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

                                   840

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                             January 7, 2015
                               ___________

Introduced by M. of A. BRINDISI -- read once and referred to the Commit-
  tee 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  2014,  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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07221-01-5
              

A. 840                              2

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] THREE years, AND PROVIDED FURTHER THAT AN INSURER MAY  SUBMIT
TO  THE SUPERINTENDENT, FOR THE SUPERINTENDENT'S PRIOR APPROVAL, A WRIT-
TEN REQUEST TO TEMPORARILY RAISE THE LIMIT FOR UP TO AN ADDITIONAL THREE
YEARS, FOR A TOTAL OF NO MORE THAN SIX YEARS. AN  INSURER  SHALL  SUBMIT
SUCH  WRITTEN  REQUEST TO THE SUPERINTENDENT AT LEAST SIXTY DAYS BUT NOT
MORE THAN ONE HUNDRED TWENTY DAYS BEFORE THE EXPIRATION OF  THE  INITIAL
PERIOD  DURING  WHICH  THE  LIMIT  WAS  RAISED.    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 equipment 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 527 of the laws of 2014, 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] THREE years, AND  PROVIDED  FURTHER  THAT  AN
INSURER MAY SUBMIT TO THE SUPERINTENDENT, FOR THE SUPERINTENDENT'S PRIOR
APPROVAL,  A WRITTEN REQUEST TO TEMPORARILY RAISE THE LIMIT FOR UP TO AN
ADDITIONAL THREE YEARS, FOR A TOTAL OF NO MORE THAN SIX YEARS. AN INSUR-
ER SHALL SUBMIT SUCH WRITTEN REQUEST  TO  THE  SUPERINTENDENT  AT  LEAST
SIXTY  DAYS BUT NOT MORE THAN ONE HUNDRED TWENTY DAYS BEFORE THE EXPIRA-
TION OF THE INITIAL PERIOD DURING WHICH  THE  LIMIT  WAS  RAISED.    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 equipment constituting a data process-
ing, record keeping or accounting system and operating and non-operating
software.
  S 3. This act shall take effect immediately.