANOTHER STATE SHALL BE PREEMPTED WITH
RESPECT TO SUCH APPLICATION.
(2) Every licensee licensed pursuant to section two thousand one
hundred five of this article shall be required to use due care in
selecting the unauthorized insurer from whom policies are procured under
his OR HER license.
[(2) (A) No policy of insurance may be procured by a licensee from any
foreign or alien insurer which is controlled, by a foreign government or
by a political subdivision thereof, or which is an agency of any such
government or subdivision if the superintendent determines that: (i)
such insurer receives a subsidy or other competitive advantage, as a
result of such control or status, that would enable it to compete
unfairly with similarly situated insurers which are not so controlled or
constituted; (ii) such insurer is entitled to claim sovereign immunity
as a result of such control and the insurer has not waived the sovereign
immunity; or (iii) the use of such insurer would be detrimental to the
interests of the people of this state.
(B) No licensee shall be deemed to be in noncompliance with this
subsection unless: (i) the superintendent has made a prior determination
that the foreign or alien insurer from which the licensee procured a
policy of insurance should not be used as an excess line insurer in this
state in accordance with the provisions of this subsection; or (ii) the
licensee knew or should have known that such insurer should not be used
as an excess line insurer in accordance with the provisions of this
subsection. The superintendent may promulgate regulations to provide
guidance to the licensee.
(C)] (3)(A) THE SUPERINTENDENT MAY NOT PROHIBIT AN UNAUTHORIZED ALIEN
INSURER FROM INSURING ANY RISK OF THE KINDS OF INSURANCE SET FORTH IN
SUBSECTION (A) OF SECTION TWO THOUSAND ONE HUNDRED FIVE OF THIS CHAPTER
PLACED BY EXCESS LINE BROKERS LICENSED UNDER THIS ARTICLE IF SUCH INSUR-
ER IS LISTED ON THE MOST CURRENT QUARTERLY LISTING OF ALIEN INSURERS
MAINTAINED BY THE INTERNATIONAL INSURERS DEPARTMENT OF THE NATIONAL
ASSOCIATION OF INSURANCE COMMISSIONERS.
(B) AN UNAUTHORIZED FOREIGN INSURER IS ELIGIBLE TO INSURE RISKS PLACED
BY EXCESS LINE BROKERS LICENSED UNDER THIS ARTICLE PROVIDED SUCH INSURER
FURNISHES SATISFACTORY PROOF AS DETERMINED BY THE SUPERINTENDENT IN A
S. 3400 7
REGULATION THAT IT IS PERMITTED TO WRITE THE TYPE OF INSURANCE REQUESTED
IN ITS DOMICILIARY JURISDICTION, AND HAS CAPITAL AND SURPLUS OR ITS
EQUIVALENT UNDER THE LAWS OF ITS DOMICILIARY JURISDICTION EQUAL TO THE
GREATER OF FIFTEEN MILLION DOLLARS OR AN AMOUNT SET FORTH AND DETERMINED
BY THE SUPERINTENDENT IN A REGULATION.
(4) Every such insurer shall otherwise satisfy all applicable require-
ments for placement by an excess line broker.
S 9. Paragraph 3 of subsection (b) of section 2118 of the insurance
law is amended by adding a new subparagraph (F) to read as follows:
(F) AN EXCESS LINE BROKER SEEKING TO PROCURE OR PLACE INSURANCE WITH
AN UNAUTHORIZED INSURER FOR AN EXEMPT COMMERCIAL PURCHASER SHALL NOT BE
REQUIRED TO SATISFY ANY REQUIREMENT TO MAKE A DILIGENT EFFORT TO DETER-
MINE WHETHER THE FULL AMOUNT OR TYPE OF INSURANCE SOUGHT BY SUCH EXEMPT
COMMERCIAL PURCHASER CAN BE OBTAINED FROM AUTHORIZED INSURERS IF:
(I) THE BROKER PROCURING OR PLACING THE EXCESS LINE INSURANCE HAS
DISCLOSED TO THE EXEMPT COMMERCIAL PURCHASER THAT SUCH INSURANCE MAY OR
MAY NOT BE AVAILABLE FROM AUTHORIZED INSURERS THAT MAY PROVIDE GREATER
PROTECTION WITH MORE REGULATORY OVERSIGHT; AND
(II) THE EXEMPT COMMERCIAL PURCHASER HAS SUBSEQUENTLY REQUESTED, IN
WRITING, THE BROKER TO PROCURE OR PLACE SUCH INSURANCE FROM AN UNAUTHOR-
IZED INSURER.
S 10. Paragraphs 5, 8 and 9 of subsection (b) of section 2118 of the
insurance law, paragraph 5 as amended by chapter 630 of the laws of 1988
and paragraphs 8 and 9 as added by chapter 687 of the laws of 2003, are
amended to read as follows:
(5) Before placing business with an unauthorized insurer, each licen-
see shall ascertain and verify the fact that such insurer is authorized
in its domiciliary jurisdiction to write the insurance policy proposed
to be procured from it by the licensee. No unauthorized insurer shall be
deemed unacceptable for placement of business solely on the ground that
it has been so authorized to write such business in its domiciliary
jurisdiction for a period of less than three years preceding the place-
ment of such risk by the licensee. [In determining whether business may
be placed with such unauthorized insurer, the superintendent shall
consider such factors as: the interests of the public and policyholders,
the length of time such insurer has been authorized in its domiciliary
jurisdiction and elsewhere, its financial condition, and unavailability
of particular coverages from authorized insurers.] IF AN UNAUTHORIZED
INSURER DOES NOT MEET THE ELIGIBILITY REQUIREMENTS OF PARAGRAPH (2) OF
SUBSECTION (A) OF SECTION TWO THOUSAND ONE HUNDRED EIGHTEEN OF THIS
CHAPTER, AN EXCESS LINE BROKER MAY NONETHELESS PLACE A RISK WITH SUCH AN
INSURER UPON AN AFFIRMATIVE FINDING OF ACCEPTABILITY BY THE SUPERINTEN-
DENT. THE FINDING SHALL BE BASED UPON SUCH FACTORS AS QUALITY OF MANAGE-
MENT, CAPITAL AND SURPLUS OF ANY PARENT COMPANY, COMPANY UNDERWRITING
PROFIT AND INVESTMENT INCOME TRENDS, MARKET AVAILABILITY AND COMPANY
RECORD AND REPUTATION WITHIN THE INDUSTRY. IN NO EVENT SHALL THE SUPER-
INTENDENT MAKE AN AFFIRMATIVE FINDING OF ACCEPTABILITY WHEN THE UNAU-
THORIZED INSURER'S CAPITAL AND SURPLUS IS LESS THAN FOUR MILLION FIVE
HUNDRED THOUSAND DOLLARS.
(8) For purposes of this article, unless exempt under the provisions
of section two thousand one hundred seventeen of this article, a policy
of insurance obtained from an insurer not authorized to transact busi-
ness in this state must be procured pursuant to an excess line license
when [the entire property or risk exposure insured or any part thereof,
is located in this state and:] THE RESIDENT STATE OF THE INSURED IS NEW
YORK.
S. 3400 8
[(A) the insured negotiated to acquire the coverage from within this
state; or
(B) the policy was delivered to the insured in this state.]
(9) Nothing in this article shall prohibit an excess line licensee
from placing risks under the excess or surplus line law of another state
provided that the excess line licensee[:
(A)] is licensed under the [applicable state law] LAWS OF THE RESIDENT
STATE OF THE INSURED as an excess or surplus line broker or places such
risk through a licensed excess or surplus line broker in such state[;
and
(B) either no portion of the property or risk exposure is in this
state, or the insured has property or risk exposure both in this state
and in another state where the insured maintains a bona fide office from
which it negotiated to acquire the coverage and to which the policy is
delivered].
S 10-a. Paragraph 1 of subsection (d) of section 2118 of the insurance
law, as amended by chapter 190 of the laws of 1990, is amended to read
as follows:
(1) Every person, firm, association or corporation licensed pursuant
to the provisions of section two thousand one hundred five of this arti-
cle shall pay A PREMIUM TAX to the superintendent IN a sum equal to
three and six-tenths percent of the gross premiums charged the insureds
by the insurers for insurance procured by such licensee pursuant to such
license, less the amount of such premiums returned to such insureds.
Where the insurance covers property or risks located or resident both in
and out of this state, AND THE COVERAGE INCEPTS ON OR PRIOR TO JULY 20,
2011, the sum payable shall be computed on that portion of the gross
premiums allocated to this state pursuant to subsection (b) of section
nine thousand one hundred two of this chapter less the amount of gross
premiums allocated to this state and returned to the insured; PROVIDED,
HOWEVER, THAT FOR SUCH POLICIES IN WHICH COVERAGE INCEPTS ON OR AFTER
JULY 21, 2011, THIS TAX SHALL ONLY APPLY TO EXCESS LINE TRANSACTIONS IN
WHICH THE INSURED'S HOME STATE IS NEW YORK AS THAT TERM IS DEFINED IN
SUBSECTION (Y) OF SECTION TWO THOUSAND ONE HUNDRED ONE OF THIS ARTICLE,
AND SUCH TAX SHALL NOT BE ALLOCATED PURSUANT TO SUBSECTION (B) OF
SECTION NINE THOUSAND ONE HUNDRED TWO OF THIS CHAPTER. FOR PURPOSES OF
THIS SECTION, THE TERM "PREMIUM TAX" MEANS, WITH RESPECT TO EXCESS LINE
INSURANCE, ANY TAX, FEE, ASSESSMENT OR ANY OTHER CHARGE IMPOSED BY THE
STATE DIRECTLY OR INDIRECTLY BASED ON ANY PAYMENT MADE AS CONSIDERATION
FOR SUCH POLICY OF INSURANCE, INCLUDING PREMIUM DEPOSITS, ASSESSMENTS,
REGISTRATION FEES AND ANY OTHER COMPENSATION GIVEN IN CONSIDERATION FOR
SUCH POLICY OF INSURANCE.
S 11. Subsection (b) of section 2134 of the insurance law, as added by
chapter 687 of the laws of 2003, is amended to read as follows:
(b) In addition to the requirements of subsection (a) of this section,
a nonresident insurance producer who changes his, her or its [home]
RESIDENT state, or a resident insurance producer who changes his, her or
its [home] RESIDENT state to another state, within thirty days of the
date of change, shall provide certification of such change from the new
[home] RESIDENT state. No fee or license application shall be required
therefor.
S 12. Subsections (a), (b) and (d) of section 2136 of the insurance
law, as added by chapter 687 of the laws of 2003, are amended to read as
follows:
S. 3400 9
(a) the applicant has a current and valid license in his or her [home]
RESIDENT state and is in good standing in his or her [home] RESIDENT
state;
(b) the applicant has submitted a completed application in the form
prescribed by the superintendent or submitted the application for licen-
sure submitted to his or her [home] RESIDENT state;
(d) the applicant's [home] RESIDENT state awards nonresident insurance
producer licenses to residents of this state on the same basis as
provided in this subsection.
S 13. Subparagraph (E) of paragraph 1 of subsection (f) of section
2137 of the insurance law, as added by chapter 499 of the laws of 2009,
is amended to read as follows:
(E) any individual seeking to be named a licensee or sub-licensee, who
is a nonresident and a life settlement broker or who is licensed as an
insurance producer with a life line of authority in the individual's
[home] RESIDENT state for at least one year; provided, however, that the
individual's [home] RESIDENT state grants nonresident licenses to resi-
dents of this state on the same basis.
S 14. Subsection (a) and paragraph 1 of subsection (b) of section 9102
of the insurance law, as amended by chapter 190 of the laws of 1990, are
amended to read as follows:
(a) In determining the amount of direct premiums taxable in this
state, all such premiums written, procured, or received in this state
shall be deemed written on property or risks located or resident in this
state except such premiums properly allocated and reported as taxable
premiums of any other state or states, PROVIDED THAT FOR PURPOSES OF
INSURANCE PROCURED BY EXCESS LINE BROKERS PURSUANT TO SECTION TWO THOU-
SAND ONE HUNDRED FIVE OF THIS CHAPTER, NO SUCH ALLOCATION SHALL BE MADE
WHERE THE EXCESS LINE TRANSACTION INVOLVES AN INSURED WHOSE HOME STATE
IS NEW YORK AS THAT TERM IS DEFINED IN SUBSECTION (Y) OF SECTION TWO
THOUSAND ONE HUNDRED ONE OF THIS CHAPTER WITH RESPECT TO EXCESS LINE
PLACEMENTS IN WHICH COVERAGE INCEPTS ON OR AFTER JULY 21, 2011.
(1) In determining the amount of gross premiums taxable in this state
pursuant to paragraph one of subsection (d) of section two thousand one
hundred eighteen of this chapter, where a placement of excess line
insurance INCEPTS ON OR PRIOR TO JULY 20, 2011 AND covers property or
risks located or resident both in and out of this state, the sum paid to
the superintendent shall be computed on that portion of the policy
premium that is attributable to property or risks located or resident in
this state, as determined by reference to an allocation schedule
prescribed by the superintendent in a regulation. WITH RESPECT TO EXCESS
LINE PLACEMENTS IN WHICH COVERAGE INCEPTS ON OR AFTER JULY 21, 2011, ONE
HUNDRED PERCENT OF THE PREMIUM CHARGED SHALL BE SUBJECT TO THE TAX WITH-
OUT ALLOCATION, BUT ONLY TO PLACEMENTS WHERE THE HOME STATE OF THE
INSURED, AS THAT TERM IS DEFINED IN SUBSECTION (Y) OF SECTION TWO THOU-
SAND ONE HUNDRED ONE OF THIS CHAPTER, IS NEW YORK.
S 15. Subsection (b) of section 1550 of the tax law, as added by chap-
ter 190 of the laws of 1990, is amended and two new subsections (d) and
(e) are added to read as follows:
(b) The term "premium" includes all amounts paid as consideration for
insurance contracts and shall include premium deposits, assessments,
policy fees, membership fees, REGISTRATION FEES and every other compen-
sation for such contract. The term "premium" includes all such amounts
paid irrespective of whether such amounts are deductible for federal
income tax purposes.
S. 3400 10
(D) THE TERM "INDEPENDENTLY PROCURED INSURANCE" MEANS INSURANCE
OBTAINED DIRECTLY BY AN INSURED FROM AN INSURER NOT AUTHORIZED TO TRANS-
ACT BUSINESS IN THIS STATE UNDER A CERTIFICATE OF AUTHORITY FROM THE
SUPERINTENDENT OF INSURANCE.
(E) THE TERM "PREMIUM TAX" MEANS, WITH RESPECT TO INDEPENDENTLY
PROCURED INSURANCE, ANY TAX, FEE, ASSESSMENT OR OTHER CHARGE IMPOSED BY
THIS STATE DIRECTLY OR INDIRECTLY BASED ON ANY PAYMENT MADE AS CONSIDER-
ATION FOR SUCH INSURANCE, INCLUDING PREMIUM DEPOSITS, ASSESSMENTS,
REGISTRATION FEES AND ANY OTHER COMPENSATION GIVEN IN CONSIDERATION FOR
SUCH A POLICY OF INSURANCE.
S 16. Section 1551 of the tax law, as amended by chapter 73 of the
laws of 1991, is amended to read as follows:
S 1551. Imposition of tax. There is hereby imposed on any person who
[purchases or renews a taxable insurance contract from an insurer not
authorized to transact business in this state under a certificate of
authority from the superintendent of insurance] INDEPENDENTLY PROCURES
INSURANCE, a PREMIUM tax at the rate of three and six-tenths percent of
the premiums paid or to be paid, less returns thereon, for such insur-
ance. Nothing in this article modifies or abrogates any provision of the
insurance law. THIS TAX SHALL ONLY APPLY TO INDEPENDENTLY PROCURED
INSURANCE TRANSACTIONS FOR INSUREDS WHOSE HOME STATE IS NEW YORK AS THAT
TERM IS DEFINED IN SUBSECTION (Y) OF SECTION TWO THOUSAND ONE HUNDRED
ONE OF THE INSURANCE LAW ON COVERAGE WHICH INCEPTS ON OR AFTER JULY 21,
2011.
S 17. Section 1552 of the tax law, as added by chapter 190 of the laws
of 1990, is amended to read as follows:
S 1552. Allocation. Where the taxable insurance contract covers risks
located or resident both within and without this state, WITH RESPECT TO
INDEPENDENTLY PROCURED INSURANCE IN WHICH COVERAGE INCEPTS ON OR PRIOR
TO JULY TWENTIETH, TWO THOUSAND ELEVEN the amount of premiums allocable
to risks resident or located within this state shall be determined
pursuant to rules and regulations of the commissioner of taxation and
finance. In promulgating such rules and regulations, the commissioner of
taxation and finance shall give due consideration to the rules and regu-
lations promulgated by the superintendent of insurance pursuant to
subsection (b) of section nine thousand one hundred two of the insurance
law. INDEPENDENTLY PROCURED INSURANCE POLICIES INCEPTING ON AND AFTER
JULY TWENTY-FIRST, TWO THOUSAND ELEVEN SHALL BE SUBJECT TO TAX ON ONE
HUNDRED PERCENT OF THE PREMIUM CHARGED WITHOUT ALLOCATION.
S 18. This act shall take effect on July 21, 2011 and applies to all
insurance policies procured by excess line licensees with an effective
date on or after July 21, 2011, provided, however, that the amendments
to subsection (b) of section 2118 of the insurance law made by sections
nine and ten of this act shall not affect the expiration and reversion
of such subsection and shall be deemed to expire therewith.
2011-S3400A (ACTIVE) - Details
- Current Committee:
- Senate Insurance
- Law Section:
- Insurance Law
- Laws Affected:
- Amd Ins L, generally; amd §§1550, 1551 & 1552, Tax L
2011-S3400A (ACTIVE) - Sponsor Memo
BILL NUMBER:S3400A
TITLE OF BILL:
An act
to amend the insurance law and the tax law, in relation to excess line
insurance
PURPOSE:
To conform New York insurance Law to the mandatory provisions
of the Nonadmitted and Reinsurance Reform Act of 2010 ("NRRA") which
is contained within portions of the Dodd-Frank Wall Street Reform and
Consumer Protection Act dealing with the regulation of insurance
procured from the excess line market, and preempting state law.
SUMMARY OF PROVISIONS:
Section one of the bill amends Insurance Law
9107(a)(4), (16) and (39)to modify the definitions of "affiliate,"
"control" and "state" to conform such definitions with those set
forth in the NRRA.
Section two of the bill amends Insurance Law § 2101(1) and adds new
subsections (w), (x), (y), (z) and (aa). Section 2101(1) changes the
current term of "home state" to "resident state" with respect to an
insurance producer, distinguishing and thereby clarifying that
definition from the NRRA definition of "home state." Section 2101(w)
adds a new, NRRA-conforming definition for the term "affiliate."
Section 2101(x) adds a new conforming definition of the term "control." Section 2101(y) adds a new conforming definition for the term "home state." Section 2101(z) adds the definition for the term "exempt commercial purchaser." Section (aa) adds a definition for the term "qualified risk manager." Section three of the bill amends Insurance Law §2103(g)(11) to replace the term "home state" with the clarifying term "resident state" to distinguish it from the definition of the term "home state" as used in the NRRA. Section four of the bill amends Insurance Law * 2104(e)(3)(G), again replacing the term "home state" as currently used with the new term "resident state" in deference to the NRRA's use of the term "home state." Section five of the bill amends Insurance Law * 2105(a) and (b) to make the conforming change regarding "resident state" and "home state" noted above. Section 2105(a) also reflects the NRRA mandate that no person, firm, association or corporation is required to obtain an excess line broker's license to procure insurance for an insured whose home state is a state other than New York. Section 2105(b) prohibits the charging of excess line broker licensing fees on or subsequent to July 21, 2012, unless New York has in effect laws or regulations authorizing participation in the National Insurance Producer database of the NAIC or any equivalent uniform national database relative to licensure and renewal of excess line broker licenses. Section six of the bill amends Insurance Law § 2106(f)(1)(B) to reflect the clarifying "resident state"/"home state" definition. Section seven of the bill amends Insurance Law § 2110(f)(2) and (4) to reflect the "resident state"/"home state" definition clarification. Section eight of the bill amends Insurance Law § 2118 to add a new §2118(a)(1), renumber old 9 2118(a)(1) as § 2118(a)(2), and add a new § 2118(a)(3). § 2118(a)(1) conforms the Insurance Law to the NRRA's directive that the placement of excess line insurance shall be exclusively subject to the laws and regulations of an insured's home state. § 2118(a)(3)(A) provides that the Superintendent of Insurance may not prohibit an unauthorized alien insurer from insuring New York excess line risks through a licensed excess line broker if the alien insurer is listed on the most current quarterly listing of alien insurers maintained by the International Insurers Department of the NAIC § 2118(a)(3)(B) provides that an unauthorized foreign insurer is eligible to insure risks placed by excess line brokers as long as the insurer furnishes satisfactory proof that it is permitted to write the coverage requested in the insurer's domiciliary jurisdiction and meets the minimum capital requirements (as calculated by its domiciliary jurisdiction) equal to the greater of $15 million, or an amount determined by the Superintendent and set forth in regulation. Section nine of the bill adds a new Insurance Law § 2118(b)(3)(F) to provide that an excess line broker shall not be required to undertake a diligent effort to determine whether coverage can be obtained from authorized insurers with respect to an exempt commercial purchaser insured under certain circumstances. Section ten of the bill amends Insurance Law § 2118(b)(5), (8) and (9). § 2118 (b) (5) is amended to permit the Superintendent to retain some discretion to allow the placement of coverage with an unauthorized insurer that does not meet the eligibility requirements under certain circumstances, with the provision that no such exception may be made where the unauthorized insurer's capital and surplus is less than $4,500,000.00. § 2118(b)(8) and (9) reflect the "resident state"/"home state" definition clarification. Section ten-a of the bill amends Insurance Law § 2118(d)(1) to make the distinction that the excess line premium tax on policies incepting on or prior to July 20, 2011 must be allocated in accordance with current law, while for policies incepting on or after July 21, 2011, the premium tax shall not be allocated, but collected exclusively by and for New York in connection with excess lines transactions in which the insured's home state is New York. Section eleven of the bill amends Insurance Law § 2134(b) with respect to the "resident state"/"home state" definition clarification. Section twelve of the bill amends Insurance Law § 2136(a),(b) and (d) with respect to the "resident state"/"home state" definition clarification. Section thirteen of the bill amends Insurance Law § 2137(e) with respect to the "resident state"/"home state" definition clarification. Section fourteen of the bill amends Insurance Law § 9102(a)(1) and (b) to reaffirm that no allocation of premium tax attributed to excess line placements shall be made where the excess line transaction involves an insured whose home state is New York when coverage incepts on or after July 21, 2011, but requires such allocation with respect to transactions in which coverage incepts on or prior to July 20, 2011. Section fifteen of the bill amends Tax Law § 1550(b) and adds new § 1550(d) and (e) to define the terms "independently procured insurance" and "premium tax" in conformance with the NRRA. Section sixteen of the bill amends Tax Law § 1551 to require that the premium tax collected on independently procured insurance only applies to transactions for insured's whose home state is New York with respect to coverage that incepts on or after July 21, 2011. Section seventeen of the bill amends Tax Law § 1552 to recognize that the tax collected on independently procured insurance in connection with coverage that incepts on or prior to July 20, 2011, is allocable. Section eighteen of the bill provides for an effective date of July 21, 2011 and renders the provisions of the bill applicable to all insurance policies procured by excess line licensees with an effective date on or after July 21, 2011. JUSTIFICATION: Last year the NRRA was enacted into law, provisions of which preempted state law in connection with certain aspects of excess line insurance placements. This bill brings into conformity with the NRRA various provisions of New York's Insurance Law and Tax Law relating to excess line insurance and the taxation and distribution of tax revenue garnered in connection with insurance procured from the excess line market. Pursuant to the NRRA, the placement of excess line insurance is subject exclusively to the statutory and regulatory requirements of an insured's home state, While the NRRA permits states to enter into a compact or otherwise establish procedures to allocate among the states premium taxes paid on excess line insurance placements to an insured's home state, absent such a compact, New York would possess the exclusive right to retain the proceeds of excess line premium taxes where the insured's home state is New York. Due to the fact that New York is a high volume excess line insurance state with many insureds and insureds' businesses located in the state, rendering New York the "home state" pursuant to the definition of that term under the NRRA, would actually be financially advantageous to New York, as it would have exclusive retention of the tax revenues generated by such placements, Moreover, no compact or system for tax allocation will exist when the NRRA provisions go into effect on July 21, 2011, Continuing the current tax allocation provisions, therefore, will assure that no jurisdiction will tax the portion New York law currently does not tax. As of July 21, 2011, New York will no longer receive premium taxes on excess line policies where New York is not the home state. If New York makes no change to its current law, excess line brokers will only pay tax on the portion of risks existing in New York and only on risks where New York is the home state. New York can offset the loss of revenues on risks whose home state is not New York by taxing one hundred percent of the risks where New York is the home state until such time than an interstate tax allocation compact actually begins to share taxes among states. To effectuate that goal, this bill adheres strictly to compliance with the mandates of the NRRA's preemption provisions relative to excess line insurance. LEGISLATIVE HISTORY: New bill. FISCAL IMPLICATIONS: New York is one of the top-ranked states in the country with respect to excess line insurance placements in which the insured's home state is New York. As such, pursuant to the NRRA's provisions relating to excess line insurance placements and tax collection, New York stands to benefit from the NRRA's authorization to exclusively collect and retain such taxes. A widely adopted tax allocation compact will permit each participating state to collect taxes on the portion of risk fairly allocated to it Prior to such a widely adopted compact, New York should tax one hundred percent of the premium on transactions where New York is the home state. EFFECTIVE DATE: This act shall take effect on July 21, 2011 and is applicable to all insurance policies procured by excess line licensees in which coverage incepts on or after July 21, 2011.
2011-S3400A (ACTIVE) - Bill Text download pdf
S T A T E O F N E W Y O R K
________________________________________________________________________
3400--A
2011-2012 Regular Sessions
I N S E N A T E
February 18, 2011
___________
Introduced by Sen. SEWARD -- read twice and ordered printed, and when
printed to be committed to the Committee on Insurance -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee
AN ACT to amend the insurance law and the tax law, in relation to excess
line insurance
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraphs 4, 16 and 39 of subsection (a) of section 107 of
the insurance law are amended to read as follows:
(4) "Affiliate" means a corporation, a majority of whose shares is
owned or controlled by shareholders, directors or officers of another
corporation, who own or control a majority of the shares of the other
corporation EXCEPT FOR PURPOSES OF INSURANCE PROCURED BY EXCESS LINE
BROKERS LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF
THIS CHAPTER.
(16) "Control". Except for the purposes of article fifteen of this
chapter AND INSURANCE PROCURED BY EXCESS LINE BROKERS LICENSED PURSUANT
TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF THIS CHAPTER, "control",
including the terms "controlling", "controlled by" and "under common
control with", means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of an
institution, whether through the ownership of voting securities, by
contract or otherwise.
(39) "State" means any state of the United States, the commonwealth of
Puerto Rico [and], the District of Columbia, GUAM, THE NORTHERN MARIANA
ISLANDS, THE VIRGIN ISLANDS AND AMERICAN SAMOA.
S 2. Subsection (l) of section 2101 of the insurance law, as added by
chapter 687 of the laws of 2003, is amended and five new subsections
(w), (x), (y), (z) and (aa) are added to read as follows:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08824-03-1
S. 3400--A 2
(l) In this article, WITH RESPECT TO AN INSURANCE PRODUCER, "[home]
RESIDENT state" means the District of Columbia or any state or territory
of the United States in which an insurance producer maintains his, her
or its principal place of residence or principal place of business and
is licensed to act as an insurance producer.
(W) IN THIS ARTICLE, FOR PURPOSES OF INSURANCE PROCURED BY EXCESS LINE
BROKERS LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF
THIS CHAPTER, THE TERM "AFFILIATE" MEANS, WITH RESPECT TO AN INSURED,
ANY ENTITY THAT CONTROLS, IS CONTROLLED BY, OR IS UNDER COMMON CONTROL
WITH, THE INSURED. THE TERM "AFFILIATED GROUP" MEANS ANY GROUP OF ENTI-
TIES THAT ARE ALL AFFILIATED.
(X) IN THIS ARTICLE, FOR PURPOSES OF INSURANCE PROCURED BY EXCESS LINE
BROKERS LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF
THIS CHAPTER, AN ENTITY HAS "CONTROL" OVER ANOTHER ENTITY IF:
(1) THE ENTITY DIRECTLY OR INDIRECTLY OR ACTING THROUGH ONE OR MORE
OTHER PERSONS OWNS, CONTROLS, OR HAS THE POWER TO VOTE TWENTY-FIVE
PERCENT OR MORE OF ANY CLASS OF VOTING SECURITIES OF THE OTHER ENTITY;
OR
(2) THE ENTITY CONTROLS IN ANY MANNER THE ELECTION OF A MAJORITY OF
THE DIRECTORS OR TRUSTEES OF THE OTHER ENTITY.
(Y)(1) IN THIS ARTICLE, FOR PURPOSES OF INSURANCE PROCURED BY EXCESS
LINE BROKERS LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE
OF THIS CHAPTER, THE TERM "HOME STATE" WITH RESPECT TO AN INSURED MEANS:
(A) THE STATE IN WHICH AN INSURED MAINTAINS ITS PRINCIPAL PLACE OF
BUSINESS OR, IN THE CASE OF AN INDIVIDUAL, THE INDIVIDUAL'S PRINCIPAL
RESIDENCE; OR
(B) IF ONE HUNDRED PERCENT OF THE INSURED RISK IS LOCATED OUT OF THE
STATE REFERRED TO IN SUBPARAGRAPH (A) OF THIS PARAGRAPH, THE STATE TO
WHICH THE GREATEST PERCENTAGE OF THE INSURED'S TAXABLE PREMIUM FOR THAT
INSURANCE CONTRACT IS ALLOCATED.
(2) IF MORE THAN ONE INSURED FROM AN AFFILIATED GROUP ARE INSURED BY A
SINGLE INSURANCE CONTRACT PROCURED BY AN EXCESS LINE BROKER, THE TERM
"HOME STATE" MEANS THE HOME STATE, AS DETERMINED PURSUANT TO PARAGRAPH
(1) OF THIS SUBSECTION, OF THE MEMBER OF THE AFFILIATED GROUP THAT HAS
THE LARGEST PERCENTAGE OF PREMIUM ATTRIBUTED TO IT UNDER SUCH INSURANCE
CONTRACT.
(Z) IN THIS ARTICLE, FOR PURPOSES OF INSURANCE PROCURED BY EXCESS LINE
BROKERS LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF
THIS CHAPTER, THE TERM "EXEMPT COMMERCIAL PURCHASER" MEANS ANY PERSON
PURCHASING COMMERCIAL INSURANCE THAT, AT THE TIME OF PLACEMENT, MEETS
THE FOLLOWING REQUIREMENTS:
(1) THE PERSON EMPLOYS OR RETAINS A QUALIFIED RISK MANAGER TO NEGOTI-
ATE INSURANCE COVERAGE;
(2) THE PERSON HAS PAID AGGREGATE NATIONWIDE COMMERCIAL PROPERTY AND
CASUALTY INSURANCE PREMIUMS IN EXCESS OF ONE HUNDRED THOUSAND DOLLARS IN
THE IMMEDIATELY PRECEDING TWELVE MONTHS; AND
(3) THE PERSON MEETS AT LEAST ONE OF THE FOLLOWING CRITERIA:
(A) THE PERSON POSSESSES A NET WORTH IN EXCESS OF TWENTY MILLION
DOLLARS, AS SUCH AMOUNT IS ADJUSTED PURSUANT TO PARAGRAPH (2) OF THIS
SUBSECTION;
(B) THE PERSON GENERATES ANNUAL REVENUES IN EXCESS OF FIFTY MILLION
DOLLARS, AS SUCH AMOUNT IS ADJUSTED PURSUANT TO PARAGRAPH (2) OF THIS
SUBSECTION;
(C) THE PERSON EMPLOYS MORE THAN FIVE HUNDRED FULL-TIME OR FULL-TIME
EQUIVALENT EMPLOYEES PER INDIVIDUAL INSURED OR IS A MEMBER OF AN AFFIL-
IATED GROUP EMPLOYING MORE THAN ONE THOUSAND EMPLOYEES IN THE AGGREGATE;
S. 3400--A 3
(D) THE PERSON IS A NOT-FOR-PROFIT ORGANIZATION OR PUBLIC ENTITY
GENERATING ANNUAL BUDGETED EXPENDITURES OF AT LEAST THIRTY MILLION
DOLLARS, AS SUCH AMOUNT IS ADJUSTED PURSUANT TO PARAGRAPH (2) OF THIS
SUBSECTION;
(E) THE PERSON IS A MUNICIPALITY WITH A POPULATION IN EXCESS OF FIFTY
THOUSAND PERSONS.
(4) EFFECTIVE ON THE FIFTH JANUARY FIRST OCCURRING AFTER THE DATE OF
THE ENACTMENT OF THIS ARTICLE AND EACH FIFTH JANUARY FIRST OCCURRING
THEREAFTER, THE AMOUNTS IN SUBPARAGRAPHS (A), (B), AND (D) OF PARAGRAPH
(3) OF THIS SUBSECTION SHALL BE ADJUSTED TO REFLECT THE PERCENTAGE
CHANGE FOR SUCH FIVE-YEAR PERIOD IN THE CONSUMER PRICE INDEX FOR ALL
URBAN CONSUMERS PUBLISHED BY THE BUREAU OF LABOR STATISTICS OF THE
DEPARTMENT OF LABOR.
(AA) FOR PURPOSES OF INSURANCE PROCURED BY EXCESS LINE BROKERS
LICENSED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FIVE OF THIS CHAP-
TER, THE TERM "QUALIFIED RISK MANAGER" MEANS, WITH RESPECT TO A POLICY-
HOLDER OF COMMERCIAL INSURANCE, A PERSON WHO MEETS ALL OF THE FOLLOWING
REQUIREMENTS:
(1) THE PERSON IS AN EMPLOYEE OF, OR THIRD-PARTY CONSULTANT RETAINED
BY, THE COMMERCIAL POLICYHOLDER;
(2) THE PERSON PROVIDES SKILLED SERVICES IN LOSS PREVENTION, LOSS
REDUCTION, OR RISK AND INSURANCE COVERAGE ANALYSIS, AND PURCHASE OF
INSURANCE;
(3) THE PERSON:
(A) HAS, AT A MINIMUM, A BACHELOR'S DEGREE FROM AN ACCREDITED COLLEGE
OR UNIVERSITY IN RISK MANAGEMENT, BUSINESS ADMINISTRATION, FINANCE,
ECONOMICS, OR ANY OTHER FIELD DETERMINED BY THE SUPERINTENDENT OR OTHER
STATE REGULATORY OFFICIAL OR ENTITY TO DEMONSTRATE MINIMUM COMPETENCE IN
RISK MANAGEMENT; AND
(B) HAS THREE YEARS OF EXPERIENCE IN RISK FINANCING, CLAIMS ADMINIS-
TRATION, LOSS PREVENTION, RISK AND INSURANCE ANALYSIS, OR PURCHASING
COMMERCIAL LINES OF INSURANCE; OR
(C) HAS A DESIGNATION AS A CHARTERED PROPERTY AND CASUALTY UNDERWRITER
("CPCU") ISSUED BY THE AMERICAN INSTITUTE FOR CPCU/INSURANCE INSTITUTE
OF AMERICA;
(D) HAS A DESIGNATION AS AN ASSOCIATE IN RISK MANAGEMENT ("ARM")
ISSUED BY THE AMERICAN INSTITUTE FOR CPCU/INSURANCE INSTITUTE OF AMERI-
CA;
(E) HAS A DESIGNATION AS CERTIFIED RISK MANAGER ("CRM") ISSUED BY THE
NATIONAL ALLIANCE FOR INSURANCE EDUCATION & RESEARCH;
(F) HAS A DESIGNATION AS A RIMS FELLOW ("RF") ISSUED BY THE GLOBAL
RISK MANAGEMENT INSTITUTE; OR
(G) HAS ANY OTHER DESIGNATION, CERTIFICATION, OR LICENSE DETERMINED BY
THE SUPERINTENDENT OR OTHER STATE INSURANCE REGULATORY OFFICIAL OR ENTI-
TY TO DEMONSTRATE MINIMUM COMPETENCY IN RISK MANAGEMENT;
(4) HAS AT LEAST SEVEN YEARS OF EXPERIENCE IN RISK FINANCING, CLAIMS
ADMINISTRATION, LOSS PREVENTION, RISK AND INSURANCE COVERAGE ANALYSIS,
OR PURCHASING COMMERCIAL LINES OF INSURANCE; AND
(A) HAS ANY ONE OF THE DESIGNATIONS SPECIFIED IN SUBPARAGRAPHS (A)
THROUGH (G) OF PARAGRAPH (3) OF SUBSECTION (AA) OF THIS SECTION;
(B) HAS AT LEAST TEN YEARS OF EXPERIENCE IN RISK FINANCING, CLAIMS
ADMINISTRATION, LOSS PREVENTION, RISK AND INSURANCE COVERAGE ANALYSIS,
OR PURCHASING COMMERCIAL LINES OF INSURANCE; OR
(C) HAS A GRADUATE DEGREE FROM AN ACCREDITED COLLEGE OR UNIVERSITY IN
RISK MANAGEMENT, BUSINESS ADMINISTRATION, FINANCE, ECONOMICS, OR ANY
S. 3400--A 4
OTHER FIELD DETERMINED BY THE SUPERINTENDENT OR OTHER STATE REGULATORY
OFFICIAL OR ENTITY TO DEMONSTRATE MINIMUM COMPETENCE IN RISK MANAGEMENT.
S 3. Paragraph 11 of subsection (g) of section 2103 of the insurance
law, as added by chapter 687 of the laws of 2003, is amended to read as
follows:
(11) of any individual who applies for an insurance agent license in
this state who was previously licensed for the same line or lines of
authority in another state, provided, however, that the applicant's
[home] RESIDENT state grants non-resident licenses to residents of this
state on the same basis. Such individual shall also not be required to
complete any prelicensing education. This exemption is only available if
the person is currently licensed in that state or if the application is
received within ninety days of the date of cancellation of the appli-
cant's previous license and if the prior state issues a certification
that, at the time of cancellation, the applicant was in good standing in
that state or the state's producer database records, maintained by the
National Association of Insurance Commissioners, its affiliates or
subsidiaries, indicate that the producer is or was licensed in good
standing for the line of authority requested. An individual or entity
licensed in another state who moves to this state shall make an applica-
tion within ninety days of establishing legal residence to become a
resident licensee. No prelicensing education or examination shall be
required of that person to obtain any line of authority previously held
in the prior state except where the superintendent determines otherwise
by regulation.
S 4. Subparagraph (G) of paragraph 3 of subsection (e) of section 2104
of the insurance law, as amended by chapter 687 of the laws of 2003, is
amended to read as follows:
(G) was previously licensed for the same line or lines of authority in
another state, provided, however, that the applicant's [home] RESIDENT
state grants non-resident licenses to residents of this state on the
same basis. Such individual shall also not be required to complete any
prelicensing education. This exemption is only available if the person
is currently licensed in that state or if the application is received
within ninety days of the date of cancellation of the applicant's previ-
ous license and if the prior state issues a certification that, at the
time of cancellation, the applicant was in good standing in that state
or the state's producer database records, maintained by the National
Association of Insurance Commissioners, its affiliates or subsidiaries,
indicate that the producer is or was licensed in good standing for the
line of authority requested. An individual or entity licensed in another
state who moves to this state shall make an application within ninety
days of establishing legal residence to become a resident licensee. No
prelicensing education or examination shall be required of that person
to obtain any line of authority previously held in the prior state
except where the superintendent determines otherwise by regulation.
S 5. Subsections (a) and (b) of section 2105 of the insurance law,
subsection (a) as amended by chapter 626 of the laws of 2006 and
subsection (b) as amended by chapter 687 of the laws of 2003, are
amended and a new subsection (i) is added to read as follows:
(a) The superintendent may issue an excess line broker's license to
any person, firm, association or corporation who or which is domiciled
or maintains an office in this state and is licensed as an insurance
broker under section two thousand one hundred four of this article, or
who or which is licensed as an excess line broker in the licensee's
[home] RESIDENT state, provided, however, that the applicant's [home]
S. 3400--A 5
RESIDENT state grants non-resident licenses to residents of this state
on the same basis, except that reciprocity is not required in regard to
the placement of liability insurance on behalf of a purchasing group or
any of its members; authorizing such person, firm, association or corpo-
ration to procure, subject to the restrictions herein provided, policies
of insurance from insurers which are not authorized to transact business
in this state of the kind or kinds of insurance specified in paragraphs
four through fourteen, sixteen, seventeen, nineteen, twenty, twenty-two,
twenty-seven, twenty-eight and thirty-one of subsection (a) of section
one thousand one hundred thirteen of this chapter and in subsection (h)
of this section, provided, however, that the provisions of this section
and section two thousand one hundred eighteen of this article shall not
apply to ocean marine insurance and other contracts of insurance enumer-
ated in subsections (b) and (c) of section two thousand one hundred
seventeen of this article. Such license may be suspended or revoked by
the superintendent whenever in his OR HER judgment such suspension or
revocation will best promote the interests of the people of this state.
NOTWITHSTANDING ANYTHING IN THIS CHAPTER TO THE CONTRARY, NO PERSON,
FIRM, ASSOCIATION OR CORPORATION IS REQUIRED TO OBTAIN AN EXCESS LINE
BROKER'S LICENSE TO PROCURE INSURANCE FOR AN INSURED WHOSE HOME STATE IS
A STATE OTHER THAN NEW YORK.
(b) Before the superintendent issues any such license or renewal,
there shall be filed in the superintendent's office an application by
the person, firm, association or corporation desiring such license, in
such form or forms, and supplements thereto, and containing information
the superintendent prescribes. For each business entity, the sub-licen-
see or sub-licensees named in the application shall be designated
responsible for the business entity's compliance with the insurance
laws, rules and regulations of this state. A person or entity licensed
as an excess line broker in his, her or its [home] RESIDENT state may
receive a non-resident excess line broker license pursuant to subsection
(a) of this section with the submission of the application.
(I) ON AND AFTER JULY 21, 2012, NO FEES RELATING TO THE LICENSING OF
AN INDIVIDUAL OR ENTITY AS AN EXCESS LINE BROKER ARE PERMITTED TO BE
CHARGED UNLESS THE STATE HAS IN EFFECT AT SUCH TIME LAWS OR REGULATIONS
THAT PROVIDE FOR PARTICIPATION BY THE STATE IN THE NATIONAL INSURANCE
PRODUCER DATABASE OF THE NATIONAL ASSOCIATION OF INSURANCE COMMISSION-
ERS, OR ANY OTHER EQUIVALENT UNIFORM NATIONAL DATABASE, FOR THE LICEN-
SURE OF EXCESS LINE BROKERS AND THE RENEWAL OF SUCH LICENSES.
S 6. Subparagraph (B) of paragraph 1 of subsection (f) of section 2106
of the insurance law, as amended by chapter 687 of the laws of 2003, is
amended to read as follows:
(B) A "non-resident reinsurance intermediary" means a person who is a
non-resident of this state and who is licensed to act as a reinsurance
intermediary in their [home] RESIDENT state.
S 7. Paragraphs 2 and 4 of subsection (f) of section 2110 of the
insurance law, as amended by chapter 687 of the laws of 2003, are
amended to read as follows:
(2) A non-resident insurance producer's license or sub-license may be
summarily revoked in the event that the licensee's license as an agent,
broker, adjuster or in any other capacity under the insurance law of the
licensee's [home] RESIDENT state of domicile or such license of the firm
or association of which the licensee is a member, employee or sub-licen-
see, or such license of the corporation of which the licensee is an
officer, director, employee or sub-licensee has been suspended or
revoked or renewal thereof denied in the licensee's [home] RESIDENT
S. 3400--A 6
state of domicile by a procedure affording to the licensee or it a stat-
utory right to a hearing, for action or conduct which, if it had been
established upon a hearing before the superintendent, would have consti-
tuted grounds for revocation of a license under subsection (a) of this
section.
(4) Upon submission to the superintendent of satisfactory proof that a
suspension or revocation of a license issued by a [home] RESIDENT state
to act as an insurance agent, insurance broker, adjuster or in another
licensed capacity under the insurance law of such other state or a
denial of renewal thereof has been duly withdrawn, set aside, reversed
or voided, the superintendent shall thereupon reinstate and restore any
and all licenses revoked in accordance with the provisions of this
subsection.
S 8. Subsection (a) of section 2118 of the insurance law, as amended
by chapter 220 of the laws of 1986, and paragraph 2 as amended by chap-
ter 663 of the laws of 1993, is amended to read as follows:
(a) (1) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER TO THE CONTRARY,
THE PLACEMENT OF EXCESS LINE INSURANCE SHALL BE EXCLUSIVELY SUBJECT TO
THE LAWS OF THE INSURED'S HOME STATE AS DEFINED IN SUBSECTION (Y) OF
SECTION TWO THOUSAND ONE HUNDRED ONE OF THIS ARTICLE. ANY LAW, REGU-
LATION, PROVISION OR ACTION OF ANY STATE THAT PURPORTS TO APPLY TO
EXCESS LINE INSURANCE SOLD TO, SOLICITED BY, OR NEGOTIATED WITH AN
INSURED WHOSE HOME STATE IS ANOTHER STATE SHALL BE PREEMPTED WITH
RESPECT TO SUCH APPLICATION.
(2) Every licensee licensed pursuant to section two thousand one
hundred five of this article shall be required to use due care in
selecting the unauthorized insurer from whom policies are procured under
his OR HER license.
[(2) (A) No policy of insurance may be procured by a licensee from any
foreign or alien insurer which is controlled, by a foreign government or
by a political subdivision thereof, or which is an agency of any such
government or subdivision if the superintendent determines that: (i)
such insurer receives a subsidy or other competitive advantage, as a
result of such control or status, that would enable it to compete
unfairly with similarly situated insurers which are not so controlled or
constituted; (ii) such insurer is entitled to claim sovereign immunity
as a result of such control and the insurer has not waived the sovereign
immunity; or (iii) the use of such insurer would be detrimental to the
interests of the people of this state.
(B) No licensee shall be deemed to be in noncompliance with this
subsection unless: (i) the superintendent has made a prior determination
that the foreign or alien insurer from which the licensee procured a
policy of insurance should not be used as an excess line insurer in this
state in accordance with the provisions of this subsection; or (ii) the
licensee knew or should have known that such insurer should not be used
as an excess line insurer in accordance with the provisions of this
subsection. The superintendent may promulgate regulations to provide
guidance to the licensee.
(C)] (3)(A) THE SUPERINTENDENT MAY NOT PROHIBIT AN UNAUTHORIZED ALIEN
INSURER FROM INSURING ANY RISK OF THE KINDS OF INSURANCE SET FORTH IN
SUBSECTION (A) OF SECTION TWO THOUSAND ONE HUNDRED FIVE OF THIS CHAPTER
PLACED BY EXCESS LINE BROKERS LICENSED UNDER THIS ARTICLE IF SUCH INSUR-
ER IS LISTED ON THE MOST CURRENT QUARTERLY LISTING OF ALIEN INSURERS
MAINTAINED BY THE INTERNATIONAL INSURERS DEPARTMENT OF THE NATIONAL
ASSOCIATION OF INSURANCE COMMISSIONERS.
S. 3400--A 7
(B) AN UNAUTHORIZED FOREIGN INSURER IS ELIGIBLE TO INSURE RISKS PLACED
BY EXCESS LINE BROKERS LICENSED UNDER THIS ARTICLE PROVIDED SUCH INSURER
FURNISHES SATISFACTORY PROOF AS DETERMINED BY THE SUPERINTENDENT IN A
REGULATION THAT IT IS PERMITTED TO WRITE THE TYPE OF INSURANCE REQUESTED
IN ITS DOMICILIARY JURISDICTION, AND HAS CAPITAL AND SURPLUS OR ITS
EQUIVALENT UNDER THE LAWS OF ITS DOMICILIARY JURISDICTION EQUAL TO THE
GREATER OF FIFTEEN MILLION DOLLARS OR AN AMOUNT SET FORTH AND DETERMINED
BY THE SUPERINTENDENT IN A REGULATION.
(4) Every such insurer shall otherwise satisfy all applicable require-
ments for placement by an excess line broker.
S 9. Paragraph 3 of subsection (b) of section 2118 of the insurance
law is amended by adding a new subparagraph (F) to read as follows:
(F) AN EXCESS LINE BROKER SEEKING TO PROCURE OR PLACE INSURANCE WITH
AN UNAUTHORIZED INSURER FOR AN EXEMPT COMMERCIAL PURCHASER SHALL NOT BE
REQUIRED TO SATISFY ANY REQUIREMENT TO MAKE A DILIGENT EFFORT TO DETER-
MINE WHETHER THE FULL AMOUNT OR TYPE OF INSURANCE SOUGHT BY SUCH EXEMPT
COMMERCIAL PURCHASER CAN BE OBTAINED FROM AUTHORIZED INSURERS IF:
(I) THE BROKER PROCURING OR PLACING THE EXCESS LINE INSURANCE HAS
DISCLOSED TO THE EXEMPT COMMERCIAL PURCHASER THAT SUCH INSURANCE MAY OR
MAY NOT BE AVAILABLE FROM AUTHORIZED INSURERS THAT MAY PROVIDE GREATER
PROTECTION WITH MORE REGULATORY OVERSIGHT; AND
(II) THE EXEMPT COMMERCIAL PURCHASER HAS SUBSEQUENTLY REQUESTED, IN
WRITING, THE BROKER TO PROCURE OR PLACE SUCH INSURANCE FROM AN UNAUTHOR-
IZED INSURER.
S 10. Paragraphs 5, 8 and 9 of subsection (b) of section 2118 of the
insurance law, paragraph 5 as amended by chapter 630 of the laws of 1988
and paragraphs 8 and 9 as added by chapter 687 of the laws of 2003, are
amended to read as follows:
(5) Before placing business with an unauthorized insurer, each licen-
see shall ascertain and verify the fact that such insurer is authorized
in its domiciliary jurisdiction to write the insurance policy proposed
to be procured from it by the licensee. No unauthorized insurer shall be
deemed unacceptable for placement of business solely on the ground that
it has been so authorized to write such business in its domiciliary
jurisdiction for a period of less than three years preceding the place-
ment of such risk by the licensee. [In determining whether business may
be placed with such unauthorized insurer, the superintendent shall
consider such factors as: the interests of the public and policyholders,
the length of time such insurer has been authorized in its domiciliary
jurisdiction and elsewhere, its financial condition, and unavailability
of particular coverages from authorized insurers.] IF AN UNAUTHORIZED
INSURER DOES NOT MEET THE ELIGIBILITY REQUIREMENTS OF PARAGRAPH (2) OF
SUBSECTION (A) OF SECTION TWO THOUSAND ONE HUNDRED EIGHTEEN OF THIS
CHAPTER, AN EXCESS LINE BROKER MAY NONETHELESS PLACE A RISK WITH SUCH AN
INSURER UPON AN AFFIRMATIVE FINDING OF ACCEPTABILITY BY THE SUPERINTEN-
DENT. THE FINDING SHALL BE BASED UPON SUCH FACTORS AS QUALITY OF MANAGE-
MENT, CAPITAL AND SURPLUS OF ANY PARENT COMPANY, COMPANY UNDERWRITING
PROFIT AND INVESTMENT INCOME TRENDS, MARKET AVAILABILITY AND COMPANY
RECORD AND REPUTATION WITHIN THE INDUSTRY. IN NO EVENT SHALL THE SUPER-
INTENDENT MAKE AN AFFIRMATIVE FINDING OF ACCEPTABILITY WHEN THE UNAU-
THORIZED INSURER'S CAPITAL AND SURPLUS IS LESS THAN FOUR MILLION FIVE
HUNDRED THOUSAND DOLLARS.
(8) For purposes of this article, unless exempt under the provisions
of section two thousand one hundred seventeen of this article, a policy
of insurance obtained from an insurer not authorized to transact busi-
ness in this state must be procured pursuant to an excess line license
S. 3400--A 8
when [the entire property or risk exposure insured or any part thereof,
is located in this state and:] THE HOME STATE OF THE INSURED IS NEW
YORK.
[(A) the insured negotiated to acquire the coverage from within this
state; or
(B) the policy was delivered to the insured in this state.]
(9) Nothing in this article shall prohibit an excess line licensee
from placing risks under the excess or surplus line law of another state
provided that the excess line licensee[:
(A)] is licensed under the [applicable state law] LAWS OF THE HOME
STATE OF THE INSURED as an excess or surplus line broker or places such
risk through a licensed excess or surplus line broker in such state[;
and
(B) either no portion of the property or risk exposure is in this
state, or the insured has property or risk exposure both in this state
and in another state where the insured maintains a bona fide office from
which it negotiated to acquire the coverage and to which the policy is
delivered].
S 10-a. Paragraph 1 of subsection (d) of section 2118 of the insurance
law, as amended by chapter 190 of the laws of 1990, is amended to read
as follows:
(1) Every person, firm, association or corporation licensed pursuant
to the provisions of section two thousand one hundred five of this arti-
cle shall pay A PREMIUM TAX to the superintendent IN a sum equal to
three and six-tenths percent of the gross premiums charged the insureds
by the insurers for insurance procured by such licensee pursuant to such
license, less the amount of such premiums returned to such insureds.
Where the insurance covers property or risks located or resident both in
and out of this state, AND THE COVERAGE INCEPTS ON OR PRIOR TO JULY 20,
2011, the sum payable shall be computed on that portion of the gross
premiums allocated to this state pursuant to subsection (b) of section
nine thousand one hundred two of this chapter less the amount of gross
premiums allocated to this state and returned to the insured; PROVIDED,
HOWEVER, THAT FOR SUCH POLICIES IN WHICH COVERAGE INCEPTS ON OR AFTER
JULY 21, 2011, THIS TAX SHALL ONLY APPLY TO EXCESS LINE TRANSACTIONS IN
WHICH THE INSURED'S HOME STATE IS NEW YORK AS THAT TERM IS DEFINED IN
SUBSECTION (Y) OF SECTION TWO THOUSAND ONE HUNDRED ONE OF THIS ARTICLE,
AND SUCH TAX SHALL NOT BE ALLOCATED PURSUANT TO SUBSECTION (B) OF
SECTION NINE THOUSAND ONE HUNDRED TWO OF THIS CHAPTER. FOR PURPOSES OF
THIS SECTION, THE TERM "PREMIUM TAX" MEANS, WITH RESPECT TO EXCESS LINE
INSURANCE, ANY TAX, FEE, ASSESSMENT OR ANY OTHER CHARGE IMPOSED BY THE
STATE DIRECTLY OR INDIRECTLY BASED ON ANY PAYMENT MADE AS CONSIDERATION
FOR SUCH POLICY OF INSURANCE, INCLUDING PREMIUM DEPOSITS, ASSESSMENTS,
REGISTRATION FEES AND ANY OTHER COMPENSATION GIVEN IN CONSIDERATION FOR
SUCH POLICY OF INSURANCE.
S 11. Subsection (b) of section 2134 of the insurance law, as added by
chapter 687 of the laws of 2003, is amended to read as follows:
(b) In addition to the requirements of subsection (a) of this section,
a nonresident insurance producer who changes his, her or its [home]
RESIDENT state, or a resident insurance producer who changes his, her or
its [home] RESIDENT state to another state, within thirty days of the
date of change, shall provide certification of such change from the new
[home] RESIDENT state. No fee or license application shall be required
therefor.
S. 3400--A 9
S 12. Subsections (a), (b) and (d) of section 2136 of the insurance
law, as added by chapter 687 of the laws of 2003, are amended to read as
follows:
(a) the applicant has a current and valid license in his or her [home]
RESIDENT state and is in good standing in his or her [home] RESIDENT
state;
(b) the applicant has submitted a completed application in the form
prescribed by the superintendent or submitted the application for licen-
sure submitted to his or her [home] RESIDENT state;
(d) the applicant's [home] RESIDENT state awards nonresident insurance
producer licenses to residents of this state on the same basis as
provided in this subsection.
S 13. Subparagraph (E) of paragraph 1 of subsection (f) of section
2137 of the insurance law, as added by chapter 499 of the laws of 2009,
is amended to read as follows:
(E) any individual seeking to be named a licensee or sub-licensee, who
is a nonresident and a life settlement broker or who is licensed as an
insurance producer with a life line of authority in the individual's
[home] RESIDENT state for at least one year; provided, however, that the
individual's [home] RESIDENT state grants nonresident licenses to resi-
dents of this state on the same basis.
S 14. Subsection (a) and paragraph 1 of subsection (b) of section 9102
of the insurance law, as amended by chapter 190 of the laws of 1990, are
amended to read as follows:
(a) In determining the amount of direct premiums taxable in this
state, all such premiums written, procured, or received in this state
shall be deemed written on property or risks located or resident in this
state except such premiums properly allocated and reported as taxable
premiums of any other state or states, PROVIDED THAT FOR PURPOSES OF
INSURANCE PROCURED BY EXCESS LINE BROKERS PURSUANT TO SECTION TWO THOU-
SAND ONE HUNDRED FIVE OF THIS CHAPTER, NO SUCH ALLOCATION SHALL BE MADE
WHERE THE EXCESS LINE TRANSACTION INVOLVES AN INSURED WHOSE HOME STATE
IS NEW YORK AS THAT TERM IS DEFINED IN SUBSECTION (Y) OF SECTION TWO
THOUSAND ONE HUNDRED ONE OF THIS CHAPTER WITH RESPECT TO EXCESS LINE
PLACEMENTS IN WHICH COVERAGE INCEPTS ON OR AFTER JULY 21, 2011.
(1) In determining the amount of gross premiums taxable in this state
pursuant to paragraph one of subsection (d) of section two thousand one
hundred eighteen of this chapter, where a placement of excess line
insurance INCEPTS ON OR PRIOR TO JULY 20, 2011 AND covers property or
risks located or resident both in and out of this state, the sum paid to
the superintendent shall be computed on that portion of the policy
premium that is attributable to property or risks located or resident in
this state, as determined by reference to an allocation schedule
prescribed by the superintendent in a regulation. WITH RESPECT TO EXCESS
LINE PLACEMENTS IN WHICH COVERAGE INCEPTS ON OR AFTER JULY 21, 2011, ONE
HUNDRED PERCENT OF THE PREMIUM CHARGED SHALL BE SUBJECT TO THE TAX WITH-
OUT ALLOCATION, BUT ONLY TO PLACEMENTS WHERE THE HOME STATE OF THE
INSURED, AS THAT TERM IS DEFINED IN SUBSECTION (Y) OF SECTION TWO THOU-
SAND ONE HUNDRED ONE OF THIS CHAPTER, IS NEW YORK.
S 15. Subsection (b) of section 1550 of the tax law, as added by chap-
ter 190 of the laws of 1990, is amended and two new subsections (d) and
(e) are added to read as follows:
(b) The term "premium" includes all amounts paid as consideration for
insurance contracts and shall include premium deposits, assessments,
policy fees, membership fees, REGISTRATION FEES and every other compen-
sation for such contract. The term "premium" includes all such amounts
S. 3400--A 10
paid irrespective of whether such amounts are deductible for federal
income tax purposes.
(D) THE TERM "INDEPENDENTLY PROCURED INSURANCE" MEANS INSURANCE
OBTAINED DIRECTLY BY AN INSURED FROM AN INSURER NOT AUTHORIZED TO TRANS-
ACT BUSINESS IN THIS STATE UNDER A CERTIFICATE OF AUTHORITY FROM THE
SUPERINTENDENT OF INSURANCE.
(E) THE TERM "PREMIUM TAX" MEANS, WITH RESPECT TO INDEPENDENTLY
PROCURED INSURANCE, ANY TAX, FEE, ASSESSMENT OR OTHER CHARGE IMPOSED BY
THIS STATE DIRECTLY OR INDIRECTLY BASED ON ANY PAYMENT MADE AS CONSIDER-
ATION FOR SUCH INSURANCE, INCLUDING PREMIUM DEPOSITS, ASSESSMENTS,
REGISTRATION FEES AND ANY OTHER COMPENSATION GIVEN IN CONSIDERATION FOR
SUCH A POLICY OF INSURANCE.
S 16. Section 1551 of the tax law, as amended by chapter 73 of the
laws of 1991, is amended to read as follows:
S 1551. Imposition of tax. There is hereby imposed on any person who
[purchases or renews a taxable insurance contract from an insurer not
authorized to transact business in this state under a certificate of
authority from the superintendent of insurance] INDEPENDENTLY PROCURES
INSURANCE, a PREMIUM tax at the rate of three and six-tenths percent of
the premiums paid or to be paid, less returns thereon, for such insur-
ance. Nothing in this article modifies or abrogates any provision of the
insurance law. THIS TAX SHALL ONLY APPLY TO INDEPENDENTLY PROCURED
INSURANCE TRANSACTIONS FOR INSUREDS WHOSE HOME STATE IS NEW YORK AS THAT
TERM IS DEFINED IN SUBSECTION (Y) OF SECTION TWO THOUSAND ONE HUNDRED
ONE OF THE INSURANCE LAW ON COVERAGE WHICH INCEPTS ON OR AFTER JULY 21,
2011.
S 17. Section 1552 of the tax law, as added by chapter 190 of the laws
of 1990, is amended to read as follows:
S 1552. Allocation. Where the taxable insurance contract covers risks
located or resident both within and without this state, WITH RESPECT TO
INDEPENDENTLY PROCURED INSURANCE IN WHICH COVERAGE INCEPTS ON OR PRIOR
TO JULY TWENTIETH, TWO THOUSAND ELEVEN the amount of premiums allocable
to risks resident or located within this state shall be determined
pursuant to rules and regulations of the commissioner of taxation and
finance. In promulgating such rules and regulations, the commissioner of
taxation and finance shall give due consideration to the rules and regu-
lations promulgated by the superintendent of insurance pursuant to
subsection (b) of section nine thousand one hundred two of the insurance
law. INDEPENDENTLY PROCURED INSURANCE POLICIES INCEPTING ON AND AFTER
JULY TWENTY-FIRST, TWO THOUSAND ELEVEN SHALL BE SUBJECT TO TAX ON ONE
HUNDRED PERCENT OF THE PREMIUM CHARGED WITHOUT ALLOCATION.
S 18. This act shall take effect on July 21, 2011 and applies to all
insurance policies procured by excess line licensees with an effective
date on or after July 21, 2011, provided, however, that the amendments
to subsection (b) of section 2118 of the insurance law made by sections
nine and ten of this act shall not affect the expiration and reversion
of such subsection and shall be deemed to expire therewith.
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