NY State Senate Bill 2017-S4719

Senate Bill S4719

2017-2018 Legislative Session

Promotes competitive property and casualty insurance markets for business to business insurance transactions

download bill text pdf

Archive: Last Bill Status - In Senate Committee Rules 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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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 20, 2018	committed to rules
May 09, 2018	advanced to third reading
May 08, 2018	2nd report cal.
May 07, 2018	1st report cal.1039
Jan 03, 2018	referred to insurance
Jun 05, 2017	reported and committed to rules
Feb 24, 2017	referred to insurance

Votes

- May 7, 2018 - Insurance Committee Vote
  S4719
  
  12
  
  Aye
  
  0
  
  Nay
  
  6
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Insurance Committee Vote: May 7, 2018
      
      aye (12)
      
      Akshar
      
      Brooks
      
      Golden
      
      Hamilton
      
      Jacobs
      
      Kennedy
      
      Lanza
      
      Larkin
      
      Murphy
      
      O'Mara
      
      Serino
      
      Seward
      
      aye wr (6)
      
      Benjamin
      
      Breslin
      
      LaValle
      
      Parker
      
      Rivera
      
      Savino
  Jun 5, 2017 - Insurance Committee Vote
  S4719
  
  19
  
  Aye
  
  0
  
  Nay
  
  0
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Insurance Committee Vote: Jun 5, 2017
      
      aye (19)
      
      Akshar
      
      Breslin
      
      Brooks
      
      Golden
      
      Hamilton
      
      Jacobs
      
      Kennedy
      
      LaValle
      
      Lanza
      
      Larkin
      
      Latimer
      
      Murphy
      
      O'Mara
      
      Parker
      
      Phillips
      
      Rivera
      
      Savino
      
      Serino
      
      Seward

2017-S4719 (ACTIVE) - Details

Current Committee:: Senate Rules
Law Section:: Insurance Law
Laws Affected:: Amd §§2302 & 3201, Ins L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S3625
2021-2022: S3560

2017-S4719 (ACTIVE) - Summary

Promotes competitive property and casualty insurance markets for business to business insurance transactions.

2017-S4719 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S4719

 TITLE OF BILL :  An act to amend the insurance law, in relation to
promoting competitive property and casualty insurance markets for
business to business insurance transactions

 PURPOSE :

The purpose of the bill is to modernize the regulation of commercial
lines insurance by providing additional exemptions from rate and form
filing requirements.

 SUMMARY OF PROVISIONS :

Section one entitles this bill as the "Competitive Commercial
Insurance Markets Act."

Section two of the bill amends Section 2302 of the insurance law to
add to the list of lines of business currently exempt from rate and
form filing requirements. Thus, insurers offering these business
insurance products would not be required to submit their rates or
forms to DFS for approval prior to their use. The bill further grants
the superintendent the authority to designate additional exemptions if
he or she deems it necessary in order to enhance competition or more
effectively utilize Department resources.

The bill also gives the superintendent the authority to temporarily
reinstate filings for up to a one year period if, after a hearing, the
superintendent finds that a reasonable degree of competition does not
exist for that specific type of insurance coverage.

Section three of the bill amends section 3201 of the insurance law to
provide an exemption from rate and form filing requirements for
commercial travel insurance products.

Section four provides for the effective date.

 JUSTIFICATION :

In an era of advancing technology and innovation, businesses are
demanding access to enhanced insurance products that keep pace with
their evolving risks by tailoring coverages to meet their specific
needs. Unfortunately, regulatory filing and review requirements often
interfere with the ability of businesses to gain the benefit of robust
market competition by locking insurers into "off the shelf" products
that can limit the range of available product choices. In addition to
making product customization difficult, policy form and rate filings
slow the introduction of innovative new insurance products, which can
discourage new market entrants and make it harder for existing
competitors to develop new products in a timely fashion.

While the Free Trade Zone has been beneficial to insurers and does
provide some flexibility, it does not provide complete freedom from
rate and form filing. A more dynamic and modernized regulatory system
would allow businesses purchasing insurance to benefit from a broader
range of competitive price options and insurance products that can be
readily customized to fit their company's risk profile.

The coverages that would be exempt from rate and form filing
requirements under the proposed legislation are not commonly purchased
by Main Street "Mom and Pop" businesses. Rather, these specialty
commercial insurance products typically are purchased by more
sophisticated policyholders who simply do not warrant the same level
of regulatory protection as individual consumers or small businesses.
Virtually all of the specialty products included in the bill are
purchased in the insurance market by businesses working closely with
licensed insurance producers, and many of these coverages are
regularly placed in the surplus lines insurance market, where there is
no regulation of policy forms or rates.

The bill does not apply to personal lines, nor would it impact the
most common insurance purchases for small Main Street businesses,
including motor vehicle and workers' compensation insurance. The bill
also does not apply to medical malpractice insurance. These coverages
would remain subject to current filing requirements under the bill.

Consumers will benefit from the proposed legislation because DFS will
be able to focus more of its resources and attention to the regulation
of personal lines insurance and commercial insurance sold to small,
Main Street businesses. Additionally, as referred to above, many of
the specialty coverages included in the proposed legislation are
written frequently in the surplus lines market, which is not subject
to rate or form filing requirements. By providing an exemption from
rate and form filing requirements, this proposal would give specialty
insurers an incentive to introduce more products into the admitted
insurance market in New York, enhancing competition.

While specialty commercial lines coverages would not be required to
file rates and forms with DFS for prior approval, DFS would continue
to perform critical oversight functions under the proposed
legislation. Specifically, insurers would be required to maintain
underwriting files, premium, loss and expense statistics, financial
and other records which would be subject to examination by the
superintendent. This ensures that DFS would continue to have the
capability to oversee the market conduct and financial solvency of
insurers selling commercial specialty products and could pursue
enforcement actions, if necessary.

Further, to provide another backstop in the unlikely event that issues
arise, should the superintendent determine that a reasonable degree of
competition does not exist in a specific insurance market, the
proposed legislation would authorize the superintendent to reinstate
rate and policy form filing requirements for that market for a period
of up to one year. This power would give the superintendent time to
take corrective actions designed to restore competition for that type
of insurance.

The proposed legislation also will help from an economic development
standpoint and promote job growth in New York State, as companies with
rapidly evolving risks will be better able to secure the necessary
insurance coverage needed to respond rapidly to changes in the
marketplace.

 LEGISLATIVE HISTORY :

New bill.

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
January first of the next succeeding year on which it shall have
become law.

2017-S4719 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4719
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             February 24, 2017
                                ___________
 
 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 promoting  competitive
   property  and  casualty  insurance  markets  for  business to business
   insurance transactions

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  This  act shall be known and may be cited as the "Compet-
 itive Commercial Insurance Markets Act".
   § 2. Section 2302  of  the  insurance  law,  paragraphs  5  and  6  of
 subsection  (a) as amended and paragraph 7 of subsection (a) as added by
 chapter 614 of the laws of 1997, is amended to read as follows:
   § 2302. Applicability. (a) This article shall apply to  all  kinds  of
 insurance  written  on  risks  or operations in this state by an insurer
 authorized to do business in this state except:
   (1) reinsurance (other than joint reinsurance to the extent stated  in
 section two thousand three hundred seventeen of this article);
   (2) accident and health insurance;
   (3)  annuities, life insurance, including provisions for non-cancella-
 ble disability benefits in conjunction therewith;
   (4) marine insurance (other  than  PERSONAL  inland  marine  insurance
 COVERING  PROPERTY OF INDIVIDUALS OR HOUSEHOLDS and insurance upon auto-
 mobiles[, airplanes, seaplanes, dirigibles or other aircraft]);
   (5) marine protection and indemnity insurance;
   (6) insurance issued  by  an  assessment  cooperative  fire  insurance
 company; [and]
   (7) service contract reimbursement insurance; AND
   (8) COMMERCIAL LINES SPECIALTY INSURANCE, WHICH INCLUDES:
   (I) AIRCRAFT LIABILITY AND HULL INSURANCE;
   (II) SURETY AND FIDELITY INSURANCE;
   (III) COMMERCIAL INLAND MARINE INSURANCE;

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

                                                            LBD10253-01-7

 S. 4719                             2
 
   (IV) BOILER AND MACHINERY INSURANCE;
   (V) ENVIRONMENTAL IMPAIRMENT/POLLUTION LIABILITY INSURANCE;
   (VI) KIDNAP AND RANSOM INSURANCE;
   (VII) POLITICAL RISK OR EXPROPRIATION INSURANCE;
   (VIII) EXCESS AND UMBRELLA LIABILITY INSURANCE;
   (IX) DIRECTORS' AND OFFICERS' LIABILITY INSURANCE;
   (X) FIDUCIARY LIABILITY INSURANCE;
   (XI) EMPLOYMENT PRACTICES LIABILITY INSURANCE;
   (XII) ERRORS AND OMISSION AND PROFESSIONAL LIABILITY INSURANCE
   (OTHER THAN MEDICAL MALPRACTICE);
   (XIII) MEDIA LIABILITY INSURANCE;
   (XIV) PRODUCT LIABILITY, PRODUCT RECALL OR COMPLETED OPERATIONS INSUR-
 ANCE;
   (XV)  CYBERSECURITY INSURANCE, INCLUDING FIRST AND THIRD PARTY COMMER-
 CIAL LINES COVERAGE FOR LOSSES ARISING OUT OF OR RELATING TO DATA PRIVA-
 CY BREACHES, NETWORK SECURITY, COMPUTER VIRUSES AND  SIMILAR  EXPOSURES,
 AND  INCLUDING  IDENTITY  THEFT  GROUP  INSURANCE POLICIES UNDER SECTION
 THREE THOUSAND FOUR HUNDRED FIFTY-ONE OF THIS CHAPTER;
   (XVI) HIGHLY PROTECTED COMMERCIAL PROPERTY INSURANCE;
   (XVII) COMMERCIAL FLOOD INSURANCE (OTHER THAN NATIONAL FLOOD INSURANCE
 PROGRAM);
   (XVIII) COMMERCIAL LINES TRAVEL INSURANCE,  INCLUDING  GROUP  PROPERTY
 TRAVEL  INSURANCE  POLICIES  UNDER  SECTION  THREE THOUSAND FOUR HUNDRED
 FIFTY-TWO OF THIS CHAPTER;
   (XIX) ALL COMMERCIAL LINES KINDS OF INSURANCE  AND  CLASSES  OF  RISK,
 OTHER   THAN   WORKERS'  COMPENSATION  AND  AUTOMOBILE  INSURANCE,  WHEN
 PURCHASED BY A COMMERCIAL POLICYHOLDER WITH AGGREGATE ANNUAL  COMMERCIAL
 PROPERTY AND CASUALTY INSURANCE PREMIUMS OF TWENTY-FIVE THOUSAND DOLLARS
 OR MORE EXCLUDING PREMIUMS PAID FOR WORKERS' COMPENSATION AND AUTOMOBILE
 INSURANCE; AND
   (XX)  ANY OTHER COMMERCIAL LINES KINDS OF INSURANCE OR CLASSES OF RISK
 THAT THE SUPERINTENDENT DEEMS, PURSUANT TO REGULATION, EXEMPT FROM  RATE
 AND  POLICY FORM FILING REQUIREMENTS IN ORDER TO PROMOTE ENHANCED COMPE-
 TITION OR TO MORE EFFECTIVELY USE THE RESOURCES OF THE  DEPARTMENT  THAT
 OTHERWISE  MIGHT  BE  USED  TO  REVIEW COMMERCIAL LINES SPECIALTY POLICY
 INSURANCE FORM OR RATE FILINGS.
   (b) The superintendent may from time to time make investigations  with
 respect to classes of risks of the kinds of insurance exempted in [para-
 graph  one  hereof] SUBSECTION (A) OF THIS SECTION and may call upon all
 authorized insurers and rate service organizations making rates for such
 risks to furnish information relative thereto.
   (C) WITH RESPECT TO THE CLASSES OF RISKS OF  THE  KINDS  OF  INSURANCE
 EXEMPTED  IN  PARAGRAPH  EIGHT  OF  SUBSECTION  (A) OF THIS SECTION, THE
 SUPERINTENDENT MAY TEMPORARILY REINSTATE, FOR A PERIOD OF NO LONGER THAN
 ONE YEAR, THE REQUIREMENT FOR RATE OR FORM FILINGS FOR A SPECIFIC  CLASS
 OF  RISK IF, AFTER A HEARING, THE SUPERINTENDENT MAKES A FINDING OF FACT
 THAT A REASONABLE DEGREE OF COMPETITION DOES NOT EXIST FOR THAT SPECIFIC
 CLASS OF RISK. SUCH A FINDING OF FACT BY THE SUPERINTENDENT MUST SPECIFY
 THE RELEVANT TESTS USED TO DETERMINE WHETHER  A  LACK  OF  A  REASONABLE
 DEGREE  OF COMPETITION EXISTS AND THE RESULTS THEREOF. IN THE ABSENCE OF
 SUCH SPECIFIC FINDINGS OF FACT  BY  THE  SUPERINTENDENT,  A  COMPETITIVE
 MARKET IS PRESUMED TO EXIST.
   §  3.  Section  3201  of  the insurance law is amended by adding a new
 subsection (e) to read as follows:
   (E) EXCEPT FOR PARAGRAPHS ONE AND THREE  OF  SUBSECTION  (C)  OF  THIS
 SECTION,  THIS SECTION SHALL NOT APPLY TO COMMERCIAL LINES TRAVEL INSUR-

 S. 4719                             3
 
 ANCE. HOWEVER, WITH RESPECT TO COMMERCIAL LINES  TRAVEL  INSURANCE,  THE
 SUPERINTENDENT MAY TEMPORARILY REINSTATE, FOR A PERIOD OF NO LONGER THAN
 ONE  YEAR,  THE REQUIREMENT FOR POLICY FORM FILINGS IF, AFTER A HEARING,
 THE  SUPERINTENDENT  MAKES A FINDING OF FACT THAT A REASONABLE DEGREE OF
 COMPETITION DOES NOT EXIST FOR THAT SPECIFIC TYPE OF INSURANCE.  SUCH  A
 FINDING  OF  FACT  BY THE SUPERINTENDENT MUST SPECIFY THE RELEVANT TESTS
 USED TO DETERMINE WHETHER A LACK OF A REASONABLE DEGREE  OF  COMPETITION
 EXISTS AND THE RESULTS THEREOF. IN THE ABSENCE OF SUCH SPECIFIC FINDINGS
 OF  FACT  BY  THE  SUPERINTENDENT,  A  COMPETITIVE MARKET IS PRESUMED TO
 EXIST.
   § 4. This act shall take effect on the first of January next  succeed-
 ing  the date on which it shall have become a law and shall apply to all
 property and casualty insurance policies issued, renewed or modified  on
 or after such date.

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