NY State Senate Bill 2013-S7551

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

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 15, 2014	referred to insurance

2013-S7551 (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §2118, Ins L
Versions Introduced in 2015-2016 Legislative Session:: S2348

2013-S7551 (ACTIVE) - Summary

Specifies requirements for licensees to have exercised due care in selecting unauthorized insurers.

2013-S7551 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S7551

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

PURPOSE: To permit excess line brokers to rely on the Excess Line
Association of New York ("ELANY") for certain services it provides in
complying with the insurance law.  Summary of Provisions: Section one
of the bill will permit excess line brokers to rely on the financial
analysis and insurer reviews conducted by ELANY by providing a
presumption that the excess line broker has used due care in selecting
a financially secure insurer when the insurer is listed by ELANY.

Section 2 improves the efficiency of broker operations by removing
unnecessary reporting data elements requirements.

Section 3 requires declinations to be acquired at least once every
three years.

Section 4 provides for 90 day effective date to allow for programming
changes.

JUSTIFICATION: The Excess Line Association of New York ("ELANY") just
completed 25 years of operation in 2013. ELANY is a statutory
not-for-profit organization established under the New York Insurance
Law. Since 1989 ELANY has been conducting rigorous financial reviews

and oversight of non-admitted markets, it maintains information
database for reporting to regulators and to assist members in tax
reports, and reviews documents for compliance. This legislation would
recognizes the function of ELANY by incorporating reliance upon ELANY
as part of a brokers duty of care.

The legislation also removes onerous paperwork on brokers and excess
line brokers. Currently brokers must provide 21 data elements as part
of the diligent search requirement. No other state requires these
elements. This legislation would streamline the reporting
requirements, but would require information to be held by the broker.
These data elements must be recorded and set forth in an affidavit in
most excess line transactions. This is time consuming and inefficient
and the data is not analyzed or used. Eliminating the requirement to
report this information in an affidavit and permitting it to be
maintained in a broker file will save substantial time and reduce
broker operating costs. Additionally, the annual declination process
would be changed to requiring declinations every three years. Markets
often change slowly, and there are already built in incentives to keep
business in the admitted market. The changes in the legislation would
help streamline the process, remove unnecessary burdens on the
insurance broker and excess line broker, and improve the business
climate in New York.

LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: 90 days

2013-S7551 (ACTIVE) - Bill Text download pdf

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

                                  7551

                            I N  S E N A T E

                              May 15, 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 the duties  of  excess
  line brokers

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

  Section 1. Paragraph 1 of subsection (a) of section 2118 of the insur-
ance law, as amended by chapter 220 of the laws of 1986, is  amended  to
read as follows:
  (1)  (A)  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 license.
  (B)  A LICENSEE IS PRESUMED TO HAVE EXERCISED DUE CARE IN SELECTING AN
UNAUTHORIZED INSURER IF AT THE TIME OF PLACEMENT, THE EXCESS LINE  ASSO-
CIATION  ESTABLISHED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED THIRTY
OF THIS ARTICLE HAS PUBLISHED THE NAME OF SUCH  INSURER  ON  A  LIST  OF
ELIGIBLE UNAUTHORIZED INSURERS. THE EXCESS LINE ASSOCIATION WILL LIST NO
INSURER  UNLESS  IT HAS CONDUCTED AN ANALYSIS OF SUCH INSURER UPDATED NO
LESS THAN ANNUALLY AND DETERMINED SUCH INSURER,
  (I) IS FINANCIALLY SOLVENT AND STABLE;
  (II) MAINTAINS ADEQUATE CAPACITY AND POLICYHOLDER'S  SURPLUS  TO  MEET
ITS OBLIGATIONS TO POLICYHOLDERS, AND ALL OTHER LIABILITIES;
  (III) IS MANAGED BY INDIVIDUALS WHO ARE TRUSTWORTHY AND COMPETENT; AND
  (IV) MAINTAINS CLAIMS PRACTICES IN A SATISFACTORY MANNER.
  S 2. Subparagraph (C) of paragraph 3 of subsection (b) of section 2118
of  the insurance law, as amended by chapter 684 of the laws of 1993, is
amended to read as follows:
  (C) Every licensee, or affirming broker, in connection with the place-
ment of each risk pursuant to this section, shall record on the  affida-
vit  required pursuant to subparagraph (A) of this paragraph [the infor-
mation]  THE  NAME  OF  THE  INSURER  DECLINING   SUCH   RISK   AND   AN
IDENTIFICATION  NUMBER  FOR  SUCH INSURER ISSUED BY THE NATIONAL ASSOCI-
ATION OF INSURANCE COMMISSIONERS OR DEPARTMENT  OF  FINANCIAL  SERVICES.

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

                                                           LBD15141-02-4

S. 7551                             2

INFORMATION relied upon [that] WHICH formed the basis of such licensee's
or  affirming  broker's  reason  to  believe that the authorized insurer
might consider writing the  type  of  coverage  or  class  of  insurance
involved  SHALL  BE  MAINTAINED  BY SUCH LICENSEE OR AFFIRMING BROKER IN
WRITING FOR A PERIOD OF THREE YEARS FROM THE EXPIRATION OF SUCH POLICY.
  S 3. Paragraph 4 of subsection (b) of section 2118  of  the  insurance
law,  as  amended by chapter 630 of the laws of 1988, is amended to read
as follows:
  (4) (A) The number of declinations  constituting  diligent  effort  in
regard to placement of coverage with authorized insurers for purposes of
paragraph  three  of  this  subsection shall be three, unless the super-
intendent after a hearing, on a record, upon findings  and  conclusions,
determines  that  another  number of such declinations is appropriate in
regard to particular  coverages.  In  making  such  determinations,  the
superintendent  shall  consider  relevant  market  conditions, including
unavailability of particular coverages from authorized insurers, and may
conduct market surveys. Any such  determination  shall  be  reviewed  at
least annually by the superintendent.
  (B) THE DILIGENT EFFORT MADE BY A LICENSEE OR AFFIRMING BROKER FOR ANY
POLICY  THAT  PROVIDES COVERAGE FOR A ONE YEAR PERIOD, SHALL BE DEEMED A
VALID DILIGENT EFFORT FOR THE FIRST AND SECOND  ANNUAL  RENEWAL  THEREOF
WHEN THE SAME INSURER PROVIDES SUCH RENEWAL COVERAGE.
  S  4.  This  act shall take effect on the ninetieth day after it shall
have become a law and apply to insurance policies placed or procured  on
and   after  such  date,  provided,  however,  that  the  amendments  to
subsection (b) of section 2118 of the insurance law made by sections two
and three of this act shall not affect the expiration and  reversion  of
such subsection and shall be deemed to expire therewith.

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Senate Bill S7551

Sponsored By

Archive: Last Bill Status - In Senate Committee Insurance Committee

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2013-S7551 (ACTIVE) - Details

2013-S7551 (ACTIVE) - Summary

2013-S7551 (ACTIVE) - Sponsor Memo

2013-S7551 (ACTIVE) - Bill Text download pdf

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Sponsored By

James L. Seward

Archive: Last Bill Status - In Senate Committee Insurance Committee

Actions

2013-S7551 (ACTIVE) - Details

2013-S7551 (ACTIVE) - Summary

2013-S7551 (ACTIVE) - Sponsor Memo

2013-S7551 (ACTIVE) - Bill Text download pdf

Comments