A05631 Summary:

BILL NO    A05631 

SAME AS    SAME AS S03858

SPONSOR    Morelle

COSPNSR    

MLTSPNSR   Garbarino

Add Art 58 SS5801 - 5809, Ins L

Relates to domestic excess line insurance companies.
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A05631 Actions:

BILL NO    A05631 

03/04/2013 referred to insurance
01/08/2014 referred to insurance
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A05631 Votes:

There are no votes for this bill in this legislative session.
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A05631 Memo:

BILL NUMBER:A5631

TITLE OF BILL:  An act to amend the insurance law, in relation to
domestic excess line insurance companies

PURPOSE: The purpose of this legislation is to facilitate the
formation and operation of domestic excess line insurance companies
within New York State.

SUMMARY OF PROVISIONS: This bill amends the insurance law by adding a
new article 58 to create domestic excess line insurance companies.
Specifically, the bill authorizes the superintendent to provide a
certificate of eligibility permitting domestic excess line insurers to
enter insurance transactions through excess line licensees, procuring
excess line insurance, provide independently procured insurance to the
extent permitted by law and conduct an excess line/surplus line
business in New York and any other state which grants the insurer
eligibility. The bill would allow a New York-domiciled excess line
insurer to be treated as non-admitted in New York for the purposes of
writing excess/surplus lines insurance policies in New York. Further,
the legislation defines a domestic excess lines insurance company and
provides that a domestic excess line insurance company is deemed a
non-admitted insurer for the purposes of the Dodd Frank Wall Street
Reform and Consumer Protection Act, Pub L. No. 111-203.

EXISTING LAW: The insurance law currently does not provide for the
formation and operation of a domestic excess line insurance company
within New York State.

JUSTIFICATION: The excess line market (a/k/a the surplus lines market)
is an important segment of New Yorks insurance marketplace. The excess
line market provides a source of additional insurance capacity and an
avenue for coverage in situations involving hard-to-place risks that
the licensed market cannot or will not write Historically, an
insurance group would have to establish two excess/surplus line
insurers. The first would be prepared to underwrite excess/surplus
line business in 49 other states, but could not do so in its state of
incorporation where it is licensed. This required a second
excess/surplus line instruct to be incorporated in a different state,
so it could underwrite excess/surplus risks in the domiciliary state
of the originally created excess/surplus line insurer Six states
(Illinois, Arkansas. Delaware, New Hampshire, New Jersey and Oklahoma)
have enacted laws to permit an insurance company to incorporate under
their laws for the purpose of underwriting excess/ surplus line risks
through excess/surplus line brokers in all fifty states.

Insurers which underwrite an excess and surplus line multistate risk
under the excess and surplus line laws of the insureds home state, but
which has risk exposures in a state where the insurer is licensed,
have exposure that a court located where the insurer is licensed will
not apply the excess and surplus law, but may apply the law relating
to licensed insurers The bill if enacted would avoid inconsistent
court interpretations by applying only the excess or surplus lines law
to an insurer which operates as such in all 50 states.

In enacting this legislation New York would maintain a competitive
edge and join the six other states which now authorize such


incorporations Domestic excess line insurer legislation would create
operational cost savings and efficiencies for such insurers and permit
these insurers to operate exclusively as excess and surplus lines In
addition to efficiencies, reductions in cost and better service for
policyholders, allowing a New York domestic insurer to offer surplus
lines coverage in all fifty states, including its state of domicile,
would spur economic growth in the New York marketplace by helping to
attract new businesses and jobs to New York and prevent the movement
of businesses and jobs away from New York.

LEGISLATIVE HISTORY: 2011/2012: A9783 - reported referred to ways and
means; passed Senate

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: 120 days after it shall have become a law
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A05631 Text:

                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________

                                         5631

                              2013-2014 Regular Sessions

                                 I N  A S S E M B L Y

                                     March 4, 2013
                                      ___________

       Introduced  by M. of A. MORELLE -- read once and referred to the Commit-
         tee on Insurance

       AN ACT to amend the insurance law, in relation to domestic  excess  line
         insurance companies

         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section 1. The insurance law is amended by adding a new article 58  to
    2  read as follows:
    3                                  ARTICLE 58
    4                  DOMESTIC EXCESS LINE INSURANCE COMPANIES
    5  SECTION 5801. PURPOSE AND APPLICABILITY OF ARTICLE.
    6          5802. DEFINITIONS.
    7          5803. ORGANIZATION AND APPROVAL.
    8          5804. TAXATION.
    9          5805. POLICY RATE AND FORMS.
   10          5806. APPLICABILITY OF OTHER INSURANCE LAWS.
   11          5807. EXEMPTIONS.
   12          5808. PRINCIPAL PLACE OF BUSINESS.
   13          5809. MANDATORY DISCLOSURE NOTICE.
   14    S  5801.  PURPOSE  AND  APPLICABILITY  OF ARTICLE. THE PURPOSE OF THIS
   15  ARTICLE IS TO FACILITATE THE FORMATION AND OPERATION OF DOMESTIC  EXCESS
   16  LINE  INSURANCE  COMPANIES  WITHIN  THE STATE OF NEW YORK WHICH SHALL BE
   17  SUBJECT TO REGULATION AND OVERSIGHT, WITH RESPECT TO FINANCIAL SOLVENCY,
   18  INVESTMENTS, CORPORATE GOVERNANCE, REPORTING AND DISCLOSURE, AS PROVIDED
   19  FOR IN THIS ARTICLE.
   20    S 5802. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE,  THE  FOLLOWING
   21  TERMS SHALL HAVE THE FOLLOWING MEANINGS:
   22    (A)  "CERTIFICATE  OF  ELIGIBILITY" MEANS A WRITTEN AUTHORIZATION FROM
   23  THE SUPERINTENDENT PERMITTING A DOMESTIC EXCESS LINE  INSURANCE  COMPANY
   24  TO:

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD06630-02-3
       A. 5631                             2

    1    (1) ENTER INSURANCE TRANSACTIONS THROUGH EXCESS LINE LICENSEES PROCUR-
    2  ING EXCESS LINE INSURANCE;
    3    (2)  SELL  INSURANCE  DIRECTLY  TO  INSUREDS WHO INDEPENDENTLY PROCURE
    4  INSURANCE WHERE PERMITTED BY LAW BUT IN NO EVENT  TO  AN  INSURED  WHOSE
    5  HOME  STATE  IS  NEW YORK FROM ANY OFFICE OF SUCH INSURER LOCATED IN NEW
    6  YORK STATE; AND
    7    (3) CONDUCT AN EXCESS LINE AND/OR SURPLUS LINE BUSINESS IN  ANY  OTHER
    8  STATE WHICH GRANTS THE INSURER ELIGIBILITY.
    9    (B) "DOMESTIC EXCESS LINE INSURANCE COMPANY" MEANS:
   10    (1)  AN  INSURER  ORGANIZED AND INCORPORATED IN NEW YORK AS AN INSURER
   11  WHICH IS NOT AN AUTHORIZED INSURER AS DEFINED  IN  SECTION  ONE  HUNDRED
   12  SEVEN  OF THIS CHAPTER BUT WHICH IS GRANTED A CERTIFICATE OF ELIGIBILITY
   13  BY THE SUPERINTENDENT TO:
   14    (A) INSURE RISKS PLACED BY EXCESS  LINE  LICENSEES  OF  THE  KINDS  OF
   15  INSURANCE  SET  FORTH  IN  SECTION TWO THOUSAND ONE HUNDRED FIVE OF THIS
   16  CHAPTER;
   17    (B) SELL INSURANCE DIRECTLY  TO  INSUREDS  WHO  INDEPENDENTLY  PROCURE
   18  INSURANCE  WHERE  PERMITTED  BY  LAW BUT IN NO EVENT TO AN INSURED WHOSE
   19  HOME STATE IS NEW YORK FROM ANY OFFICE OF SUCH INSURER  LOCATED  IN  NEW
   20  YORK STATE; AND
   21    (C) INSURE EXCESS LINE AND/OR SURPLUS LINE RISKS FOR ANY INSURED WHOSE
   22  HOME STATE IS A STATE OTHER THAN NEW YORK PROVIDED THE INSURER IS ELIGI-
   23  BLE TO WRITE SUCH RISKS IN SUCH STATE.
   24    (2)  A  DOMESTIC EXCESS LINE INSURANCE COMPANY IS DEEMED A NONADMITTED
   25  INSURER FOR PURPOSES OF THE DODD FRANK WALL STREET REFORM  AND  CONSUMER
   26  PROTECTION ACT, PUB. L. NO. 111-203.
   27    S  5803.  ORGANIZATION AND APPROVAL. (A) A DOMESTIC EXCESS LINE INSUR-
   28  ANCE COMPANY MAY BE INCORPORATED AND ORGANIZED IN THE MANNER  SET  FORTH
   29  IN SECTION ONE THOUSAND TWO HUNDRED ONE OF THIS CHAPTER, EXCEPT AS MODI-
   30  FIED BY THE PROVISIONS OF THIS ARTICLE.
   31    (B) UPON INCORPORATION AND COMPLETION OF THE REQUIREMENTS OF ORGANIZA-
   32  TION  UNDER  SECTION  ONE  THOUSAND  TWO  HUNDRED ONE AND SUBJECT TO ALL
   33  PROVISIONS OF THIS ARTICLE, UNLESS THE SUPERINTENDENT,  UPON  A  WRITTEN
   34  RECORD  DETERMINES  THAT  ANY  INCORPORATOR, DIRECTOR, OFFICER, PROPOSED
   35  SHAREHOLDER OR  MEMBER  OF  THE  PROPOSED  HOLDING  COMPANY  SYSTEM,  IS
   36  UNTRUSTWORTHY,  IN  A FINANCIALLY HAZARDOUS CONDITION OR OTHERWISE COULD
   37  NOT QUALIFY TO OBTAIN A CERTIFICATE OF AUTHORITY IN NEW YORK, THE SUPER-
   38  INTENDENT SHALL, WITHIN NINETY DAYS OF RECEIPT OF A CERTIFIED COPY OF  A
   39  RESOLUTION  ADOPTED BY THE BOARD OF DIRECTORS DECLARING THAT THE INSURER
   40  INTENDS TO ACT AS A DOMESTIC EXCESS  LINE  INSURANCE  COMPANY,  ISSUE  A
   41  CERTIFICATE OF ELIGIBILITY.
   42    (C)  EVERY  DOMESTIC EXCESS LINE INSURANCE COMPANY MUST HAVE AND MAIN-
   43  TAIN PRIOR TO ISSUANCE OF A CERTIFICATE OF ELIGIBILITY AND AT ALL  TIMES
   44  THEREAFTER  A  MINIMUM CAPITAL AND PAID IN SURPLUS IN AN AMOUNT EQUAL TO
   45  OR EXCEEDING THE GREATER OF FORTY-FIVE MILLION DOLLARS  OR  THE  MINIMUM
   46  AMOUNT  REQUIRED  BY  NEW YORK FOR FOREIGN AND ALIEN INSURER EXCESS LINE
   47  ELIGIBILITY AS SET FORTH IN A REGULATION PROMULGATED BY THE  SUPERINTEN-
   48  DENT.
   49    (D)  TRANSACTIONS  UNDER  THIS  ARTICLE  SHALL NOT CONSTITUTE DOING AN
   50  INSURANCE BUSINESS WITHOUT A LICENSE IN VIOLATION OF SUBSECTION  (A)  OF
   51  SECTION ONE THOUSAND ONE HUNDRED TWO OF THIS CHAPTER.
   52    (E)  UPON  ISSUANCE  OF A CERTIFICATE OF ELIGIBILITY THE DIRECTORS AND
   53  INCORPORATORS SHALL HAVE NO FURTHER LIABILITY FOR THE DEBTS AND  LIABIL-
   54  ITIES OF THE INSURER.
   55    S  5804. TAXATION.   (A) THE TAX SET FORTH IN SECTION TWO THOUSAND ONE
   56  HUNDRED EIGHTEEN OF THIS CHAPTER  SHALL  APPLY  TO  THE  GROSS  PREMIUMS
       A. 5631                             3

    1  CHARGED  LESS  THE  AMOUNT OF PREMIUM RETURNED TO SUCH INSUREDS ON EVERY
    2  POLICY PROCURED BY AN EXCESS LINE LICENSEE WHEN NEW  YORK  IS  THE  HOME
    3  STATE  OF THE INSURED. IT IS THE DUTY OF THE EXCESS LINE LICENSEE TO PAY
    4  SUCH TAX.
    5    (B)  EVERY DOMESTIC EXCESS LINE INSURANCE COMPANY IS EXEMPT FROM ARTI-
    6  CLE NINETY-ONE OF THIS CHAPTER, SECTION TWO HUNDRED SIX OF THE FINANCIAL
    7  SERVICES LAW EXCEPT SUBSECTION (F) OF SUCH SECTION, AND  ARTICLES  NINE,
    8  NINE-A AND THIRTY-THREE OF THE TAX LAW.
    9    S  5805.  POLICY RATE AND FORMS. DOMESTIC EXCESS LINE INSURANCE COMPA-
   10  NIES ARE EXEMPT FROM ARTICLE TWENTY-THREE OF THIS CHAPTER AND SHALL  NOT
   11  BE  REQUIRED  TO  FILE NOR SEEK APPROVAL FOR ANY FORM, CONTRACT OR OTHER
   12  DOCUMENT WHICH EXPRESSES COVERAGE TERMS AND CONDITIONS.
   13    S 5806. APPLICABILITY OF OTHER INSURANCE LAWS. (A) EXCEPT AS  MODIFIED
   14  BY  THE PROVISIONS OF THIS ARTICLE DOMESTIC EXCESS LINE INSURANCE COMPA-
   15  NIES ARE SUBJECT TO THE PROVISIONS OF:
   16    (1) ARTICLE ONE OF THIS CHAPTER. GENERAL PROVISIONS.
   17    (2) ARTICLE TWO OF THIS CHAPTER. ORGANIZATION  OF  THE  DEPARTMENT  OF
   18  FINANCIAL SERVICES.
   19    (3)  ARTICLE  THREE  OF  THIS  CHAPTER.  ADMINISTRATIVE AND PROCEDURAL
   20  PROVISIONS.
   21    (4) ARTICLE FOUR OF THIS CHAPTER. INSURANCE FRAUDS PREVENTION.
   22    (5) ARTICLE ELEVEN OF THIS CHAPTER. LICENSING OF INSURERS.
   23    (6) ARTICLE TWELVE OF THIS CHAPTER. ORGANIZATION AND CORPORATE  PROCE-
   24  DURE.
   25    (7) ARTICLE THIRTEEN OF THIS CHAPTER. ASSETS AND DEPOSITS.
   26    (8) ARTICLE FOURTEEN OF THIS CHAPTER. INVESTMENTS.
   27    (9) ARTICLE FIFTEEN OF THIS CHAPTER. HOLDING COMPANIES.
   28    (10)  ARTICLE  SIXTEEN  OF  THIS  CHAPTER.  SUBSIDIARIES  OF  DOMESTIC
   29  PROPERTY/CASUALTY INSURANCE COMPANIES AND CERTAIN OTHER ENTITIES.
   30    (11) ARTICLE SEVENTY-ONE OF THIS CHAPTER. MERGER, CONSOLIDATION, REDO-
   31  MESTICATION, ACQUISITION OF ASSETS AND ACQUISITION OF CERTAIN SHARES  OF
   32  INSURERS.
   33    (12)  ARTICLE  SEVENTY-FOUR  OF  THIS  CHAPTER. REHABILITATION, LIQUI-
   34  DATION, CONSERVATION AND DISSOLUTION OF INSURERS.
   35    (B) NOTWITHSTANDING SUBSECTION (A) OF THIS SECTION:
   36    (1) NO LICENSE TO ACT AS AN AUTHORIZED INSURER  IS  REQUIRED  FOR  ANY
   37  INSURER TO WHICH A CERTIFICATE OF ELIGIBILITY HAS BEEN ISSUED.
   38    (2)  SECTION  ONE  THOUSAND TWO HUNDRED THIRTEEN OF THIS CHAPTER SHALL
   39  NOT APPLY TO DOMESTIC EXCESS LINE INSURERS.
   40    (C) EXCEPT AS MODIFIED BY THIS ARTICLE, DOMESTIC EXCESS LINE  INSURERS
   41  ARE SUBJECT TO EACH PROVISION OF THIS CHAPTER WHICH:
   42    (1)  APPLY  BROADLY  TO  INSURANCE POLICIES ISSUED OR DELIVERED IN NEW
   43  YORK AND NOT EXCLUSIVELY TO AUTHORIZED INSURERS; OR
   44    (2) EXPRESSLY APPLY TO OR EXEMPT EXCESS  LINE  INSURANCE  POLICIES  OR
   45  COVERAGE PROVIDED, IN SUCH POLICIES; AND
   46    (3) ARE SET FORTH IN ANY OF THE FOLLOWING:
   47    (A)  ARTICLE  TWENTY-ONE  OF THIS CHAPTER. AGENTS, BROKERS, ADJUSTERS,
   48  CONSULTANTS AND INTERMEDIARIES.
   49    (B) ARTICLE TWENTY-FOUR OF THIS CHAPTER. UNFAIR METHODS OF COMPETITION
   50  AND UNFAIR AND DECEPTIVE ACTS AND PRACTICES.
   51    (C)  ARTICLE  TWENTY-FIVE  OF  THIS  CHAPTER.   PROHIBITIONS   AGAINST
   52  CONTROLLED BUSINESS.
   53    (D)  ARTICLE TWENTY-SIX OF THIS CHAPTER. UNFAIR CLAIM SETTLEMENT PRAC-
   54  TICES; OTHER MISCONDUCT; DISCRIMINATION.
   55    (E) ARTICLE TWENTY-SEVEN OF THIS CHAPTER. HOLOCAUST VICTIMS  INSURANCE
   56  ACT OF 1998.
       A. 5631                             4

    1    (F)     ARTICLE     THIRTY-FOUR    OF    THIS    CHAPTER.    INSURANCE
    2  CONTRACTS-PROPERTY/CASUALTY.
    3    (G)  ARTICLE  FORTY-ONE  OF  THIS CHAPTER. PROPERTY/CASUALTY INSURANCE
    4  COMPANIES.
    5    (H) ARTICLE SEVENTY-FOUR OF THIS CHAPTER. REHABILITATION, LIQUIDATION,
    6  CONSERVATION AND DISSOLUTION OF INSURERS.
    7    (D) NOTWITHSTANDING SUBSECTION (C) OF THIS SECTION, SECTION FOUR THOU-
    8  SAND ONE HUNDRED THREE OF THIS  CHAPTER  SHALL  NOT  APPLY  TO  DOMESTIC
    9  EXCESS LINE INSURANCE COMPANIES.
   10    S  5807.  EXEMPTIONS.  DOMESTIC  EXCESS  LINE  INSURANCE COMPANIES ARE
   11  EXEMPT FROM THE PROVISIONS OF:
   12    (A) ARTICLE FIFTY-TWO OF THIS CHAPTER. MOTOR VEHICLE ACCIDENT INDEMNI-
   13  FICATION CORPORATION.
   14    (B) ARTICLE FIFTY-THREE  OF  THIS  CHAPTER.  MOTOR  VEHICLE  INSURANCE
   15  ASSIGNED RISK PLANS.
   16    (C)  ARTICLE  FIFTY-FOUR  OF THIS CHAPTER. NEW YORK PROPERTY INSURANCE
   17  UNDERWRITING ASSOCIATION.
   18    (D) ARTICLE FIFTY-FIVE OF THIS CHAPTER. MEDICAL MALPRACTICE  INSURANCE
   19  ASSOCIATION.
   20    (E)  ARTICLE  SEVENTY-SIX  OF THIS CHAPTER. PROPERTY/CASUALTY SECURITY
   21  FUNDS.
   22    S 5808. PRINCIPAL PLACE OF BUSINESS. A DOMESTIC  EXCESS  LINE  INSURER
   23  SHALL  MAINTAIN  ITS PRINCIPAL PLACE OF BUSINESS WITHIN THE STATE OF NEW
   24  YORK.
   25    S 5809. MANDATORY DISCLOSURE  NOTICE.  THE  SUPERINTENDENT  SHALL,  BY
   26  REGULATION,  REQUIRE  EVERY  POLICY  AND/OR  BINDER ISSUED BY A DOMESTIC
   27  EXCESS LINE INSURANCE COMPANY TO BEAR  SPECIFIC  LANGUAGE  CONSPICUOUSLY
   28  DISPLAYED, WHICH ADVISES THE INSURED THAT THE INSURER IS NOT LICENSED BY
   29  THE  STATE  OF  NEW YORK, THAT IN THE EVENT OF INSOLVENCY OF THE INSURER
   30  PROTECTIONS PROVIDED BY THE NEW YORK STATE SECURITY FUNDS DO  NOT  APPLY
   31  AND  THAT  THE  POLICY  MAY  NOT  BE  SUBJECT  TO ALL OF THE REGULATIONS
   32  PERTAINING TO POLICY FORMS.
   33    S 2. This act shall take effect on the one hundred twentieth day after
   34  it shall have become a law. Effective immediately, the addition,  amend-
   35  ment and/or repeal of any rule or regulation necessary for the implemen-
   36  tation  of this act on its effective date is authorized to be made on or
   37  before such date.
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