Relates to the distribution of the foreign and alien fire insurance premium tax; provides amount received shall be distributed to the fire companies in proportion to the number of active members within each company.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A172
SPONSOR: Paulin
 
TITLE OF BILL:
An act to amend the insurance law, in relation to the distribution of
the foreign and alien fire insurance premium tax
 
PURPOSE:
To provide that fire insurance money for fire departments, companies,
and volunteer benevolent associations be distributed in proportion to
the number of active members within each company.
 
SUMMARY OF PROVISIONS:
Sections one and two amend sections 9104 and 9105 of the insurance law
to provide that beginning on the effective date of the chapter of the
laws of 2020 which amended these sections, the monies received by fire
companies shall be distributed to the companies in proportion to the
number of active members within each company. The term 'active member'
shall mean a member who participates in firefighting and is subject to
call for whatever duties may be assigned to him or her under the rules
and regulations of the fire department or company of which he or she is
a member.
Section three provides the effective date.
 
JUSTIFICATION:
Sections 9104 and 9105 of the Insurance Law establish a tax on all out-
of-state insurance companies selling policies to protect against loss or
damage by fire of properties within New York. These funds are colloqui-
ally referred to as "2% funds" because the percentage of the tax obli-
gated under the Insurance Law are 2% of the premiums. The tax is paid by
insurers to the New York State Insurance Department and dispensed to
fire departments, fire companies, fire department benevolent associ-
ations, and the Firemen's Association of the State of New York (FASNY).
The overwhelming majority of entities receiving 2% monies spend them
appropriately on approved uses and are in compliance with State law,
their individual charters or enabling legislation, and guidelines put
out by FASNY, DFS, and the State Comptroller. However, a number of prob-
lems have surfaced over the last two decades which, although represent-
ing a tiny fraction of entities receiving 2% monies, have received
sufficient press attention to suggest areas where the program could be
improved.
There have been some high profile disputes in municipalities, where both
an existing voluntary benevolent association and a professional fire
department or fire company co-exist, as to which entity is entitled to
which percentage of the money. Most notably, Eastchester had a Volunteer
Benevolent Association which had for decades received the 2% monies when
the town established a professional Fire Department as well. Because
there was no clarity in the insurance law on how to distribute the money
where multiple entities existed and had active members, the current
formula for distribution was arrived at through the negotiated settle-
ment of a lawsuit. Because of the adversarial way the formula was estab-
lished, this has resulted in continued strained relations between the
two entities.
The Office of General Counsel for the Department of Financial Services
has issued opinions and guidance on how fire districts that contain
multiple fire companies ought to distribute 2% monies for those compa-
nies. The standard set by both the General Counsel's most recent opinion
and court cases over the previous decades have held that the money
should be distributed pro rata on the basis of the number of active
members in each company. They have come to the same decision often, as
there is nothing in the relevant sections of the insurance law to deter-
mine how the money is to be allocated between multiple overlapping
companies, or between a paid and voluntary organization covering the
same fire district. Codifying the "active member" standard would help
resolve or perhaps even avoid future disputes.
 
LEGISLATIVE HISTORY:
2021-2022: A.1109, Referred to Insurance/ Same as S.500, Referred to
Insurance.
2019-2020: A.352A, Referred to Insurance, Print Number 352A/ 5.2950,
Referred to Insurance, Amend and Print Number 2950A
2018: A. 11027, Referred to Insurance
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
Immediately.
STATE OF NEW YORK
________________________________________________________________________
172
2023-2024 Regular Sessions
IN ASSEMBLY(Prefiled)
January 4, 2023
___________
Introduced by M. of A. PAULIN, LUPARDO, SIMPSON -- read once and
referred to the Committee on Insurance
AN ACT to amend the insurance law, in relation to the distribution of
the foreign and alien fire insurance premium tax
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 4 of subsection (a) of section 9104 of the insur-
2 ance law, as amended by chapter 293 of the laws of 1988, is amended to
3 read as follows:
4 (4) if such payment is made to the treasurer or other fiscal officer
5 of a fire department or fiscal officer of authorities having jurisdic-
6 tion and control of such fire department, such treasurer or fiscal offi-
7 cer shall on or before the fifteenth day of March in each year distrib-
8 ute the amount so received to the fire companies constituting the fire
9 department if such fire department is constituted of more than one fire
10 company. Beginning on the effective date of the chapter of the laws of
11 two thousand twenty-three which amended this paragraph, the amount so
12 received shall be distributed to the fire companies in proportion to the
13 number of active members within each company. For the purposes of this
14 paragraph, the term "active member" shall mean a member who participates
15 in firefighting and is subject to call for whatever duties may be
16 assigned to him or her under the rules and regulations of the fire
17 department or company of which he or she is a member.
18 § 2. Subparagraph (E) of paragraph 2 of subsection (d) of section 9105
19 of the insurance law, as amended by chapter 293 of the laws of 1988, is
20 amended to read as follows:
21 (E) if such payment is received by the treasurer or other fiscal offi-
22 cer of a fire department or fiscal officer of authorities having juris-
23 diction and control of such fire department, such treasurer or fiscal
24 officer shall on or before the fifteenth day of July in each year
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02135-01-3
A. 172 2
1 distribute the amount so received to the fire companies constituting the
2 fire department if such fire department is constituted of more than one
3 fire company. Beginning on the effective date of the chapter of the laws
4 of two thousand twenty-three which amended this subparagraph, the amount
5 so received shall be distributed to the fire companies in proportion to
6 the number of active members within each company. For the purposes of
7 this subparagraph, the term "active member" shall mean a member who
8 participates in firefighting and is subject to call for whatever duties
9 may be assigned to him or her under the rules and regulations of the
10 fire department or company of which he or she is a member.
11 § 3. This act shall take effect immediately.