Senate Bill S1495

                                 
BILL NUMBER: S1495

SPONSOR: COMRIE
 
TITLE OF BILL:

An act to amend the insurance law, in relation to enacting the small
insurer protection act

 
PURPOSE:

To protect and encourage the creation of small insurance companies that
write property and casualty insurance that will benefit the public and
policyholders through increased competition.

 
SUMMARY OF PROVISIONS:

Section one 'of the bill states that the act shall be known and may be
cited as the "small insurer protection act."

Section two of the bill provides the legislative intent declaring that
the legislature intends to protect small insurance companies that write
commercial automobile insurance, to encourage new entrants into the
              

insurance market and novel insurance products, and to foster competition
in the marketplace, which will benefit policyholders and the public.

Section three of the bill adds § 7402-a to the insurance law to specify
conditions under which the rehabilitation or liquidation of a small
insurer can occur. Subdivision 1 prohibits an application for an order
of rehabilitation or liquidation of a small insurer on the grounds of
insolvency as defined in § 1309 of the insurance law or as a result of a
failure or refusal to comply, within the time designated by the super-
intendent of financial services, with an order of the superintendent to
make good an impairment of its capital, or minimum surplus to policy-
holders if a stock insurer, or of its minimum surplus if a mutual insur-
er, a reciprocal insurer, Lloyds underwriters, or a co-operative fire
insurance corporation, unless the aforementioned order is based on
either the superintendent's adoption of a report on examination finding
the company insolvent as defined in § 1309 of t he insurance law or the
annual or quarterly financial statements of the company either demon-
strate that the company's admitted assets do not exceed its liabilities
and surplus to policyholders and if the company does not maintain
reserves in an amount determined reasonable by its independent loss
reserve specialist or, if no independent loss reserve special is
required, by its appointed actuary.

Subdivision two declares that this section shall not restrict the super-
intendent right to direct an examination nor shall the superintendent's
regulatory authority be interfered with. In addition, this section shall
not restrict an insurer's rights and remedies in any judicial or admin-
istrative proceeding.

Subdivision three defines "small insurer" as a domestic
property/casualty insurance company with a maximum annual net direct
written premiums written of twenty-five million dollars, of which a
minimum of seventy-five percent is from the commercial automobile
liability business. This subdivision also defines "direct written premi-
ums" as the gross direct written premiums less return premiums on such
direct business.

Section four of the bill provides the effective date.

 
JUSTIFICATION:

Affordable commercial auto insurance can be difficult to obtain, partic-
ularly for new and niche business ventures, because institutional insur-
ers are often unwilling to take on these risks.  Some of those most
affected are for hire vehicle operators that service residents in New
York City as well as all of New York State.  Yet smaller insurance
companies can find it hard to compete against large, institutional
carriers in the heavily regulated insurance industry.

This bill attempts to level the playing field by relieving some of the
economic pressures facing small insurers and ensuring that they cannot
be liquidated on grounds of insolvency when their financial statements
show that the companies are solvent. This bill will ease entry by, and
retention of, small insurance companies in the property and casualty
industry in New York, resulting in greater competition and innovation in
the industry and ensuring that for-hire vehicles can operate in the
State, for the benefit of all.

 
PRIOR LEGISLATIVE HISTORY:

2022: S3671

 
FISCAL IMPLICATIONS:

None to State or Local Governments.

 
EFFECTIVE DATE:
Thirtieth day after becoming law. Effective immediately the addition,
amendment and/or repeal of any rule or regulation necessary for the
implementation of this act on its effective date are authorized to be
made and completed on or before such date.