Bill Text: NY A00332 | 2023-2024 | General Assembly | Introduced


Bill Title: Enacts the "construction insurance transparency act" to require insurers providing coverage for liability under the scaffold law to report, on an annual basis, to the superintendent of financial services relating to its finances and claims paid thereunder.

Spectrum: Moderate Partisan Bill (Democrat 16-3)

Status: (Introduced - Dead) 2024-01-03 - referred to insurance [A00332 Detail]

Download: New_York-2023-A00332-Introduced.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                           332

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                     January 4, 2023
                                       ___________

        Introduced  by  M.  of  A.  BRONSON,  STECK, STIRPE, MAGNARELLI, WEPRIN,
          DINOWITZ,  COLTON,  JACOBSON,  BRABENEC,  BYRNES,  McMAHON,   WALLACE,
          SEAWRIGHT,  CRUZ,  OTIS,  L. ROSENTHAL,  SIMON, TAPIA, J. A. GIGLIO --
          read once and referred to the Committee on Insurance

        AN ACT  to  amend  the  insurance  law,  in  relation  to  enacting  the
          "construction insurance transparency act of 2023" requiring all insur-
          ers  which  issue  policies  of  liability  insurance insuring against
          claims made in reliance upon the duty imposed by the "scaffold law" to
          file annual financial statements and  detailed  claim  data  with  the
          superintendent of financial services

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section  1.  This  act  shall  be  known  and  may  be  cited  as  the
     2  "construction insurance transparency act of 2023".
     3    §  2.  Declarations  of  legislative  findings. The legislature hereby
     4  finds and declares that persons,  corporations,  associations  or  other
     5  business  entities  which issue policies of liability insurance insuring
     6  an owner of real property or a contractor who  is  performing  work  and
     7  services  on  real  property  against  claims  made in reliance upon the
     8  duties imposed upon such parties  by  section  240  of  the  labor  law,
     9  commonly  referred  to  as  the "scaffold law", owe an obligation to the
    10  public, to those they insure and to those  who  may  in  the  future  be
    11  insured  by  them,  to fully disclose in a public and transparent manner
    12  all elements relating to the premiums paid for such insurance, the meth-
    13  od and manner in which such premiums are  determined  and  imposed  upon
    14  insureds,  and  claims  made  by  injured persons who rely on owners and
    15  contractors to provide a safe and secure worksite as  required  in  such
    16  section  of  such  law. It is essential that the public be made aware of
    17  such an insurer's responsibility  to  inform  them  of  their  financial
    18  condition and solvency, and the details and specifics of the factors and
    19  circumstances behind its financial solvency as well as the basis for the

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01576-01-3

        A. 332                              2

     1  rates they charge to owners and contractors to obtain such coverage. The
     2  determination  of  premiums  for such liability insurance policy in this
     3  state has, unfortunately, gone on too long in obscurity, with even those
     4  who bear the cost of premiums unable to learn why prices are set as they
     5  are.  As a matter of public trust, liability insurers should be required
     6  to make the public aware of the pertinent facts related to their premium
     7  determinations and financial solvency by disclosing  all  the  pertinent
     8  facts  as  provided  for in this section. It is the further sense of the
     9  legislature that this data should be disclosed in  an  open  and  public
    10  manner, and should be made available without undue cost and delay.
    11    §  3. The insurance law is amended by adding a new section 346 to read
    12  as follows:
    13    § 346. Financial statement and detailed claim data to  be  filed  with
    14  the superintendent. (a) For purposes of this section, the term "insurer"
    15  shall mean any person, corporation, association or other business entity
    16  which  issues  a  policy of liability insurance insuring a contractor or
    17  owner of real property located in this state against claims made  by  an
    18  injured  worker,  the  claim for which is made in reliance upon the duty
    19  owed to such worker pursuant to the provisions of  section  two  hundred
    20  forty of the labor law.
    21    (b) On or before April first of each year, every insurer shall for the
    22  prior  calendar  year  provide  the superintendent and the public with a
    23  detailed financial statement to supplement and  expand  upon  any  other
    24  information otherwise provided to the department as it relates an insur-
    25  er's provision of liability insurance coverage to owners of real proper-
    26  ty  or  contractors  performing  services to owners of real property for
    27  claims made by an injured person in  reliance  upon  the  duty  owed  by
    28  section  two hundred forty of the labor law; provided, however, that the
    29  initial financial statement so filed by an insurer after  the  effective
    30  date  of  this  section  shall  include the information required in this
    31  subdivision not only for such prior  calendar  year  but  also  for  the
    32  previous nine calendar years prior to such report.  The financial state-
    33  ment shall, in depth, separate the cost of providing section two hundred
    34  forty of the labor law based coverage from the cost of providing general
    35  liability  insurance  insuring the same owner or contractor with respect
    36  to the same property and shall contain at least the  following  informa-
    37  tion relating to coverage pursuant to such section:  (1) that portion of
    38  premiums  assessed and attributable to providing such coverage; (2) paid
    39  judgments, settlements or losses resulting from such coverage; (3)  case
    40  reserves  for losses which may be attributable to coverage; (4) incurred
    41  but not reported loss estimates which may be attributable  to  coverage;
    42  (5)  paid  defense  and  cost  containment  expenses attributable to any
    43  claims made based upon such coverage; (6) case reserves for defense  and
    44  cost  containment  experience attributable to any claims made based upon
    45  such coverage; (7) incurred but not reported defense and  cost  contain-
    46  ment estimates based upon such coverage; (8) premium and loss experience
    47  identified by policy limits and deductibles; (9) number of claims initi-
    48  ated  and  closed; (10) number of claims closed with loss payments; (11)
    49  number of open claims at the time such statement is prepared; (12) other
    50  expenses by category as determined by the superintendent to reflect  the
    51  cost  to  the  insurer  to  provide such coverage as part of a liability
    52  insurance policy; (13) investment income realized from that  portion  of
    53  the  premium  paid for a policy providing such coverage; (14) the amount
    54  of exposure to the insurer resulting from the provision of such coverage
    55  and whether the insurer has limited  the  amount  of  coverage  provided
    56  together  with  an estimate of the amount which might be required of the

        A. 332                              3

     1  insured to purchase further coverage from an out of state  excess  lines
     2  provider,  based  upon current data available to such in-state provider,
     3  especially where such in-state  provider  operates  as  an  excess  line
     4  insurer  for  risks  in another state; (15) amounts spent by insurer for
     5  risk management programs, or required to be spent  by  insureds  at  the
     6  behest  of  the  insurer,  which  programs  are designed and intended to
     7  promote worksite safety, more  particularly  as  it  relates  to  height
     8  related accidents covered by section two hundred forty of the labor law;
     9  and (16) the aforegoing experience and information further subdivided by
    10  quality of risk as measured by prior loss experience, contractor payroll
    11  ranges,  contractor  number  of employee ranges, risk management partic-
    12  ipation, and other relevant  identifiable  differences  in  exposure  to
    13  insurance  loss. The data provided by insurers shall be separated out so
    14  that a determination can be made that a claim  made  or  paid  is  based
    15  partially  or  totally  upon section two hundred forty of the labor law;
    16  coverage, and not any other provision of statutory or common law  impos-
    17  ing  another  or  different  or  separate standard of care or duty to an
    18  injured party.  Such financial statement shall include the  entirety  of
    19  such  insurer's  business activities insuring against risks occurring in
    20  this state and shall be in a form determined by the superintendent.  The
    21  form shall be sufficiently itemized in a manner that allows for an actu-
    22  arially  sound  analysis  of the income realized by the insurer from all
    23  sources during such year, including but not limited to premiums, invest-
    24  ment income, and any other category or categories of  income  as  deter-
    25  mined  by the superintendent to reflect the full disclosure requirements
    26  of this section and that portion which may be  specifically  related  to
    27  such coverage. At a minimum, such information shall consist of the items
    28  set  forth in the statement of income, excluding the capital and surplus
    29  account section of the property/casualty statutory annual statement,  as
    30  applicable  to  the  insurer's  New  York state business, as well as the
    31  other information delineated in this subsection. Such  financial  state-
    32  ment  shall  also contain a comprehensive and detailed disclosure of the
    33  insurer's expenses actually incurred and paid during such calendar year,
    34  to include normal business expenses, salaries,  commissions,  consulting
    35  fees,  legal  expenses,  advertising costs and any other category deemed
    36  pertinent to the intent of this  section.  At  a  minimum,  the  expense
    37  information  required shall consist of the items set forth in the under-
    38  writing  and  investment  exhibit  -  part   3   -   expenses   of   the
    39  property/casualty  statutory  annual  statement,  as  applicable  to the
    40  insurer's New York state business. With respect to  salaries  (including
    41  all  other forms of compensation), each insurer shall itemize the salary
    42  of the twenty most highly compensated employees of such  insurer  during
    43  such  year,  provided  that  the  names  of  such  employees need not be
    44  disclosed.  Such financial statement shall also provide the public  with
    45  a  synopsis  of claims or settlements paid for section two hundred forty
    46  of the labor law coverage pursuant to such policies or contracts,  list-
    47  ing the total of such claims and settlements attributable to such cover-
    48  age.  At  a minimum, the claim information required shall consist of the
    49  items  set  forth  in  the  exhibit  of  premiums  and  losses  of   the
    50  property/casualty  statutory  annual  statement,  as  applicable  to the
    51  insurer's New York state business and identified and  categorized  sepa-
    52  rately  for  each zip code in this state. Such financial statement shall
    53  be signed and attested as full, complete and accurate by the chief exec-
    54  utive officer of the insurer, and he or she  shall  be  held  personally
    55  responsible  with  respect to the accuracy of the content of such state-
    56  ment. The superintendent shall provide insurers with a method to  submit

        A. 332                              4

     1  their financial statements electronically via the internet, which method
     2  shall  include  instructions relating to the use of an electronic signa-
     3  ture which shall be subject to, and submitted in accordance with section
     4  three hundred sixteen of this article; provided, however, that no excep-
     5  tion authorized in such section may be requested or granted.
     6    (c) On or before April first of each year, every insurer shall provide
     7  the  superintendent  with detailed closed claim information for the same
     8  insurance coverage as provided for in subsection (b) of this section for
     9  the most recently concluded  calendar  year.  Until  the  superintendent
    10  promulgates  data  collection  forms  and procedures for the itemization
    11  requirements, data shall be collected using,  at  a  minimum,  the  most
    12  recent publicly available forms required by law, or commonly used in the
    13  insurance  industry.  The superintendent may require additional informa-
    14  tion beyond that which may otherwise be currently required if he or  she
    15  deems  it  necessary  and warranted without the need to formally adopt a
    16  rule or regulation provided such  requirement  is  consistent  with  the
    17  intent  of  this  section.  Such detailed claim data shall be signed and
    18  attested as full, complete and accurate by the chief  executive  officer
    19  of  the insurer, and he or she shall be held personally responsible with
    20  respect to the accuracy of the data. The detailed claim  data  shall  be
    21  submitted  in  the same manner as provided for in subsection (b) of this
    22  section.
    23    (d) The superintendent shall, in both written form and as part of  the
    24  department  web  site, make such financial statements and detailed claim
    25  information available to the  public.  The  detailed  claim  information
    26  shall  be  provided  in aggregate form for all insurers and separated by
    27  specific insurer, combined without  any  identification  of  a  specific
    28  claim  to  a specific insurer.   None of the publicly available detailed
    29  claim information shall identify the individual  insurer,  defendant  or
    30  plaintiff,  or  representative  of  the same, associated with the claim.
    31  Such financial statements and detailed claim information shall be deemed
    32  a public document and no person shall be required to file a request  for
    33  such financial statements pursuant to article six of the public officers
    34  law  in order to receive a copy thereof, but upon request and payment of
    35  the fee for copying such document, it shall be provided forthwith.  With
    36  respect to the electronic copy of such financial statements and detailed
    37  claim  information,  which  shall  be accessible on the department's web
    38  site, the department shall highlight the availability of  such  informa-
    39  tion  to  the  public  on  such web site, and the link to each insurer's
    40  financial statement and the aggregated detailed claim information  shall
    41  be  accessible in a simple and easy manner. Both the financial statement
    42  and aggregated detailed claim information on the department's  web  site
    43  shall  be  available  in  spreadsheet  format,  in addition to any other
    44  format the superintendent determines is appropriate. Where summaries are
    45  included, they shall be written in plain and simple English so that  the
    46  public at large can easily comprehend the data provided.
    47    (e)  On  or  before  July first of each year, the superintendent shall
    48  issue reports summarizing and explaining the information collected  from
    49  the  financial  statements and the detailed claim information and summa-
    50  rizing the cost and  other  essential  elements  relevant  to  providing
    51  section  two  hundred forty of the labor law coverage. Such report shall
    52  further contain such recommendations the superintendent deems  advisable
    53  to encourage the utilization of risk management programs to be regularly
    54  conducted  by  contractors to reduce premiums and provide workers with a
    55  safer work environment, and any other steps contractors or real property
    56  owners should utilize in furtherance of the same. The superintendent may

        A. 332                              5

     1  seek, and shall be entitled to receive, the aid and  assistance  of  the
     2  commissioner of labor and any other state or local governmental official
     3  charged with responsibility for work site safety in preparing such anal-
     4  ysis  and recommendations.  Copies of such reports shall be forwarded to
     5  the temporary president of the senate, the speaker of the  assembly  and
     6  the chairs of the senate and assembly insurance committees. Such reports
     7  shall be public documents and shall be accessible both in paper copy and
     8  on  the  department's  web  site in a similar fashion as provided for in
     9  subsection (d) of this section.
    10    (f) Where an insurer fails or refuses to  provide  the  superintendent
    11  with  a  full  and  complete disclosure as required by this section, the
    12  superintendent shall take such action he or she deems necessary to bring
    13  the insurer into full compliance. Such action may include imposition  of
    14  a  civil  penalty  of  up to fifty thousand dollars assessed against the
    15  insurer for each violation, temporary suspension of any right  to  issue
    16  additional  policies  or  contracts until the insurer brings itself into
    17  full compliance, an audit of the insurer's records by the department  or
    18  its  designated representative to obtain the information and which audit
    19  shall be paid for by the insurer, or any other civil remedy  the  super-
    20  intendent   deems  warranted  or  necessary  until  such  insurer  fully
    21  complies. In addition the officer whose signature  is  affixed  to  such
    22  statement may be personally penalized to the same extent.
    23    (g) The superintendent may promulgate such rules and regulations he or
    24  she  deems  necessary for the proper administration of the provisions of
    25  this section, and such rules and regulations may be  promulgated  on  an
    26  emergency  basis if the superintendent warrants such action to be neces-
    27  sary.
    28    § 4. Severability. If any item, clause, sentence, subparagraph, subdi-
    29  vision or other part of this act, or  the  application  thereof  to  any
    30  person  or circumstances shall be held to be invalid, such holding shall
    31  not affect, impair or invalidate the remainder of this act but it  shall
    32  be  confined  in  its  operation to the item, clause, sentence, subpara-
    33  graph, subdivision or other part of this act directly involved  in  such
    34  holding, or to the person and circumstances therein involved.
    35    §  5. This act shall take effect on the first of January next succeed-
    36  ing the date upon which it shall have become a law.
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