S T A T E O F N E W Y O R K ________________________________________________________________________ 3967--A 2011-2012 Regular Sessions I N A S S E M B L Y January 31, 2011 ___________ Introduced by M. of A. MORELLE, P. RIVERA -- read once and referred to the Committee on Insurance -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the insurance law, in relation to exempting large commercial insureds from certain rate and policy form requirements THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: 1 Section 1. Subsections (a) and (b) of section 6301 of the insurance 2 law are amended to read as follows: 3 (a) Notwithstanding any provision of this chapter, the superintendent 4 shall, pursuant to regulations promulgated by him THE SUPERINTENDENT, 5 permit exemption from filing requirements only with respect to rates and 6 policy forms, where applicable, for any of the kinds of insurance 7 [authorized to be written in this state] SPECIFIED IN SUBSECTION (B) OF 8 THIS SECTION. 9 (b) [No] AN exemption pursuant to subsection (a) hereof shall be 10 permitted in relation to the kinds of insurance set forth in [paragraph 11 one, two, three, fifteen, eighteen or twenty-three] PARAGRAPHS FOUR 12 THROUGH FOURTEEN, SIXTEEN, SEVENTEEN, NINETEEN THROUGH TWENTY-TWO, TWEN- 13 TY-SEVEN AND TWENTY-NINE, of subsection (a) of section one thousand one 14 hundred thirteen of this chapter[, or to] AND SUCH INSURANCE AS THE 15 SUPERINTENDENT DEEMS TO BE SUBSTANTIALLY SIMILAR TO ONE OF THE FOREGOING 16 KINDS, EXCEPT NO EXEMPTION MAY BE PERMITTED FOR: (1) coverage for 17 personal lines to natural persons for non-business purposes; (2) INSUR- 18 ANCE SPECIFIED IN SUBSECTION (B) OF SECTION TWO THOUSAND THREE HUNDRED 19 FIVE OR SECTION TWO THOUSAND THREE HUNDRED TWENTY-EIGHT OF THIS CHAPTER; 20 (3) INSURANCE REQUIRED TO SATISFY ANY FINANCIAL RESPONSIBILITY REQUIRE- 21 MENT OF THIS STATE; OR (4) A POLICY WRITTEN ON A GROUP BASIS. However, 22 any risk pursuant to paragraph one, two or three of such subsection of 23 such section of this chapter, MEDICAL MALPRACTICE INSURANCE (EXCEPT FOR 24 PHYSICIANS AND SURGEONS), or personal lines risk (except private passen- EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD05245-03-1 A. 3967--A 2 1 ger, non-fleet automobile insurance) shall be exempt pursuant to 2 subsection (a) hereof if it is included by the superintendent on the 3 list maintained by [him] THE SUPERINTENDENT pursuant to subsection (a) 4 of section six thousand three hundred three of this article. 5 S 2. Section 6302 of the insurance law, paragraph 3 of subsection (c) 6 as amended by chapter 534 of the laws of 1985, is amended to read as 7 follows: 8 S 6302. Special license. (a) An authorized insurer, as a condition 9 precedent to the obtaining of such exemption, shall obtain a special 10 license from the superintendent. 11 (b) Before such special license shall be issued or renewed the 12 prospective licensee shall file in the office of the superintendent an 13 application in such form and supplements thereto as the superintendent 14 prescribes. Such license shall be subject to annual renewal with an 15 annual fee of [one] TWO thousand dollars. 16 (c) Such license may only be issued to: 17 (1) an authorized insurer [which] THAT maintains at all times a 18 surplus to policyholders of at least [twice the minimum surplus to poli- 19 cyholders required to be maintained for the kinds of insurance which it 20 is authorized to write in this state] THE AUTHORIZED CONTROL LEVEL AS 21 SET FORTH IN ARTICLE THIRTEEN OF THIS CHAPTER; 22 (2) a United States branch which maintains at all times a trusteed 23 surplus of at least [twice the minimum trusteed surplus required to be 24 maintained for the kinds of insurance which it is authorized to write in 25 this state] THE AUTHORIZED CONTROL LEVEL AS SET FORTH IN ARTICLE THIR- 26 TEEN OF THIS CHAPTER; or 27 (3) an insurer initially licensed on or after July first, nineteen 28 hundred eighty-two pursuant to article forty-one of this chapter, or 29 pursuant to article forty-two of this chapter as an accident and health 30 insurer, or pursuant to article sixty-one of this chapter as a recipro- 31 cal insurer, if such insurer is at least meeting the minimum surplus to 32 policyholders requirement or the minimum trusteed surplus requirement 33 imposed upon such insurer by the provisions of the article pursuant to 34 which it was initially licensed. 35 (d) The superintendent may revoke, suspend, or refuse to renew such 36 license if, after notice and a hearing, [he] THE SUPERINTENDENT finds 37 that such action will protect the best interests of the people of this 38 state. 39 S 3. Section 6303 of the insurance law is amended to read as follows: 40 S 6303. Limitations. (a) The exemption [which] THAT may be granted 41 pursuant to this article shall apply only if the business is underwrit- 42 ten and transacted from an office within this state; and [(i)]: 43 (1) the risk, as defined in regulations of the superintendent, produc- 44 es a minimum annual premium in excess of one hundred thousand dollars or 45 such higher amount as the superintendent may prescribe by regulation; 46 [or (ii)] 47 (2) the coverage is for a risk or class of risks which is of an unusu- 48 al nature, a high loss hazard, or difficult to place, pursuant to a list 49 promulgated or amended by the superintendent; OR 50 (3) THE POLICY IS ISSUED TO A LARGE COMMERCIAL INSURED THAT EMPLOYS OR 51 RETAINS A RISK MANAGER TO ASSIST IN THE NEGOTIATION AND PURCHASE OF A 52 POLICY EXEMPTED UNDER THIS ARTICLE. 53 (b) [All policies] FOR THE PURPOSES OF THIS SECTION: 54 (1) "LARGE COMMERCIAL INSURED" MEANS AN ENTITY THAT GENERATES ANNUAL 55 COMMERCIAL RISK INSURANCE PREMIUM IN EXCESS OF TWENTY-FIVE THOUSAND 56 DOLLARS WITH RESPECT TO THE KINDS OF INSURANCE SPECIFIED IN PARAGRAPHS A. 3967--A 3 1 FOUR THROUGH FOURTEEN, SIXTEEN, SEVENTEEN, NINETEEN THROUGH TWENTY-TWO 2 AND TWENTY-SEVEN OF SUBSECTION (A) OF SECTION ONE THOUSAND ONE HUNDRED 3 THIRTEEN OF THIS CHAPTER AND: 4 (I) HAS A NET WORTH OF AT LEAST SEVEN MILLION FIVE HUNDRED THOUSAND 5 DOLLARS AS OF THE INSURED'S FISCAL YEAR END IMMEDIATELY PRECEDING THE 6 POLICY'S EFFECTIVE DATE; 7 (II) HAS GROSS ASSETS EXCEEDING TEN MILLION DOLLARS AND A NET WORTH OF 8 AT LEAST ONE MILLION FIVE HUNDRED THOUSAND DOLLARS AS OF THE INSURED'S 9 FISCAL YEAR END IMMEDIATELY PRECEDING THE POLICY'S EFFECTIVE DATE; 10 (III) IS A FOR-PROFIT BUSINESS ENTITY THAT GENERATES ANNUAL GROSS 11 REVENUES EXCEEDING FIFTEEN MILLION DOLLARS, AND HAS A NET WORTH OF AT 12 LEAST ONE MILLION FIVE HUNDRED THOUSAND DOLLARS AS OF THE INSURED'S 13 FISCAL YEAR END IMMEDIATELY PRECEDING THE POLICY'S EFFECTIVE DATE; 14 (IV) IS A FOR-PROFIT BUSINESS ENTITY THAT HAS GROSS ASSETS EXCEEDING 15 TEN MILLION DOLLARS AND GENERATES ANNUAL GROSS REVENUES EXCEEDING 16 FIFTEEN MILLION DOLLARS AS OF THE INSURED'S FISCAL YEAR END IMMEDIATELY 17 PRECEDING THE POLICY'S EFFECTIVE DATE; 18 (V) IS A NOT-FOR-PROFIT ORGANIZATION OR PUBLIC ENTITY WITH AN ANNUAL 19 BUDGET EXCEEDING TWENTY MILLION DOLLARS FOR EACH OF ITS THREE FISCAL 20 YEARS IMMEDIATELY PRECEDING THE POLICY'S EFFECTIVE DATE; 21 (VI) HAS FIFTY EMPLOYEES OR, TOGETHER WITH ITS PARENT, SUBSIDIARIES 22 AND AFFILIATES, ONE HUNDRED EMPLOYEES, AS OF THE INSURED'S FISCAL YEAR 23 END IMMEDIATELY PRECEDING THE POLICY'S EFFECTIVE DATE; OR 24 (VII) IS A MUNICIPALITY WITH A POPULATION OF FIFTY THOUSAND OR MORE 25 PERSONS. 26 (2) "RISK MANAGER" MEANS AN INDIVIDUAL WHO HOLDS THE PROFESSIONAL 27 DESIGNATION OF CPCU, ARM, OR CRM WITH AT LEAST FIVE YEARS EXPERIENCE IN 28 THE ANALYSIS AND TREATMENT OF RISK, LOSS EXPOSURE, INSURANCE COVERAGES, 29 AND ALTERNATIVE METHODS AND PROGRAMS, WHO IS NOT EMPLOYED BY THE INSURER 30 ISSUING THE POLICY OR ANY PERSON IN THE INSURER'S HOLDING COMPANY 31 SYSTEM, AND WHO IS LICENSED AS AN INSURANCE PRODUCER PURSUANT TO ARTICLE 32 TWENTY-ONE OF THIS CHAPTER, UNLESS EXEMPTED FROM LICENSING THEREIN. 33 (3) "MUNICIPALITY" SHALL MEAN ANY COUNTY, CITY, TOWN OR VILLAGE. 34 (C) EFFECTIVE ON THE FIFTH JANUARY FIRST OCCURRING AFTER THE DATE OF 35 THE ENACTMENT OF THIS SUBSECTION AND EACH FIFTH JANUARY FIRST OCCURRING 36 THEREAFTER, THE AMOUNTS SPECIFIED IN PARAGRAPH ONE OF SUBSECTION (B) OF 37 THIS SECTION MAY BE ADJUSTED TO REFLECT THE PERCENTAGE CHANGE FOR SUCH 38 FIVE-YEAR PERIOD IN THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS 39 PUBLISHED BY THE BUREAU OF LABOR STATISTICS OF THE DEPARTMENT OF LABOR. 40 THE SUPERINTENDENT MAY CONDUCT A PUBLIC HEARING TO DETERMINE WHETHER 41 SUCH INCREASE IS NECESSARY. 42 (D) EVERY POLICY issued pursuant to the provisions of this article 43 shall contain a notice to the policyholder that the rate and policy form 44 are not subject to the filing requirements of this state and such other 45 notices required by the superintendent pursuant to regulation. 46 [(c)] (E) The superintendent may by regulation prescribe limitations 47 on the total amount of business [which] THAT an insurer may transact 48 pursuant to this article OR REIMPOSE FILING REQUIREMENTS WHERE AND TO 49 THE EXTENT THAT THE SUPERINTENDENT DEEMS IT IN THE INTEREST OF THE POLI- 50 CYHOLDERS. 51 S 4. Subsection (b) of section 2307 of the insurance law, as amended 52 by chapter 508 of the laws of 1998, is amended to read as follows: 53 (b) (1) Except as otherwise provided herein, no policy form shall be 54 delivered or issued for delivery unless it has been filed with the 55 superintendent and either [he] THE SUPERINTENDENT has approved it, or A. 3967--A 4 1 thirty days have elapsed and [he] THE SUPERINTENDENT has not disapproved 2 it as misleading or violative of public policy. 3 (2) After notice and hearing to the insurer or rate service organiza- 4 tion which submitted a policy form for approval, the superintendent may 5 withdraw approval of such form on finding that the use of such form is 6 contrary to the legal requirements applicable at the time of withdrawal. 7 The effective date of the withdrawal of approval shall be prescribed by 8 the superintendent but shall be not less than ninety days after notice 9 of withdrawal. 10 (3) With regard to residual value insurance, policy forms and any 11 amendments thereto shall be filed with the superintendent within thirty 12 days of their use by the insurer. For purposes of this subsection, 13 "residual value insurance" shall have the same meaning as set forth in 14 paragraph twenty-two of subsection (a) of section one thousand one 15 hundred thirteen of this chapter, provided however, for the purposes of 16 this subsection such insurance shall only be utilized for commercial 17 purposes, and shall not include personal lines of insurance as defined 18 in paragraph two of subsection (a) of section three thousand four 19 hundred twenty-five of this chapter or any commercial auto insurance, 20 and, provided further that applicants for such insurance shall sign a 21 statement that the applicant has an appropriate level of knowledge and 22 understanding of the use of residual value insurance. 23 (4) POLICY FORMS FOR INLAND MARINE RISKS WHERE THE RATES FOR SUCH 24 RISKS BY GENERAL CUSTOM OF THE BUSINESS ARE NOT WRITTEN ACCORDING TO 25 MANUAL RATES OR RATING PLANS SHALL NOT BE FILED PURSUANT TO PARAGRAPH 26 ONE OF THIS SUBSECTION, UNLESS THE SUPERINTENDENT DIRECTS THAT THEY BE 27 FILED. 28 S 5. This act shall take effect immediately.