S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2824
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 27, 2023
                                ___________
 
 Introduced  by  M. of A. PHEFFER AMATO, JONES, COOK, COLTON -- read once
   and referred to the Committee on Insurance
 
 AN ACT to amend the insurance law, in relation  to  creating  the  state
   flood insurance association
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. The insurance law is amended by adding a new  article  54-A
 to read as follows:
                               ARTICLE 54-A
                   NEW YORK FLOOD INSURANCE ASSOCIATION
 SECTION 5450. DEFINITIONS.
         5451. ASSOCIATION.
         5452. PROCEDURES.
         5453. RATES, RATING PLANS, RULES AND STATISTICS.
         5454. PARTICIPATION.
         5455. APPEALS.
         5456. AVAILABILITY OF REPORTS; IMMUNITY.
         5457. ANNUAL STATEMENT.
         5458. EXAMINATIONS.
         5459. REIMBURSEMENT FUND.
         5460. ADDITIONAL POWERS OF THE ASSOCIATION.
   § 5450. DEFINITIONS. IN THIS ARTICLE:
   (A)  "FLOOD INSURANCE" MEANS COVERAGE AGAINST LOSS OF OR DAMAGE TO ANY
 PROPERTY RESULTING FROM FLOOD, AS DEFINED IN PARAGRAPHS FIVE AND SIX  OF
 SUBSECTION  (A)  OF  SECTION  ONE  THOUSAND ONE HUNDRED THIRTEEN OF THIS
 CHAPTER AND IMPLEMENTED BY SECTION THREE THOUSAND  FOUR  HUNDRED  FORTY-
 FOUR OF THIS CHAPTER.
   (B)  "ASSOCIATION"  MEANS  THE  NEW  YORK  FLOOD INSURANCE ASSOCIATION
 ESTABLISHED BY THIS ARTICLE.
   (C) "PLAN OF OPERATION" OR "PLAN" MEANS THE PLAN OF OPERATION  COMPLY-
 ING WITH SECTION FIVE THOUSAND FOUR HUNDRED FIFTY-ONE OF THIS ARTICLE.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD06405-01-3
              

 A. 2824                             2
 
   (D)  "INSURABLE  PROPERTY"  MEANS  REAL  PROPERTY  AT  FIXED LOCATIONS
 ANYWHERE IN THIS STATE, OR THE TANGIBLE PERSONAL PROPERTY LOCATED THERE-
 ON, WHICH IS DETERMINED BY THE ASSOCIATION, AFTER INSPECTION AND  PURSU-
 ANT TO CRITERIA SPECIFIED IN THE PLAN, TO BE INSURABLE.  NEIGHBORHOOD OR
 AREA  LOCATION  SHALL  NOT BE CONSIDERED IN DETERMINING INSURABLE CONDI-
 TION. PROPERTY IS NOT INSURABLE IF IT HAS CHARACTERISTICS OF  OWNERSHIP,
 CONDITION, OCCUPANCY OR MAINTENANCE WHICH VIOLATE PUBLIC POLICY.
   (E) "NET DIRECT PREMIUMS" MEANS GROSS DIRECT PREMIUMS WRITTEN ON PROP-
 ERTY  IN  THIS  STATE  FOR  FLOOD  INSURANCE LESS RETURN PREMIUMS OR THE
 UNUSED OR UNABSORBED PORTIONS OF PREMIUM DEPOSITS.
   (F) "HOMEOWNERS INSURANCE" MEANS SUCH  HOMEOWNERS  INSURANCE  POLICIES
 DEFINED  IN  SUBSECTION (A) OF SECTION TWO THOUSAND THREE HUNDRED FIFTY-
 ONE OF THIS CHAPTER, AS ARE  DETERMINED  BY  THE  SUPERINTENDENT  TO  BE
 EQUIVALENT  TO  ANY HOMEOWNERS POLICIES DEVELOPED BY A NATIONALLY RECOG-
 NIZED PRINCIPAL RATE SERVICE ORGANIZATION, EXCEPT THAT WHERE THE  MARKET
 VALUE  OF  THE  INSURED PROPERTY IS LESS THAN ITS REPLACEMENT COST, THEN
 THE COVERAGE SHALL BE PROVIDED IN POLICIES DETERMINED BY THE SUPERINTEN-
 DENT TO BE EQUIVALENT TO THAT CONTAINED IN MARKET VALUE (HO-8) POLICIES.
   § 5451. ASSOCIATION. (A) THE ASSOCIATION KNOWN AS THE NEW  YORK  FLOOD
 INSURANCE ASSOCIATION IS ESTABLISHED, CONSISTING OF ALL INSURERS AUTHOR-
 IZED  TO  WRITE  AND  ENGAGED  IN WRITING WITHIN THIS STATE, ON A DIRECT
 BASIS, FLOOD COVERAGE INSURANCE. EVERY SUCH INSURER SHALL BE AND  REMAIN
 A  MEMBER OF THE ASSOCIATION AS A CONDITION OF ITS AUTHORITY TO CONTINUE
 TO TRANSACT FLOOD AND HOMEOWNERS INSURANCE IN THIS STATE.
   (B) THE ASSOCIATION SHALL BE GOVERNED BY A BOARD  OF  THIRTEEN  DIREC-
 TORS,  TEN OF WHOM SHALL BE ELECTED ANNUALLY BY CUMULATIVE VOTING BY THE
 MEMBERS OF THE ASSOCIATION,  WHOSE  VOTES  IN  SUCH  ELECTION  SHALL  BE
 WEIGHTED  IN  ACCORDANCE  WITH EACH MEMBER'S NET DIRECT PREMIUMS WRITTEN
 DURING THE PRECEDING CALENDAR YEAR. THE REMAINING THREE DIRECTORS  SHALL
 BE  APPOINTED ANNUALLY BY THE SUPERINTENDENT AND BE DULY LICENSED INSUR-
 ANCE AGENTS OR BROKERS REPRESENTATIVE OF BROAD SEGMENTS  OF  THE  PUBLIC
 OBTAINING INSURANCE THROUGH THE ASSOCIATION.
   (C)  THE ASSOCIATION SHALL, PURSUANT TO THE PROVISIONS OF THIS ARTICLE
 AND THE PLAN OF OPERATION AND WITH  RESPECT  TO  FLOOD  COVERAGE  ISSUED
 PURSUANT  TO  SUBSECTION  (G)  OF  THIS SECTION AND HOMEOWNERS INSURANCE
 SHOULD THE SAME BE MADE AVAILABLE THROUGH THE ASSOCIATION IN  ACCORDANCE
 WITH A DETERMINATION OF NECESSITY MADE BY THE SUPERINTENDENT PURSUANT TO
 SECTION  FIVE  THOUSAND  FOUR HUNDRED SIXTY OF THIS ARTICLE ON INSURABLE
 PROPERTY, HAVE THE POWER ON BEHALF OF ITS MEMBERS:
   (I) TO CAUSE POLICIES OF INSURANCE TO BE ISSUED TO APPLICANTS;
   (II) TO ASSUME REINSURANCE FROM ITS MEMBERS; AND
   (III) TO CEDE REINSURANCE.
   (D) THE ASSOCIATION SHALL ADHERE TO A PLAN  OF  OPERATION,  CONSISTENT
 WITH  THE  PROVISIONS  OF  THIS  ARTICLE, APPROVED BY THE SUPERINTENDENT
 AFTER CONSULTATION WITH AFFECTED INDIVIDUALS  AND  ORGANIZATIONS.    THE
 PLAN  SHALL PROVIDE FOR ECONOMICAL, FAIR AND NON-DISCRIMINATORY ADMINIS-
 TRATION AND PROMPT AND EFFICIENT PROVISION OF FLOOD COVERAGE PURSUANT TO
 SUBSECTION (G) OF THIS SECTION AND HOMEOWNERS INSURANCE, WHEN A DETERMI-
 NATION OF NECESSITY IS MADE BY THE SUPERINTENDENT  PURSUANT  TO  SECTION
 FIVE  THOUSAND  FOUR  HUNDRED  SIXTY  OF THIS ARTICLE TO PROMOTE ORDERLY
 COMMUNITY DEVELOPMENT. IT SHALL CONTAIN OTHER MATTERS INCLUDING, BUT NOT
 LIMITED TO, PROVISION FOR NECESSARY FACILITIES; MANAGEMENT OF THE  ASSO-
 CIATION; ASSESSMENT OF MEMBERS TO DEFRAY LOSSES AND EXPENSES; COMMISSION
 ARRANGEMENTS;  REASONABLE  AND OBJECTIVE UNDERWRITING STANDARDS; ACCEPT-
 ANCE AND CESSION OF REINSURANCE AND PROCEDURES FOR  DETERMINING  AMOUNTS
 OF INSURANCE TO BE PROVIDED BY THE ASSOCIATION. THE AMOUNTS SHALL NOT BE
 A. 2824                             3
 
 IN EXCESS OF ONE MILLION FIVE HUNDRED THOUSAND DOLLARS FOR THE INSURABLE
 REAL PROPERTY OR THE TANGIBLE PERSONAL PROPERTY THEREON.
   (E)  THE  DIRECTORS OF THE ASSOCIATION MAY, ON THEIR OWN INITIATIVE OR
 AT THE REQUEST OF THE SUPERINTENDENT, AMEND THE PLAN SUBJECT TO APPROVAL
 BY THE SUPERINTENDENT.
   (F) THE ASSOCIATION SHALL OFFER HOMEOWNERS INSURANCE,  AS  DEFINED  IN
 SUBSECTION (F) OF SECTION FIVE THOUSAND FOUR HUNDRED FIFTY OF THIS ARTI-
 CLE  UPON  A  DETERMINATION  OF NECESSITY HAVING BEEN MADE BY THE SUPER-
 INTENDENT PURSUANT TO SECTION FIVE THOUSAND FOUR HUNDRED SIXTY  OF  THIS
 ARTICLE.
   (G)  IN  ADDITION  TO FLOOD INSURANCE, HOMEOWNERS INSURANCE SHOULD THE
 SAME BE MADE AVAILABLE THROUGH THE  ASSOCIATION  IN  ACCORDANCE  WITH  A
 DETERMINATION  OF  NECESSITY  PURSUANT  TO  SECTION  FIVE  THOUSAND FOUR
 HUNDRED SIXTY OF THIS ARTICLE. ON OR BEFORE OCTOBER FIRST, TWO  THOUSAND
 TWENTY-FIVE,  THE SUPERINTENDENT SHALL REQUIRE THE ASSOCIATION TO REPORT
 TO HIM OR HER AS TO THE NUMBER OF  POLICIES  WRITTEN  PURSUANT  TO  THIS
 SUBSECTION  AND  PARAGRAPH THREE OF SUBSECTION (F) OF SECTION FIVE THOU-
 SAND FOUR HUNDRED FIFTY-FOUR OF THIS ARTICLE, AND ANY OTHER  INFORMATION
 THE SUPERINTENDENT MAY REQUIRE. ON OR BEFORE JANUARY FIRST, TWO THOUSAND
 TWENTY-SIX,  THE  SUPERINTENDENT  SHALL  REPORT  TO THE GOVERNOR AND THE
 LEGISLATURE REGARDING THE NUMBER OF POLICIES  ISSUED  PURSUANT  TO  THIS
 SECTION  AND  SUCH PARAGRAPH AND SHALL INCLUDE RECOMMENDATIONS AS TO THE
 CONTINUATION OF SUCH INSURANCE OFFERINGS.
   (H) THE ASSOCIATION SHALL ADHERE TO A PLAN  OF  OPERATION,  CONSISTENT
 WITH  THE  PROVISIONS  OF  THIS  ARTICLE, APPROVED BY THE SUPERINTENDENT
 AFTER CONSULTATION WITH AFFECTED INDIVIDUALS  AND  ORGANIZATIONS.    THE
 PLAN  SHALL PROVIDE FOR ECONOMICAL, FAIR AND NON-DISCRIMINATORY ADMINIS-
 TRATION AND PROMPT AND EFFICIENT PROVISION OF FLOOD COVERAGE PURSUANT TO
 SUBSECTION (G) OF THIS SECTION AND HOMEOWNERS INSURANCE, WHEN A DETERMI-
 NATION OF NECESSITY IS MADE BY THE SUPERINTENDENT  PURSUANT  TO  SECTION
 FIVE  THOUSAND  FOUR  HUNDRED  SIXTY  OF THIS ARTICLE TO PROMOTE ORDERLY
 COMMUNITY DEVELOPMENT. IT SHALL CONTAIN OTHER  MATTERS,  INCLUDING,  BUT
 NOT  LIMITED  TO,  PROVISION FOR NECESSARY FACILITIES; MANAGEMENT OF THE
 ASSOCIATION; ASSESSMENT  OF  MEMBERS  TO  DEFRAY  LOSSES  AND  EXPENSES;
 COMMISSION  ARRANGEMENTS; REASONABLE AND OBJECTIVE STANDARDS; ACCEPTANCE
 AND CESSION OF REINSURANCE AND PROCEDURES  FOR  DETERMINING  AMOUNTS  OF
 INSURANCE  TO  BE PROVIDED BY THE ASSOCIATION.  THE AMOUNTS SHALL NOT BE
 IN EXCESS OF ONE MILLION FIVE HUNDRED THOUSAND DOLLARS FOR THE INSURABLE
 REAL PROPERTY OR THE TANGIBLE PERSONAL PROPERTY THEREON.
   (I) THE DIRECTORS OF THE ASSOCIATION MAY, ON THEIR OWN  INITIATIVE  OR
 AT THE REQUEST OF THE SUPERINTENDENT, AMEND THE PLAN SUBJECT TO APPROVAL
 BY THE SUPERINTENDENT.
   (J) NOT LESS THAN ONCE EVERY THIRTY DAYS, THE ASSOCIATION SHALL REPORT
 TO  THE  SUPERINTENDENT,  THE SPEAKER OF THE ASSEMBLY, AND THE TEMPORARY
 PRESIDENT OF THE SENATE ON THE NUMBER, LOCATION  AND  TYPE  OF  POLICIES
 WRITTEN  THROUGH A COASTAL MARKET ASSISTANCE PROGRAM PURSUANT TO SECTION
 FIVE THOUSAND FOUR HUNDRED FOURTEEN OF THIS CHAPTER.
   § 5452. PROCEDURES. (A) ANY PERSON HAVING  AN  INSURABLE  INTEREST  IN
 INSURABLE  PROPERTY, WHO HAS MADE A DILIGENT EFFORT IN THE NORMAL INSUR-
 ANCE MARKET TO PROCURE FLOOD INSURANCE, PURSUANT TO  SUBSECTION  (G)  OF
 SECTION  FIVE  THOUSAND FOUR HUNDRED FIFTY-ONE OF THIS ARTICLE AND HOME-
 OWNERS INSURANCE UPON A DETERMINATION OF NECESSITY HAVING BEEN  MADE  BY
 THE  SUPERINTENDENT PURSUANT TO SECTION FIVE THOUSAND FOUR HUNDRED SIXTY
 OF THIS ARTICLE FROM AN AUTHORIZED INSURER, IS ENTITLED TO APPLY TO  THE
 ASSOCIATION FOR SUCH COVERAGE. SUCH APPLICATION MAY BE MADE ON BEHALF OF
 AN APPLICANT BY A BROKER OR AGENT AUTHORIZED BY HIM OR HER.
 A. 2824                             4
 
   (B)  IF  THE ASSOCIATION DETERMINES THAT (I) THE PROPERTY IS INSURABLE
 IN ACCORDANCE WITH THE PLAN AND (II) THERE  IS  NO  UNPAID,  UNCONTESTED
 PREMIUM  DUE  FROM THE APPLICANT FOR PRIOR INSURANCE ON THE PROPERTY (AS
 SHOWN BY THE INSURED HAVING FAILED TO MAKE WRITTEN OBJECTION TO  CHARGES
 WITHIN  THIRTY DAYS AFTER BILLING), THE ASSOCIATION, UPON RECEIPT OF THE
 PREMIUM OR PORTION PRESCRIBED IN THE PLAN, SHALL CAUSE A POLICY OF FLOOD
 INSURANCE OR HOMEOWNERS INSURANCE  UPON  A  DETERMINATION  OF  NECESSITY
 HAVING BEEN MADE BY THE SUPERINTENDENT PURSUANT TO SECTION FIVE THOUSAND
 FOUR HUNDRED SIXTY OF THIS ARTICLE TO BE ISSUED FOR A TERM OF ONE YEAR.
   (C)  ANY MEMBER MAY CEDE FLOOD INSURANCE PURSUANT TO SUBSECTION (G) OF
 SECTION FIVE THOUSAND FOUR HUNDRED FIFTY-ONE OF THIS ARTICLE AND  COVER-
 AGE  FOR  AND  HOMEOWNERS  INSURANCE  UPON  A DETERMINATION OF NECESSITY
 HAVING BEEN MADE BY THE SUPERINTENDENT PURSUANT TO SECTION FIVE THOUSAND
 FOUR HUNDRED SIXTY OF THIS ARTICLE WRITTEN ON INSURABLE PROPERTY TO  THE
 ASSOCIATION AS PROVIDED IN THE PLAN.
   (D)  THE  ASSOCIATION  SHALL  NOTIFY THOSE POLICYHOLDERS WHOSE INSURED
 PROPERTIES ARE LOCATED IN AREAS SERVED BY A  MARKET  ASSISTANCE  PROGRAM
 ESTABLISHED BY THE SUPERINTENDENT FOR THE PURPOSE OF FACILITATING PLACE-
 MENT  OF  HOMEOWNERS'  INSURANCE  OF  THE POSSIBILITY OF ELIGIBILITY FOR
 COVERAGE THROUGH SUCH PROGRAM. SUCH NOTIFICATION SHALL INCLUDE  INFORMA-
 TION  ON  HOW  TO  APPLY  AND  SUCH OTHER INFORMATION AS REQUIRED BY THE
 SUPERINTENDENT.
   § 5453. RATES, RATING PLANS, RULES  AND  STATISTICS.  (A)  THE  RATES,
 RATING  PLANS,  RATING  RULES AND STATISTICS APPLICABLE TO THE INSURANCE
 WRITTEN BY THE ASSOCIATION SHALL BE SUBJECT TO THE  RELEVANT  PROVISIONS
 OF  ARTICLE TWENTY-THREE OF THIS CHAPTER EXCEPT AS OTHERWISE PROVIDED IN
 THIS SECTION.
   (B) RATES, RATING PLANS AND RATING RULES APPLICABLE  TO  FLOOD  INSUR-
 ANCE,  PURSUANT  TO SUBSECTION (G) OF SECTION FIVE THOUSAND FOUR HUNDRED
 FIFTY-ONE OF THIS ARTICLE AND HOMEOWNERS INSURANCE UPON A  DETERMINATION
 OF  NECESSITY HAVING BEEN MADE BY THE SUPERINTENDENT PURSUANT TO SECTION
 FIVE THOUSAND FOUR HUNDRED SIXTY OF THIS ARTICLE WRITTEN BY THE  ASSOCI-
 ATION SHALL BE NO GREATER THAN THE FOLLOWING PERCENTAGES OF THOSE RECOM-
 MENDED  FOR THE VOLUNTARY MARKET BY THE PRINCIPAL RATE SERVICE ORGANIZA-
 TION IN THIS STATE:
   (1) ONE HUNDRED TWENTY PERCENT WITH RESPECT TO:
   (A) OWNER-OCCUPIED RESIDENTIAL DWELLINGS CONSISTING OF NOT  MORE  THAN
 FOUR DWELLING UNITS;
   (B)  HOUSEHOLD  FURNISHINGS  AND  PERSONAL  PROPERTY  CONTAINED IN ANY
 HOUSEHOLD UNIT;
   (C) CONTENTS OF ANY RETAIL-TYPE BUSINESS LOCATED IN  STORE-TYPE  PREM-
 ISES AND OPERATING IN A SINGLE LOCATION, PROVIDED SUCH BUSINESS IS OWNED
 BY ITS OPERATORS, WHO ARE ALL RELATED BY BLOOD OR AFFINITY;
   (D)  REAL  PROPERTY  OF ELEEMOSYNARY INSTITUTIONS USED EXCLUSIVELY FOR
 SUCH ELEEMOSYNARY PURPOSES INCLUDING FURNISHINGS AND  PERSONAL  PROPERTY
 CONTAINED THEREIN;
   (2) ONE HUNDRED THIRTY PERCENT WITH RESPECT TO:
   (A)  NON-OWNER  OCCUPIED  RESIDENTIAL DWELLINGS CONSISTING OF NOT MORE
 THAN FOUR DWELLING UNITS;
   (B) RESIDENTIAL STRUCTURES  CONSISTING  OF  MORE  THAN  FOUR  BUT  NOT
 EXCEEDING EIGHT UNITS WITH OR WITHOUT BUSINESS OCCUPANCIES;
   (C) HOMEOWNERS INSURANCE UPON A DETERMINATION OF NECESSITY HAVING BEEN
 MADE  BY  THE  SUPERINTENDENT  PURSUANT  TO  SECTION  FIVE THOUSAND FOUR
 HUNDRED TWELVE OF THIS CHAPTER;
 A. 2824                             5
 
   (3) ONE HUNDRED FORTY PERCENT WITH RESPECT  TO  RESIDENTIAL  DWELLINGS
 CONSISTING  OF  MORE THAN EIGHT DWELLING UNITS, WITH OR WITHOUT BUSINESS
 OCCUPANCIES;
   (4) ONE HUNDRED THIRTY PERCENT WITH RESPECT TO ANY RISKS NOT OTHERWISE
 PROVIDED FOR IN PARAGRAPHS ONE, TWO AND THREE OF THIS SUBSECTION.
   (C)  THE RATES, RATING PLANS AND RATING RULES RECOMMENDED BY THE PRIN-
 CIPAL RATE SERVICE ORGANIZATION, TOGETHER WITH  SUCH  OTHER  INFORMATION
 THE SUPERINTENDENT MAY REQUIRE, SHALL BE SUBMITTED BY THE ASSOCIATION AT
 LEAST SIXTY DAYS PRIOR TO THE DATE ON WHICH THEY ARE TO BECOME EFFECTIVE
 FOR RISKS WRITTEN BY IT.
   (D) FILED RATING RULES OR PLANS MAY PROVIDE STANDARDS FOR THE APPLICA-
 TION  OF SURCHARGES FOR RISKS CONTAINING UNSAFE OR HAZARDOUS CONDITIONS,
 AND SHALL PROVIDE FOR PROMPT REMOVAL OF THE SURCHARGES UPON  THE  ELIMI-
 NATION OF THOSE CONDITIONS.
   §  5454.  PARTICIPATION.  (A)  EVERY  MEMBER  OF THE ASSOCIATION SHALL
 PARTICIPATE IN ITS WRITINGS, EXPENSES, PROFITS AND LOSSES IN THE PROPOR-
 TION THAT THE NET DIRECT PREMIUMS OF  THE  MEMBER  (BUT  EXCLUDING  THAT
 PORTION  OF  PREMIUMS  ATTRIBUTABLE TO THE OPERATION OF THE ASSOCIATION)
 WRITTEN DURING THE PRECEDING CALENDAR YEAR BEAR  TO  THE  AGGREGATE  NET
 DIRECT PREMIUMS WRITTEN IN THIS STATE BY ALL MEMBERS OF THE ASSOCIATION.
 EACH MEMBER'S PARTICIPATION IN THE ASSOCIATION SHALL BE DETERMINED ANNU-
 ALLY ON THE BASIS OF SUCH NET DIRECT PREMIUMS WRITTEN DURING THE PRECED-
 ING  CALENDAR  YEAR  AS  DISCLOSED  IN  THE  ANNUAL STATEMENTS AND OTHER
 REPORTS FILED BY THE MEMBER WITH THE SUPERINTENDENT.
   (B) NO MEMBER SHALL BE OBLIGATED IN ANY YEAR TO REIMBURSE THE  ASSOCI-
 ATION  ON  ACCOUNT  OF ITS PROPORTIONATE SHARE IN THE DEFICIT FROM OPER-
 ATIONS OF THE ASSOCIATION IN THAT YEAR IN EXCESS OF ONE PERCENT  OF  ITS
 SURPLUS  TO  POLICYHOLDERS. THE AGGREGATE AMOUNT NOT SO REIMBURSED SHALL
 BE REALLOCATED AMONG THE REMAINING MEMBERS IN ACCORDANCE WITH THE METHOD
 OF DETERMINING PARTICIPATION PRESCRIBED IN THIS SECTION, AFTER EXCLUDING
 FROM THE COMPUTATION THE TOTAL NET DIRECT PREMIUMS OF  ALL  MEMBERS  NOT
 SHARING IN SUCH EXCESS DEFICIT. IN THE EVENT THAT THE DEFICIT FROM OPER-
 ATIONS  ALLOCATED  TO  ALL MEMBERS IN ANY CALENDAR YEAR SHALL EXCEED ONE
 PERCENT OF THEIR RESPECTIVE SURPLUS TO POLICYHOLDERS, THE AMOUNT OF SUCH
 DEFICIT SHALL BE ALLOCATED TO EACH MEMBER IN ACCORDANCE WITH THE  METHOD
 OF DETERMINING PARTICIPATION PRESCRIBED IN THIS SECTION.
   (C)  ANNUALLY,  ON  A  DATE SET BY THE SUPERINTENDENT, THE ASSOCIATION
 SHALL ESTIMATE ITS DEFICIT FROM OPERATIONS, AND AFTER APPLICATION OF THE
 FUNDS PROVIDED FOR IN  SUBSECTION  (D)  OF  THIS  SECTION,  CALCULATE  A
 FACTOR,  NOT  TO  EXCEED  ONE  PERCENT,  BY RELATING SUCH DEFICIT TO NET
 DIRECT PREMIUMS WRITTEN FOR THE LATEST CALENDAR  YEAR,  SUBJECT  TO  THE
 APPROVAL  OF  THE  SUPERINTENDENT.  SUCH  FACTOR MAY BE REFLECTED IN THE
 DETERMINATION OF RATES FILED BY THE  PRINCIPAL  RATING  ORGANIZATION  IN
 THIS  STATE  AND BY MEMBERS OF THE ASSOCIATION FOR FIRE, EXTENDED COVER-
 AGE, BROAD FORM COVERAGE PURSUANT TO  SUBSECTION  (G)  OF  SECTION  FIVE
 THOUSAND FOUR HUNDRED FIFTY-ONE OF THIS ARTICLE AND HOMEOWNERS POLICIES.
 NOTWITHSTANDING  THE  PROVISIONS  OF  SECTION FIVE THOUSAND FOUR HUNDRED
 FIFTY-THREE OF THIS ARTICLE TO THE CONTRARY, ANY PART  OF  SUCH  DEFICIT
 WHICH  EXCEEDS  ONE  PERCENT  AS  SO CALCULATED, SHALL BE DEFRAYED BY AN
 INCREASE IN RATES FOR THE RESPECTIVE OCCUPANCY CLASSES, BASED  UPON  THE
 ASSOCIATION'S  RELATED  LOSS  AND EXPENSE EXPERIENCE TOGETHER WITH OTHER
 INFORMATION THE SUPERINTENDENT  REQUIRES,  IN  ACCORDANCE  WITH  FILINGS
 APPROVED  BY  THE  SUPERINTENDENT.  EACH MEMBER'S SHARE OF THE ESTIMATED
 DEFICIT SHALL BE COLLECTED BY THE ASSOCIATION  IN  ACCORDANCE  WITH  THE
 PLAN OF OPERATION.
 A. 2824                             6
 
   (D)  IN ACCORDANCE WITH REGULATIONS OF THE SUPERINTENDENT, THE DEFICIT
 FROM THE OPERATIONS OF THE ASSOCIATION SHALL  BE  CREDITED  WITH  INCOME
 EARNED  FROM THE NEW YORK PROPERTY/CASUALTY INSURANCE SECURITY FUND. THE
 CREDIT SHALL BE AN AMOUNT DETERMINED BY THE SUPERINTENDENT, WHICH IN  NO
 YEAR  SHALL  EXCEED  INCOME EARNED OR THE SUM OF FIFTEEN MILLION DOLLARS
 WHICHEVER IS LESS. THE CREDIT SHALL BE ESTIMATED ANNUALLY BY THE  SUPER-
 INTENDENT ON A DATE SET BY THE SUPERINTENDENT, AND SUCH ESTIMATED AMOUNT
 SHALL  BE CREDITED TO THE ASSOCIATION AND TRANSFERRED FROM THE INCOME AS
 EARNED DURING THE YEAR BY THE NEW YORK PROPERTY/CASUALTY INSURANCE SECU-
 RITY FUND. ANY DIFFERENCE BETWEEN THE ESTIMATED AMOUNT OF INCOME AND THE
 ACTUAL AMOUNT OF INCOME FOR THE YEAR SHALL  BE  TAKEN  INTO  ACCOUNT  IN
 COMPUTING  THE ESTIMATE FOR THE NEXT PERIOD. NOTWITHSTANDING THE FOREGO-
 ING PROVISIONS OF THIS SECTION OR ANY OTHER LAW TO THE CONTRARY, IF  THE
 ASSETS OF THE ASSOCIATION EXCEED ITS LIABILITIES ON THE THIRTIETH DAY OF
 NOVEMBER  IN  ANY  YEAR  COMMENCING  ON  OR  AFTER APRIL FIRST, NINETEEN
 HUNDRED EIGHTY-TWO IN ACCORDANCE WITH REGULATIONS OF THE SUPERINTENDENT,
 THE ASSOCIATION SHALL PAY TO THE NEW  YORK  PROPERTY/CASUALTY  INSURANCE
 SECURITY  FUND AN AMOUNT EQUAL TO ANY AMOUNTS PAID FROM SUCH FUND TO THE
 ASSOCIATION IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE SEVENTY-SIX  OF
 THIS  CHAPTER  AND THIS SECTION WHICH HAVE NOT BEEN REPAID PRIOR TO SUCH
 THIRTIETH DAY OF NOVEMBER, TOGETHER WITH ANY INVESTMENT INCOME ATTRIBUT-
 ABLE THERETO, AS DETERMINED BY THE SUPERINTENDENT, UP TO THE  AMOUNT  OF
 SUCH EXCESS. ANY SUCH PAYMENT SHALL BE MADE NO LATER THAN FEBRUARY FIRST
 OF THE FOLLOWING YEAR.
   (E) MEMBERS SHALL NOT BE RELIEVED OF THEIR OBLIGATION TO REIMBURSE THE
 ASSOCIATION FOR THEIR SHARE OF THE DEFICIT RESULTING FROM THE OPERATIONS
 OF THE ASSOCIATION PRIOR TO AUGUST FIRST, NINETEEN HUNDRED SEVENTY-NINE.
   (F)  (1)  ANY MEMBER THAT VOLUNTARILY WRITES, AS OF EXPIRATION DATE, A
 POLICY OR COVERAGE CURRENTLY  WRITTEN  THROUGH  THE  ASSOCIATION,  SHALL
 RECEIVE  CREDIT  AGAINST ITS PARTICIPATION IN ASSOCIATION WRITINGS. SUCH
 CREDIT SHALL BE TO THE EXTENT OF TWICE THE NET  DIRECT  PREMIUM,  ON  AN
 ANNUAL  BASIS,  OF SUCH POLICY OR COVERAGE VOLUNTARILY WRITTEN AND SHALL
 APPLY FOR ONE YEAR.
   (2) SUBJECT TO APPROVAL BY THE SUPERINTENDENT, THE  ASSOCIATION  SHALL
 DEVELOP  AND  IMPLEMENT  AN INCENTIVE PLAN FOR MEMBERS WHICH VOLUNTARILY
 WRITE POLICIES THAT INCLUDE WINDSTORM COVERAGE IN  COASTAL  AREAS.  SUCH
 PLAN  SHALL  ALSO  INCLUDE  INCENTIVES  FOR MEMBERS TO VOLUNTARILY WRITE
 WRAPAROUND POLICIES, AS DEFINED BY THE ASSOCIATION,  IN  COASTAL  AREAS,
 WHEN  SUCH  WRAPAROUND  POLICIES  INCLUDE  COVERAGE  FOR  WINDSTORM ON A
 REPLACEMENT COST BASIS IN EXCESS OF THE WINDSTORM COVERAGE CONTAINED  IN
 AN  ASSOCIATION  POLICY  ISSUED TO THE SAME POLICYHOLDER. THE PURPOSE OF
 THESE INCENTIVES SHALL BE TO ENCOURAGE THE WRITING OF  VOLUNTARY  INSUR-
 ANCE  POLICIES  IN  COASTAL  AREAS  BY REDUCING THE PARTICIPATION IN THE
 WRITINGS OF THE ASSOCIATION OF THOSE MEMBER COMPANIES WHICH  VOLUNTARILY
 WRITE  POLICIES  THAT  INCLUDE WINDSTORM COVERAGE IN SUCH AREAS. FOR THE
 PURPOSES OF THIS SECTION, COASTAL AREAS INCLUDE: AREAS WITHIN  ONE  MILE
 OF  A  SALTWATER OCEAN, SOUND, INLET OR BAY ON LONG ISLAND'S SOUTH SHORE
 OR ALONG THE SHORE OF BROOKLYN, QUEENS, STATEN ISLAND AND LONG  ISLAND'S
 FORKS; AREAS WITHIN TWO THOUSAND FIVE HUNDRED FEET OF A SALTWATER OCEAN,
 SOUND, INLET OR BAY ON LONG ISLAND'S NORTH SHORE, THE BRONX OR WESTCHES-
 TER.
   (3)  THE  ASSOCIATION SHALL OFFER A POLICY FORM WHICH MAY BE USED ONLY
 IN CONJUNCTION WITH VOLUNTARY MARKET WRAPAROUND  POLICIES  THAT  PROVIDE
 WINDSTORM  COVERAGE IN EXCESS OF AMOUNTS INSURED BY THE ASSOCIATION. THE
 POLICY FORM, WHICH  MAY  INCLUDE  BROAD  FORM  COVERAGE,  SHALL  PROVIDE
 REPLACEMENT COST COVERAGE FOR DWELLINGS AND PERSONAL PROPERTY FOR REPAIR
 A. 2824                             7
 
 OR  REPLACEMENT  WITHOUT  DEDUCTION FOR DEPRECIATION ON TERMS AND CONDI-
 TIONS GENERALLY CONSISTENT WITH  POLICIES  CUSTOMARILY  IN  USE  IN  THE
 VOLUNTARY  MARKET  AS MODIFIED TO MAKE THE ASSOCIATION POLICY COMPATIBLE
 WITH VOLUNTARY MARKET WRAPAROUND POLICIES. COVERAGE OFFERED BY THE ASSO-
 CIATION  UNDER SUCH POLICY SHALL NOT EXCEED SIX HUNDRED THOUSAND DOLLARS
 FOR DWELLING  COVERAGE  AND  TWO  HUNDRED  FIFTY  THOUSAND  DOLLARS  FOR
 PERSONAL  PROPERTY,  AND  SHALL BE AVAILABLE TO COVER ONE TO FOUR FAMILY
 OWNER-OCCUPIED DWELLINGS, APARTMENT  UNITS  OR  CONDOMINIUM  UNITS.  THE
 ASSOCIATION  MAY  REQUIRE APPLICANTS TO PROVIDE EVIDENCE OF THE PURCHASE
 OF FLOOD INSURANCE AS A CONDITION OF ELIGIBILITY FOR COVERAGE UNDER THIS
 POLICY. THE ASSOCIATION SHALL FILE THE FORM FOR APPROVAL WITH THE SUPER-
 INTENDENT.
   § 5455. APPEALS. ANY APPLICANT  TO  THE  ASSOCIATION  AND  ANY  PERSON
 INSURED  PURSUANT  TO  THIS  ARTICLE,  OR  THEIR REPRESENTATIVES, OR ANY
 AFFECTED INSURER, MAY APPEAL TO THE SUPERINTENDENT  WITHIN  THIRTY  DAYS
 AFTER ANY RULING, ACTION OR DECISION BY OR ON BEHALF OF THE ASSOCIATION,
 WITH  RESPECT TO THOSE ITEMS THE PLAN OF OPERATION DEFINES AS APPEALABLE
 MATTERS.
   § 5456. AVAILABILITY OF REPORTS; IMMUNITY. (A) REPORTS  OF  INSPECTION
 PERFORMED  BY  OR  ON  BEHALF  OF  THE ASSOCIATION SHALL BE AVAILABLE TO
 MEMBERS OF THE ASSOCIATION, APPLICANTS AND THE SUPERINTENDENT.
   (B) NO LIABILITY OR CAUSE OF ACTION SHALL EXIST  AGAINST  THE  ASSOCI-
 ATION  OR  ITS  AGENTS OR EMPLOYEES, AN INSURER OR THE SUPERINTENDENT OR
 HIS OR HER AUTHORIZED REPRESENTATIVES FOR ANY STATEMENTS  MADE  IN  GOOD
 FAITH  BY THEM IN ANY REPORTS OR COMMUNICATIONS CONCERNING RISKS INSURED
 OR TO BE INSURED BY THE ASSOCIATION OR  AT  ANY  RELATED  ADMINISTRATIVE
 HEARINGS.
   §  5457.  ANNUAL  STATEMENT. (A) THE ASSOCIATION SHALL ANNUALLY FILE A
 STATEMENT IN THE OFFICE OF THE SUPERINTENDENT ON OR BEFORE THE FIRST DAY
 OF MARCH. SUCH STATEMENT SHALL BE IN A  FORM  APPROVED  BY  AND  CONTAIN
 INFORMATION  REQUIRED  BY  THE SUPERINTENDENT WITH RESPECT TO ITS TRANS-
 ACTIONS, CONDITION, OPERATIONS AND AFFAIRS DURING THE PRECEDING YEAR.
   (B) THE SUPERINTENDENT MAY AT ANY  TIME  REQUIRE  THE  ASSOCIATION  TO
 FURNISH  ADDITIONAL  INFORMATION  WHICH  HE  CONSIDERS TO BE MATERIAL IN
 EVALUATING THE SCOPE, OPERATION AND EXPERIENCE OF THE ASSOCIATION.
   § 5458. EXAMINATIONS. THE SUPERINTENDENT MAY, IN ACCORDANCE WITH ARTI-
 CLE THREE OF THIS CHAPTER, MAKE AN EXAMINATION INTO THE AFFAIRS  OF  THE
 ASSOCIATION WHENEVER HE OR SHE DEEMS IT EXPEDIENT. THE EXPENSES OF EVERY
 SUCH EXAMINATION SHALL BE BORNE AND PAID BY THE ASSOCIATION.
   §  5459.  REIMBURSEMENT FUND. (A) THE SUPERINTENDENT SHALL ASSESS EACH
 MEMBER OF THE ASSOCIATION AN AMOUNT SUFFICIENT TO PROVIDE  REIMBURSEMENT
 PAYMENTS, PURSUANT TO THE PROVISIONS OF SECTION 1223(A)(1) OF THE FEDER-
 AL  URBAN PROPERTY PROTECTION AND REINSURANCE ACT OF 1968, TO THE AGENCY
 OF THE FEDERAL GOVERNMENT ADMINISTERING THE ACT IN AN  AGGREGATE  AMOUNT
 NOT TO EXCEED FIVE PER CENTUM OF THE AGGREGATE PROPERTY INSURANCE PREMI-
 UMS  EARNED  IN  THE  STATE  DURING THE PRECEDING CALENDAR YEAR ON THOSE
 LINES OF INSURANCE REINSURED UNDER SUCH ACT DURING THE CALENDAR YEAR.
   (B) THE TOTAL AMOUNT OF ANY ASSESSMENT ON EACH SUCH MEMBER SHALL BE IN
 THE PROPORTION THAT THE PREMIUMS EARNED DURING  THE  PRECEDING  CALENDAR
 YEAR  BY  EACH  SUCH MEMBER IN THIS STATE BEAR TO THE AGGREGATE PREMIUMS
 EARNED IN THIS STATE DURING THE PRECEDING CALENDAR YEAR ON  THOSE  LINES
 OF  INSURANCE REINSURED UNDER THE FEDERAL ACT DURING THE CURRENT YEAR BY
 ALL MEMBERS OF THE ASSOCIATION. ASSESSMENTS SHALL  BE  COLLECTIBLE  FROM
 ALL  MEMBERS  ON  AND  AFTER  THE FORTY-FIFTH DAY FOLLOWING RECEIPT OF A
 CLAIM FROM THE FEDERAL AGENCY.
 A. 2824                             8
 
   (C) THE  SUPERINTENDENT  SHALL  RECEIVE  ALL  ASSESSMENTS  PAYABLE  ON
 ACCOUNT OF THE CLAIM OF THE FEDERAL AGENCY AND MAKE ALL DISBURSEMENTS IN
 CARRYING OUT THIS SECTION FROM THE RIOT REINSURANCE REVOLVING FUND WHICH
 IS  CONTINUED. NOTWITHSTANDING ANY OTHER LAW, RULE OR REGULATION REQUIR-
 ING THAT MONEY RECEIVED FOR OR ON BEHALF OF THE STATE SHALL BE PAID INTO
 THE  STATE TREASURY, THE SUPERINTENDENT SHALL DEPOSIT THE ASSESSMENTS IN
 A SEPARATE BANK ACCOUNT OR ACCOUNTS IN A TRUST COMPANY  OR  BANK  HAVING
 TRUST  POWERS  WITHIN  THE STATE. ALL DEPOSITS SHALL BE SECURED BY OBLI-
 GATIONS OF THE UNITED STATES OR THIS  STATE  AND  ALL  BANKS  AND  TRUST
 COMPANIES  ARE  AUTHORIZED TO GIVE THE SAME. THE MONIES OF THE FUND MAY,
 AT THE DISCRETION OF THE SUPERINTENDENT, BE INVESTED IN  OBLIGATIONS  OF
 OR GUARANTEED BY THIS STATE OR THE UNITED STATES. ANY INCOME OR EARNINGS
 DERIVED FROM SUCH INVESTMENTS SHALL BE DEPOSITED IN THE FUND.
   (D)  THE  MONIES  IN THE FUND SHALL BE PAID ON THE ORDER OF THE SUPER-
 INTENDENT SOLELY FOR REIMBURSEMENT PAYMENTS AS  PROVIDED  IN  SUBSECTION
 (A)  OF  THIS  SECTION  AFTER ANY INVESTIGATION THE SUPERINTENDENT DEEMS
 APPROPRIATE TO VERIFY THE CORRECTNESS OF THE CLAIM. ANY BALANCE  REMAIN-
 ING  SHALL  BE  RETAINED BY THE SUPERINTENDENT IN THE FUND AND USED ONLY
 FOR THE PURPOSE OF MEETING FUTURE CLAIMS OF THE FEDERAL AGENCY.
   (E) THE SUPERINTENDENT MAY AT ANY TIME REQUIRE ANY MEMBER  TO  FURNISH
 INFORMATION  HE  OR  SHE  DEEMS NECESSARY TO DETERMINE IF THE MEMBER HAS
 COMPLIED WITH THE PROVISIONS OF THIS SECTION.
   (F) THE COMPTROLLER SHALL HAVE THE POWER AND AUTHORITY  TO  AUDIT  THE
 ACCRUALS,  THE  RECEIPTS, THE PAYMENTS AND THE EXPENDITURE OF ALL MONIES
 OF THE FUND.
   § 5460. ADDITIONAL POWERS OF THE ASSOCIATION.  (A)  AS  USED  IN  THIS
 ARTICLE:
   (1)   "COMMERCIAL  RISK  INSURANCE",  "PUBLIC  ENTITY  INSURANCE"  AND
 "PROFESSIONAL LIABILITY INSURANCE" HAVE THE MEANINGS ASCRIBED TO THEM BY
 SECTION ONE HUNDRED SEVEN OF THIS CHAPTER,  EXCEPT  THAT  MOTOR  VEHICLE
 INSURANCE  AND MEDICAL MALPRACTICE LIABILITY INSURANCE ARE EXCLUDED FROM
 SUCH MEANINGS FOR PURPOSES OF THIS ARTICLE;
   (2) "MARKET" MEANS A LINE, SUBLINE OR  CLASSIFICATION  (OTHER  THAN  A
 CLASSIFICATION  DELINEATED  BY GEOGRAPHIC LOCATION) OF PROPERTY/CASUALTY
 INSURANCE NOT SUBJECT TO SUBSECTION (B) OF SECTION  TWO  THOUSAND  THREE
 HUNDRED FIVE, SECTION TWO THOUSAND THREE HUNDRED TWENTY-EIGHT OR SECTION
 THREE  THOUSAND  FOUR  HUNDRED  TWENTY-FIVE  OF  THIS CHAPTER. PROVIDED,
 HOWEVER, A "MARKET" SHALL ALSO INCLUDE HOMEOWNERS INSURANCE  AS  DEFINED
 IN  SUBSECTION  (F)  OF SECTION FIVE THOUSAND FOUR HUNDRED FIFTY OF THIS
 ARTICLE. A "MARKET" SHALL ALSO INCLUDE MANDATORY  MINIMUM  SURETY  BONDS
 REQUIRED  PURSUANT  TO SECTION TWO HUNDRED FIFTY-EIGHT-B OF THE AGRICUL-
 TURE AND MARKETS LAW.
   (B) THE ASSOCIATION SHALL BEGIN, OR RESUME AFTER ANY  SUSPENSION,  ITS
 INSURANCE  UNDERWRITING  OPERATIONS FOR ANY MARKET ONLY AFTER THE SUPER-
 INTENDENT HAS DETERMINED AFTER A HEARING ON A RECORD THAT IT  IS  NECES-
 SARY,  DUE  TO  UNAVAILABILITY  OF  MEANINGFUL  COVERAGE IN A PARTICULAR
 VOLUNTARY MARKET, TO ACTIVATE THE ASSOCIATION TO WRITE COVERAGE FOR SUCH
 MARKET.  IN  MAKING  A  DETERMINATION  OF  NECESSITY  PURSUANT  TO  THIS
 SUBSECTION,  THE SUPERINTENDENT MAY CONSIDER SUCH FACTORS AS: THE EXTENT
 AND NATURE OF COMPETITION; SIZE AND SIGNIFICANCE OF THE COVERAGE; AVAIL-
 ABILITY OF ADEQUATE LIMITS OF COVERAGE; EFFICACY OF ANY  MARKET  ASSIST-
 ANCE PROGRAM ADMINISTERED BY THE SUPERINTENDENT INCLUDING BUT NOT LIMIT-
 ED TO ACTUAL PLACEMENT OF COVERAGE THROUGH A VOLUNTARY MARKET ASSISTANCE
 PROGRAM AT THE TIME SUCH DETERMINATION IS TO BE MADE; REINSURANCE AVAIL-
 ABILITY;  EXTENT  OF  CONSUMER COMPLAINTS TO THE DEPARTMENT OF FINANCIAL
 SERVICES; EXTENT OF DENIALS AND  RESTRICTIONS  OF  COVERAGE;  VOLUME  OF
 A. 2824                             9
 
 CANCELLATIONS  AND  NONRENEWALS; OR CHANGING CONDITIONS IN THE ECONOMIC,
 JUDICIAL AND SOCIAL ENVIRONMENT. IF, AFTER ACTIVATING THE ASSOCIATION IN
 REGARD TO A PARTICULAR MARKET, THE SUPERINTENDENT DETERMINES THAT  READY
 AVAILABILITY  OF  MEANINGFUL  COVERAGE IN SUCH VOLUNTARY MARKET HAS BEEN
 RESTORED, THE ASSOCIATION SHALL THEREUPON SUSPEND  ITS  UNDERWRITING  IN
 REGARD  TO  SUCH MARKET. THE SUPERINTENDENT SHALL, NO LATER THAN OCTOBER
 FIRST, NINETEEN HUNDRED EIGHTY-SIX, ACTIVATE THE  ASSOCIATION  TO  WRITE
 PARTICULAR  MARKETS IN REGARD TO PUBLIC ENTITIES, UNLESS THE SUPERINTEN-
 DENT DETERMINES THAT ACTIVATION IS UNNECESSARY BECAUSE  PUBLIC  ENTITIES
 ARE  ABLE  TO SECURE MEANINGFUL COVERAGE IN VOLUNTARY MARKETS, INCLUDING
 THROUGH ANY MARKET ASSISTANCE PROGRAM ADMINISTERED  BY  THE  SUPERINTEN-
 DENT.
   (C)  THE  DIRECTORS  OF  THE  ASSOCIATION, AFTER CONSULTATION WITH THE
 SUPERINTENDENT, SHALL FORTHWITH PREPARE A PLAN OF OPERATION, SUBJECT  TO
 APPROVAL  BY THE SUPERINTENDENT WHO SHALL ACT EXPEDITIOUSLY THEREON, AND
 THE DIRECTORS SHALL TAKE ALL OTHER NECESSARY  STEPS  ON  AND  AFTER  THE
 EFFECTIVE  DATE  OF THIS SECTION TO PREPARE FOR PROMPT IMPLEMENTATION OF
 THE ASSOCIATION'S POWERS IN THE EVENT THAT ANY MARKET  IS  ACTIVATED  BY
 THE  SUPERINTENDENT  PURSUANT  TO  SUBSECTION  (B)  OF THIS SECTION. THE
 DIRECTORS OF THE ASSOCIATION MAY, ON THEIR  OWN  INITIATIVE  OR  AT  THE
 REQUEST OF THE SUPERINTENDENT, AMEND THE PLAN SUBJECT TO APPROVAL BY THE
 SUPERINTENDENT.  THE  SUPERINTENDENT  MAY DIRECT THAT THE PLAN OF OPERA-
 TION, OR AMENDMENTS TO SUCH PLAN,  SHALL  INCLUDE  SPECIFIED  LIMITS  OF
 COVERAGE FOR PARTICULAR MARKETS ACTIVATED.
   (D)  UPON  ACTIVATION  BY THE SUPERINTENDENT OF ANY MARKET PURSUANT TO
 SUBSECTION (B) OF THIS SECTION, ALL INSURERS (EXCLUDING ASSESSMENT COOP-
 ERATIVE FIRE INSURERS) AUTHORIZED TO WRITE AND ENGAGED IN WRITING  ON  A
 DIRECT BASIS WITHIN THIS STATE COMMERCIAL RISK, PUBLIC ENTITY OR PROFES-
 SIONAL  LIABILITY  INSURANCE,  INCLUDING COMMERCIAL MULTIPLE PERIL POLI-
 CIES, SHALL PARTICIPATE AS MEMBERS IN THE ASSOCIATION. EVERY SUCH INSUR-
 ER SHALL BE AND REMAIN A MEMBER OF THE ASSOCIATION AS A CONDITION OF ITS
 AUTHORITY TO CONTINUE TO TRANSACT SUCH INSURANCE IN THIS STATE. IN ADDI-
 TION TO THE CREDIT PROVIDED PURSUANT TO SUBSECTION (F) OF  SECTION  FIVE
 THOUSAND FOUR HUNDRED FIFTY-FOUR OF THIS ARTICLE, THE SUPERINTENDENT MAY
 BY  REGULATION  PROVIDE  FOR  ADDITIONAL  CREDITS  TO SUCH INSURERS THAT
 VOLUNTARILY PROVIDE A MARKET FOR THOSE  RISKS  THAT  THE  SUPERINTENDENT
 DETERMINES TO BE EXTREMELY DIFFICULT TO PLACE IN THE VOLUNTARY MARKET.
   (E)  THE ASSOCIATION SHALL WITH RESPECT TO ANY MARKET ACTIVATED BY THE
 SUPERINTENDENT PURSUANT TO SUBSECTION (B) OF THIS SECTION ISSUE POLICIES
 IN ACCORDANCE WITH THE ASSOCIATION'S PLAN OF OPERATION, AND SHALL  MAIN-
 TAIN  SEPARATE  ACCOUNTS  AND RECORDS FOR PREMIUMS, LOSSES, EXPENSES AND
 INVESTMENT INCOME ATTRIBUTABLE TO SUCH INSURANCE. ASSESSMENTS OF  INSUR-
 ERS  FOR  EXPENSES  AND ANY LOSSES OF THE ASSOCIATION IN CONNECTION WITH
 SUCH INSURANCE SHALL BE  BASED  ON  AN  INSURER'S  NET  DIRECT  PREMIUMS
 ATTRIBUTABLE  TO  THE  TYPES OF INSURANCE SPECIFIED IN SUBSECTION (A) OF
 THIS SECTION. RATES SHALL BE BASED UPON LOSS AND EXPENSE  EXPERIENCE  OF
 THE  RISKS INSURED BY THE ASSOCIATION PURSUANT TO THIS SECTION AND SHALL
 BE ON AN ACTUARIALLY SOUND BASIS, CALCULATED TO  BE  SELF-SUPPORTING  AT
 THE LOWEST POSSIBLE RATES CONSISTENT WITH THE MAINTENANCE OF SOLVENCY OF
 THE  ASSOCIATION  AND  OF  REASONABLE  RESERVES,  SURPLUS  AND EXPENSES,
 INCLUDING COMMISSIONS. THE PROVISIONS OF SUBSECTION (D) OF SECTION  FIVE
 THOUSAND  FOUR  HUNDRED  FIFTY-FOUR  OF  THIS ARTICLE SHALL NOT APPLY TO
 INSURANCE WRITTEN PURSUANT TO THIS SECTION.
   (F) THE SUPERINTENDENT MAY ALSO ACTIVATE THE ASSOCIATION FOR  PURPOSES
 OF  PROVIDING  EXCESS OR UMBRELLA COVERAGES IN CONNECTION WITH A MARKET.
 A. 2824                            10

 HAZARDS THAT THE SUPERINTENDENT  DETERMINES  ARE  UNINSURABLE  SHALL  BE
 EXCLUDED FROM COVERAGES WHICH THE ASSOCIATION IS REQUIRED TO FURNISH.
   §  2.  Paragraph  3 of subsection (d) of section 7603 of the insurance
 law is amended to read as follows:
   (3) The superintendent is authorized to use the income earned  on  the
 moneys of the fund to offset the deficit of the New York property insur-
 ance  underwriting  association  in  accordance  with  subsection (d) of
 section five thousand four hundred five of this chapter  AND  SUBSECTION
 (D)  OF  SECTION  FIVE THOUSAND FOUR HUNDRED FIFTY-FOUR OF THIS CHAPTER,
 provided that any income earned on the moneys of the fund which  in  any
 one year exceeds fifteen million dollars or which the superintendent has
 not  utilized  for  the purposes of such subsection shall be credited to
 the corpus of the fund until the superintendent determines that its  net
 value  is  two  hundred  forty  million dollars, and thereafter shall be
 credited, upon certification by the superintendent to the  commissioner,
 to the general fund of the state treasury.
   § 3. This act shall take effect immediately.