senate Bill S7353

Signed By Governor
2013-2014 Legislative Session

Relates to encouraging modernization of mutual and cooperative insurance companies' information systems technology

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Archive: Last Bill Status - Signed by Governor


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Dec 17, 2014 approval memo.26
signed chap.527
Dec 05, 2014 delivered to governor
Jun 19, 2014 returned to senate
passed assembly
ordered to third reading rules cal.492
substituted for a9793
Jun 17, 2014 referred to insurance
delivered to assembly
passed senate
Jun 02, 2014 advanced to third reading
May 29, 2014 2nd report cal.
May 28, 2014 1st report cal.969
May 14, 2014 referred to insurance

Votes

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S7353 - Bill Details

See Assembly Version of this Bill:
A9793
Law Section:
Insurance Law
Laws Affected:
Amd ยงยง4110 & 6613, Ins L
Versions Introduced in 2011-2012 Legislative Session:
S4043A

S7353 - Bill Texts

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Relates to expenses incurred during the modernization of mutual and cooperative insurance companies' information systems technology.

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BILL NUMBER:S7353

TITLE OF BILL: An act to amend the insurance law, in relation to
encouraging modernization of mutual and cooperative insurance companies'
information systems technology

PURPOSE:

Domestic mutual and co-operative property/casualty insurance companies
are bound by New York law to hold their management expenses below a
certain percentage of their net written premium income. These caps can
inhibit companies from making necessary upgrades and improvements to
their computer systems and software. This bill is designed to permit
both mutuals and cooperative property/casualty insurers to make such
important expenditures by temporarily raising the management expenses
cap when computer upgrade expenses result in exceeding such cap. An
additional protection against excessive costs being incurred for such
upgrades is contained in the bill by providing that in no event shall
the cap be raised by more than 5 percentage points. Further, insurers
are prohibited from increasing premiums solely as a result of the
management expenses cap being exceeded.

SUMMARY OF PROVISIONS:

Section 1. Amend Insurance Law section 4110(a) to temporarily raise the
management expenses limit for domestic mutual property/casualty insur-
ance companies if they incur expenses upon making a new system upgrade
which places the insurer's total management expenses over the limit.
This temporary increase in the limit could not exceed 5 percentage
points and would be subject to approval by the superintendent. In
essence, this would allow such expenses to be made even if they cause
the mutual insurer to exceed the statute's management expenses cap.
Additionally, insurers are prohibited from increasing premiums solely as
a result of the management expenses cap being exceeded.

Section 2. Amend Insurance Law section 6613(a) to similarly increase the
management expenses limit for cooperative property/casualty insurance
companies if they incur expenses upon making a new system upgrade which
places their total management expenses over the limit. This temporary
increase in the limit could not exceed 5 percentage points. In essence,
this would allow such expenses to be made even if they cause the cooper-
ative insurer to exceed the statute's management expenses cap. Addi-
tionally, insurers are prohibited from increasing premiums solely as a
result of the management expenses cap being exceeded.

Section 3. Effective date is immediately upon enactment.

JUSTIFICATION:

Domestic mutual property/casualty insurance companies are important
drivers of the New York state economy, employing well over 2,000 New
Yorkers. In addition, they provide important property/casualty coverage

to numerous New York businesses and individuals as well as businesses
and individuals in other states. This legislation would assist mutual
insurers by encouraging these companies to acquire state of the art,
modern computer and information technology systems for purposes of maxi-
mizing customer service. In today's world, insurance consumers increas-
ingly want "24/7" access to their insurer and its services, whether
reporting a claim or filling out a renewal for their policy. Since the
vast majority of these mutual insurance companies are providing services
to residents and businesses in other states, this measure helps keep
these insurers thriving in New York as they engage in competition with
non-New York domiciled property/casualty insurers to keep those other
states' residents and businesses using insurance products created, sold
and managed by New York domestic companies employing New Yorkers.

In a similar vein, this bill would also help cooperative insurance
companies to continue to serve their vital role in the New York
property/casualty insurance market. Cooperatives are the major insurance
writers of farm owners' coverage and agricultural-related small busi-
nesses, small contractors' liability insurance, seasonal businesses, as
well as small diners and taverns. Co-ops also provide employment for
over 2,200 professional and clerical staff in New York State, with the
vast bulk of these jobs spread throughout Upstate New York. Furthermore,
New York cooperative insurance companies provide necessary
property/casualty coverage to over 70,000 New York State small busi-
nesses.

Importantly, the legislation ensures that there will be no undue harm to
consumers by prohibiting insurers from raising premiums solely as a
result of the management expenses cap being exceeded.

In sum, this proposed legislation would help both domestic mutual insur-
ance companies and cooperative insurance companies to upgrade their
computer hardware and software in order to provide their customers with
the most efficient and effective means of doing business.

LEGISLATIVE HISTORY:

S.4043-A of 2011-12.

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

Immediately.

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

                                  7353

                            I N  S E N A T E

                              May 14, 2014
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to encouraging moderniza-
  tion  of  mutual  and  cooperative  insurance  companies'  information
  systems technology

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

  Section 1. Subsection (a) of section 4110 of  the  insurance  law,  as
amended  by  chapter  527  of  the  laws  of 2006, is amended to read as
follows:
  (a) No domestic mutual property/casualty insurance company licensed to
write a kind of insurance specified in  paragraph  seven,  eight,  nine,
ten,  eleven,  thirteen,  fourteen,  fifteen,  sixteen  or  seventeen of
subsection (a) of section one thousand  one  hundred  thirteen  of  this
chapter  shall expend in any one calendar year for management expenses a
greater amount than thirty percent of the sum of its net premium  income
and  seventy-five  percent  of  its  investment  income  for  such year;
provided that any insurer whose principal line of  business  is  medical
malpractice  liability  insurance or any insurer who is the subject of a
proceeding pursuant to article seventy-four of this  chapter  shall  not
expend  in  any  one  calendar  year  for management expenses, a greater
amount than thirty percent of its net  premium  income  for  such  year.
Management expenses shall be held to include all expenses of the company
except expenses incurred in the investigation, adjustment and settlement
of  claims,  taxes, fees and expenses of examination, and taxes, repairs
and expenses on real estate. In applying the provisions of this  section
the  net premium income of, and expenses of, boiler and machinery insur-
ance or elevator insurance shall not be included.  IN THE EVENT EXPENSES
INCURRED IN MAKING A NEW SYSTEM  UPGRADE  RESULT  IN  THIS  SUBSECTION'S
MANAGEMENT  EXPENSES LIMIT BEING EXCEEDED, THEN THE INSURER SHALL INFORM
THE SUPERINTENDENT SIXTY DAYS IN ADVANCE  OF  THE  EXPENSE  LIMIT  BEING
EXCEEDED.  SUBJECT TO APPROVAL BY THE SUPERINTENDENT, THE LIMIT SHALL BE
TEMPORARILY RAISED TO THE AMOUNT NECESSARY TO ENCOMPASS THE  AFORESTATED
NEW  SYSTEM UPGRADE, PROVIDED THAT IN NO EVENT SHALL THE LIMIT BE RAISED

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08132-03-4

S. 7353                             2

MORE THAN FIVE PERCENTAGE POINTS AND SHALL NOT BE  IN  EFFECT  FOR  MORE
THAN  SIX  YEARS.    THE INSURER SHALL NOT INCREASE PREMIUMS SOLELY AS A
RESULT OF THE  MANAGEMENT  EXPENSES  CAP  LIMIT  BEING  EXCEEDED.    FOR
PURPOSES  OF  THIS  SUBSECTION,  A  NEW SYSTEM UPGRADE IS DEFINED AS THE
ACQUISITION OF ELECTRONIC DATA PROCESSING APPARATUS AND  RELATED  EQUIP-
MENT CONSTITUTING A DATA PROCESSING, RECORD KEEPING OR ACCOUNTING SYSTEM
AND OPERATING AND NON-OPERATING SOFTWARE.
  S  2.  Subsection (a) of section 6613 of the insurance law, as amended
by chapter 284 of the laws of 1989, is amended to read as follows:
  (a) The expenses of management of any  co-operative  property/casualty
insurance  company  shall  not exceed in any one calendar year forty-two
and one-half percent of its net premiums written for such year. The term
"net premiums written" means direct premiums  written  plus  reinsurance
assumed  less  return  premiums  and  reinsurance  ceded.   IN THE EVENT
EXPENSES INCURRED  IN  MAKING  A  NEW  SYSTEM  UPGRADE  RESULT  IN  THIS
SUBSECTION'S  MANAGEMENT EXPENSES LIMIT BEING EXCEEDED, THEN THE INSURER
SHALL INFORM THE SUPERINTENDENT SIXTY DAYS IN  ADVANCE  OF  THE  EXPENSE
LIMIT  BEING  EXCEEDED.  SUBJECT  TO APPROVAL BY THE SUPERINTENDENT, THE
LIMIT SHALL BE TEMPORARILY RAISED TO THE AMOUNT NECESSARY  TO  ENCOMPASS
THE  AFORESTATED NEW SYSTEM UPGRADE, PROVIDED THAT IN NO EVENT SHALL THE
LIMIT BE RAISED MORE THAN FIVE PERCENTAGE POINTS AND  SHALL  NOT  BE  IN
EFFECT FOR MORE THAN SIX YEARS.  THE INSURER SHALL NOT INCREASE PREMIUMS
SOLELY  AS A RESULT OF THE MANAGEMENT EXPENSES CAP LIMIT BEING EXCEEDED.
FOR PURPOSES OF THIS SUBSECTION, A NEW SYSTEM UPGRADE IS DEFINED AS  THE
ACQUISITION  OF  ELECTRONIC DATA PROCESSING APPARATUS AND RELATED EQUIP-
MENT CONSTITUTING A DATA PROCESSING, RECORD KEEPING OR ACCOUNTING SYSTEM
AND OPERATING AND NON-OPERATING SOFTWARE.
  S 3. This act shall take effect immediately.

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