NY State Senate Bill S5896

Current Bill Status - Passed Senate

Introduced
In Committee
On Floor Calendar
- Passed Senate
- Passed Assembly
Delivered to Governor
Signed/Vetoed by Governor

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Actions

view actions (7)

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 03, 2023	referred to insurance delivered to assembly passed senate
Apr 26, 2023	advanced to third reading
Apr 25, 2023	2nd report cal.
Apr 24, 2023	1st report cal.632
Mar 22, 2023	referred to insurance

Votes

view votes

May 3, 2023 - floor Vote

S5896

floor

Aye

Nay

Absent

Excused

Abstained

Apr 24, 2023 - Insurance committee Vote

S5896

committee

Aye

Nay

Aye with Reservations

Absent

Excused

Abstained

S5896 (ACTIVE) - Details

See Assembly Version of this Bill:: A5253
Current Committee:: Assembly Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §2118, Ins L
Versions Introduced in 2021-2022 Legislative Session:: S8128, A9117

S5896 (ACTIVE) - Summary

Permits a waiver of the diligent effort requirement in limited circumstances for certain insurance coverage to be placed by licensed excess line brokers with unauthorized insurers where a retail producing insurance broker seeks to procure or place commercial lines insurance through an unaffiliated wholesale excess line insurance broker.

S5896 (ACTIVE) - Sponsor Memo

 
BILL NUMBER: S5896

SPONSOR: BRESLIN
 
TITLE OF BILL:

An act to amend the insurance law, in relation to permitting a waiver of
the diligent effort requirement in limited circumstances for certain
insurance coverage to be placed by licensed excess line brokers with
unauthorized insurers

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill would exempt certain commercial lines insurance transactions
placed by wholesale insurance brokers from the excess line diligent
effort requirement. The bill would eliminate both a process and exces-
sive data reporting which provide no benefit to insureds and instead
allow brokers to focus on providing services that consumers need and
value.

 
SUMMARY OF PROVISIONS:

Section one - Amends subparagraph (A) of paragraph 3 of subsection (b)

of section 2118 of the insurance law, as amended by section 12 of part I
of chapter 61 of the laws of 2011, to establish a waiver of the diligent
effort requirement in limited circumstances.

Section two - Amends section 2118 of the insurance law by adding a new
subsection (g).

Section three - Establishes the effective date.

 
JUSTIFICATION:

The excess line market exists as a matter of public policy to insure
risks which New York admitted insurers choose not to underwrite because
the risks are distressed, unique, volatile, or involve new businesses or
coverages without loss history. The legislature reasoned that New York
businesses could not operate without a secondary market to insure risks
that are rejected by licensed insurers. The excess line market is of
vital importance to New York and nimble processing is essential to
effectively serve consumer needs.

The law requires that brokers make a good faith attempt to seek coverage
from a licensed insurer before turning to the excess line market. This
is called a diligent effort. The law considers a diligent effort to be
complete when three licensed insurers have considered and then rejected
a risk. The bill would exempt commercial insurance policies placed by
retail insurance brokers through unaffiliated wholesale excess line
brokers from the diligent effort requirement. Diligent effort would
still apply to all personal lines policies as well as commercial lines
policies that are not placed through an unaffiliated wholesale excess
line broker.

A substantial portion of excess line risks are placed by small main
street retail insurance brokers who turn to wholesale excess line
brokers when they have exhausted their own licensed insurer options.  It
is inherent to the insurance industry that retail brokers will exhaust
all licensed market options before seeking excess line coverage through
a wholesale broker. Retail brokers will not choose to split their
commissions with wholesale excess line brokers unless that is the only
way to obtain coverage for an insured. Retail brokers know the under-
writers at the licensed insurers with whom they deal regularly and are
familiar with their policy forms, their licensed companies often direct-
ly bill insureds and therefore eliminate collection risks, and policies
issued by licensed insurers are covered by state security funds that
also de facto protect retail brokers by supporting their clients. A
retail broker loses these benefits in excess line transactions.

Therefore, diligent effort is unneeded to ensure that commercial risks
are placed with licensed insurers when feasible where retail brokers
place risks with unaffiliated wholesale excess line brokers. The process
and data reporting under these circumstances places an unnecessary delay
and cost on placing insurance policies that is detrimental to consumers.

 
PRIOR LEGISLATIVE HISTORY:

2021/22 - S.8128

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
Immediately.

S5896 (ACTIVE) - Bill Text download pdf

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5896
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                              March 22, 2023
                                ___________
 
 Introduced  by  Sen. BRESLIN -- 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 permitting a waiver of
   the diligent effort requirement in limited circumstances  for  certain
   insurance  coverage  to be placed by licensed excess line brokers with
   unauthorized insurers
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subparagraph  (A)  of  paragraph  3  of subsection (b) of
 section 2118 of the insurance law, as amended by section 12 of part I of
 chapter 61 of the laws of 2011, is amended to read as follows:
   (A) Except as provided in  subparagraph  (F)  OF  THIS  PARAGRAPH  AND
 SUBJECT  TO  SUBPARAGRAPH (C) of this paragraph, submission of insurance
 documents to the excess line  association  shall  be  accompanied  by  a
 statement subscribed to, and affirmed by, the licensee or sublicensee as
 true  under  the  penalties  of perjury that, after diligent effort, the
 full amount of insurance required could not be procured, from authorized
 insurers, each of which is authorized to write  insurance  of  the  kind
 requested  and  which  the licensee has reason to believe might consider
 writing the type of coverage or class of insurance involved, and further
 showing that the amount  of  insurance  procured  from  an  unauthorized
 insurer is only the excess over the amount procurable from an authorized
 insurer.  The  licensee, however, shall be excused from affirming that a
 diligent effort, as defined above, was made to procure the coverage from
 authorized insurers if the licensee's affidavit is  accompanied  by  the
 affidavit  of another broker involved in the placement affirming as true
 under the penalties of  perjury  that,  after  diligent  effort  by  the
 affirming  broker,  the required insurance could not be procured from an
 authorized insurer which the affirming  broker  had  reason  to  believe
 might  consider  writing  the  type  of  coverage  or class of insurance
 involved. The licensee and the affirming broker shall  be  excused  from
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05708-01-3

 S. 5896                             2
 
 affirming  that  a diligent effort was made if the superintendent deter-
 mines, pursuant to paragraph four of this subsection, that  no  declina-
 tions  are  required.  NOTWITHSTANDING  ANY  PROVISION  TO  THE CONTRARY
 CONTAINED  IN    THIS  CHAPTER,   WHERE   A RETAIL   PRODUCING INSURANCE
 BROKER  SEEKS  TO PROCURE  OR PLACE COMMERCIAL LINES INSURANCE   THROUGH
 AN    UNAFFILIATED WHOLESALE  EXCESS  LINE  INSURANCE BROKER,  BOTH  THE
 RETAIL PRODUCING INSURANCE BROKER AND THE WHOLESALE EXCESS  LINE  INSUR-
 ANCE  BROKER  SHALL BE EXCUSED FROM MAKING ANY DILIGENT EFFORT OTHERWISE
 REQUIRED BY THIS ARTICLE.
   § 2. Section 2118 of the insurance law is  amended  by  adding  a  new
 subsection (g) to read as follows:
   (G) (1) AS USED IN THIS SECTION:
   (A)  "RETAIL  PRODUCING  INSURANCE  BROKER"  MEANS AN INSURANCE BROKER
 LICENSEE WHO DIRECTLY DEALS WITH AN INSURED;
   (B) "WHOLESALE EXCESS LINE INSURANCE BROKER" MEANS THE LICENSED EXCESS
 LINE INSURANCE BROKER FROM WHOM OR THROUGH  WHOM  THE  RETAIL  INSURANCE
 BROKER HAS PROCURED EXCESS LINE COVERAGE ON BEHALF OF THE INSURED; AND
   (C)  "COMMERCIAL  LINES  INSURANCE"  MEANS ANY POLICY OF INSURANCE NOT
 DEFINED AS A "COVERED POLICY" IN SUBSECTION (A) OF SECTION  THREE  THOU-
 SAND FOUR HUNDRED TWENTY-FIVE OF THIS CHAPTER.
   (2)  A  RETAIL  PRODUCING INSURANCE BROKER AND A WHOLESALE EXCESS LINE
 INSURANCE BROKER ARE UNAFFILIATED IF SUCH BROKER DOES  NOT  CONTROL,  IS
 NOT  CONTROLLED  BY,  OR  IS  NOT UNDER COMMON CONTROL WITH THE OTHER. A
 RETAIL PRODUCING INSURANCE BROKER OR A WHOLESALE EXCESS  LINE  INSURANCE
 BROKER  HAS  CONTROL OVER THE OTHER IF THE BROKER: (A) DIRECTLY OR INDI-
 RECTLY OR ACTING THROUGH ONE OR MORE OTHER PERSONS  OWNS,  CONTROLS,  OR
 HAS THE POWER TO VOTE TWENTY-FIVE PERCENT OR MORE OF ANY CLASS OF VOTING
 SECURITIES OF THE OTHER, OR (B) CONTROLS IN ANY MANNER THE ELECTION OF A
 MAJORITY OF THE DIRECTORS OR TRUSTEES OF THE OTHER.
   §  3.  This act shall take effect immediately, provided, however, that
 the amendments to subparagraph (A) of paragraph 3 of subsection  (b)  of
 section  2118 of the insurance law made by section one of this act shall
 not affect the expiration of such subsection  and  shall  be  deemed  to
 expire therewith.

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The New York State Senate

senate Bill S5896

Sponsored By

Current Bill Status - Passed Senate

Your Voice

Actions

Votes

May 3, 2023 - floor Vote

Floor Vote: May 3, 2023

Apr 24, 2023 - Insurance committee Vote

Insurance Committee Vote: Apr 24, 2023

S5896 (ACTIVE) - Details

S5896 (ACTIVE) - Summary

S5896 (ACTIVE) - Sponsor Memo

S5896 (ACTIVE) - Bill Text download pdf

Comments

senate Bill S5896

Share this bill

Sponsored By

Neil D. Breslin

Current Bill Status - Passed Senate

Your Voice

Actions

Votes

May 3, 2023 - floor Vote

Floor Vote: May 3, 2023

Apr 24, 2023 - Insurance committee Vote

Insurance Committee Vote: Apr 24, 2023

S5896 (ACTIVE) - Details

S5896 (ACTIVE) - Summary

S5896 (ACTIVE) - Sponsor Memo

S5896 (ACTIVE) - Bill Text download pdf

Comments