Senate Bill S3707

2015-2016 Legislative Session

Authorizes cities of one million or more to provide wrap-up insurance or bonds for their public building and construction projects

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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
Jan 06, 2016	referred to insurance
Feb 17, 2015	referred to insurance

2015-S3707 (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §2504, Ins L
Versions Introduced in 2013-2014 Legislative Session:: S4834

2015-S3707 (ACTIVE) - Summary

Authorizes cities of one million or more to provide wrap-up insurance or bonds for their public building and construction projects.

2015-S3707 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S3707

TITLE OF BILL:  An act to amend the insurance law, in relation to
authorizing any city with a population of one million or more to
provide wrap-up insurance programs and surety bonds for their public
building and construction projects; and providing for the repeal of
such provisions upon expiration thereof

PURPOSE:

An act to amend the insurance law, in relation to authorizing any city
with a population of one million or more to provide wrap-up insurance
programs and surety bonds for their public building and construction
projects; and providing for the repeal of such provisions upon
expiration thereof

SUMMARY OF PROVISIONS:

This bill amends Insurance Law § 2504(b) to permit any city with a
population of one million or more and others acting on its behalf
(such as a construction manager) to procure wrap-up insurance or
surety bonds when such insurance or bonds could be procured by
contractors and subcontractors. It also adds new language to § 2504(b)
to make clear that any city with a population of one million or more,
or others acting on its behalf, may provide such wrap-up insurance or
surety bonds without reimbursement from the contractor or

subcontractor, and also may require that a contractor or subcontractor
account for, or otherwise provide a credit in his or her bid that
reflects, the amount the bidding contractor or subcontractor would
otherwise add if he or she provided his or her own insurance or bonds
as required in the bid specifications. The bill also provides that any
city that provides such surety bonds or insurance policies shall do so
only for projects that are subject to a project labor agreement. The
bill will take effect immediately and will expire and be deemed
repealed five years after the effective date except with regard to
those contracts for which a solicitation was issued within five years
of the effective date.

JUSTIFICATION:

For most large-scale construction projects, it is best for all
concerned - owners, contractors, workers, and the public - for
insurance to be purchased through a single insurance "wrap-up" program
(known as an Owner-Controlled Insurance Program or CCIP if bought by
the owner or a Contractor-Controlled Insurance Program of  CCIP if
bought by the construction manager or general contractor). A wrap-up
covers everyone involved in the project, including the owner, all
contractors and subcontractors, and all workers, thereby making
unnecessary the multiple insurance policies each project participant
would otherwise have to purchase on its own.  In doing so, it
centralizes project safety programs (protecting the safety of workers
and the public) and eliminates wasteful litigation among participants
and their insurers to decide who pays a single claim. By reducing
these transaction costs, wrap-ups save a significant amount of money -
according to a study by the Federal government, "up to 50% of the cost
of traditional insurance, or from 1% to 3% of a project's construction
costs." This saves taxpayer dollars and allows public funds to go


further, increasing the number of construction projects and jobs.
Wrap-ups also assure that the planned -for insurance actually exists
when a claim is made and often allow claimants, including workers and
the general public, to be paid faster and more easily. Finally,
wrap-ups facilitate the market entry to emerging small businesses and
minority and women-owned businesses (MWBEs), which often have limited
access to the insurance markets. Small contractors, including MWBEs,
can be chosen by construction managers based on their ability to do
the work rather than access to insurance.

For all these reasons, wrap-ups are routinely used in large-scale
construction projects throughout the private sector. They are also
used in government projects around the country and, in New York, in
billions of dollars worth of projects undertaken by public authorities
that are exempt from Insurance Law § 25o4(b)'s prohibition on
wrap-ups, notably the Metropolitan Transportation Authority, the New
York City School Construction Authority, and the Port Authority of New
York and New Jersey. Insurance Law § 2504(b) currently restricts
various governmental entities from using wrap-ups. This restriction
should be lifted with respect to the City of New York, for contracts
that are subject to project labor agreements.

Accordingly, the Mayor urges the earliest possible favorable
consideration of this proposal by the Legislature.

LEGISLATIVE HISTORY:

None

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect immediately.

2015-S3707 (ACTIVE) - Bill Text download pdf

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

                                  3707

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            February 17, 2015
                               ___________

Introduced  by  Sen.  LANZA  -- 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 authorizing  any  city
  with  a population of one million or more to provide wrap-up insurance
  programs and surety bonds for their public building  and  construction
  projects; and providing for the repeal of such provisions upon expira-
  tion thereof

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

  Section 1. Section 2504 of the insurance law is  amended  to  read  as
follows:
  S  2504. Designation of particular insurer, agent or broker for insur-
ance in certain public construction contracts. (a)  (1)  No  officer  or
employee  of  this  state,  or  of  any public corporation as defined in
section sixty-six of the general construction  law,  or  of  any  public
authority,  and  no person acting or purporting to act on behalf of such
officer, employee, public corporation or public authority,  shall,  with
respect  to  any public building or construction contract which is about
to be, or which has been, competitively bid, require the bidder to  make
application  to any particular insurance company, agent or broker for or
to obtain or procure therefrom, any surety bond or contract of insurance
specified in connection with such contract, or  specified  by  any  law,
general, special or local.
  (2) In paragraph one [hereof] OF THIS SUBSECTION, "public corporation"
and "public authority" shall not include:
  (A)  a  public  corporation  or  public  authority created pursuant to
agreement or compact with another state, or
  (B) the city of New York, a public corporation or public authority, in
connection with the construction of  electrical  generating  and  trans-
mission  facilities  or  construction, extensions and additions of light
rail or heavy rail rapid transit and commuter railroads.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01646-01-5

S. 3707                             2

  (b) [No] EXCEPT AS SET FORTH BELOW IN THIS SUBSECTION, NO such officer
or employee, and no person, firm or corporation acting or purporting  to
act  on behalf of such officer or employee, shall negotiate, make appli-
cation for, obtain or procure any of such surety bonds or  contracts  of
insurance  (except  contracts  of  insurance for builders risk or owners
protective liability) which can be obtained or procured by  the  bidder,
contractor or subcontractor.  PROVIDED, HOWEVER, THAT THIS SECTION SHALL
NOT  PREVENT, FOR ANY CONTRACT THAT IS SUBJECT TO A PROJECT LABOR AGREE-
MENT PURSUANT TO SECTION TWO HUNDRED TWENTY-TWO OF THE  LABOR  LAW,  ANY
CITY  WITH  A  POPULATION OF ONE MILLION OR MORE, OR ANY PERSON, FIRM OR
CORPORATION ACTING OR PURPORTING TO ACT ON ITS  BEHALF,  FROM  PROVIDING
SURETY   BONDS   OR  INSURANCE  POLICIES  FOR  ANY  PUBLIC  BUILDING  OR
CONSTRUCTION CONTRACT  WITHOUT  REIMBURSEMENT  FROM  THE  CONTRACTOR  OR
SUBCONTRACTOR,  OR  FROM  REQUIRING  THAT  A CONTRACTOR OR SUBCONTRACTOR
ACCOUNT FOR, OR OTHERWISE PROVIDE A  CREDIT  IN  HIS  OR  HER  BID  THAT
REFLECTS,  THE  AMOUNT  THE  BIDDING  CONTRACTOR  OR SUBCONTRACTOR WOULD
OTHERWISE ADD IF HE OR SHE PROVIDED HIS OR HER OWN INSURANCE AS REQUIRED
IN THE BID SPECIFICATIONS.
  (c) This section shall not, however,  prevent  the  exercise  by  such
officer or employee on behalf of the state or such public corporation or
public  authority  of  its  right  to  approve the form, sufficiency, or
manner of execution, of surety bonds or contracts of insurance furnished
by the insurance company selected by the bidder to underwrite such bonds
or contracts.
  (D) Any provisions in any invitation  for  bids,  or  in  any  of  the
contract  documents,  in  conflict  herewith  are contrary to the public
policy of this state.
  S 2.   This act shall take  effect  immediately  and  shall  apply  to
contracts  for which a solicitation was issued within five years of such
date. Except with regard to such contracts, this act shall expire and be
deemed repealed five years after such effective date.

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Senate Bill S3707

Sponsored By

Archive: Last Bill Status - In Senate Committee Insurance Committee

Actions

2015-S3707 (ACTIVE) - Details

2015-S3707 (ACTIVE) - Summary

2015-S3707 (ACTIVE) - Sponsor Memo

2015-S3707 (ACTIVE) - Bill Text download pdf

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Sponsored By

Andrew J. Lanza

Archive: Last Bill Status - In Senate Committee Insurance Committee

Actions

2015-S3707 (ACTIVE) - Details

2015-S3707 (ACTIVE) - Summary

2015-S3707 (ACTIVE) - Sponsor Memo

2015-S3707 (ACTIVE) - Bill Text download pdf

Comments