NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7742A
SPONSOR: Zebrowski
 
TITLE OF BILL: An act to amend the workers' compensation law, in
relation to the requirement for policyholders to provide 30-days notice
to withdraw from the state insurance fund
 
PURPOSE:
The bill would remove the requirement for State Insurance Fund policy-
holders to provide a 30 day notice to withdraw from the Fund if they
have secured insurance with another insurance carrier.
 
SUMMARY OF PROVISIONS:
Section one of the bill amends section 94 of the workers' compensation
law as it relates to removing the requirement of policyholders of the
State Insurance Fund to provide 30 days notice of their intent to with-
draw from the Fund for employers who have secured insurance with another
insurance carrier. In the event that an employer secured another insur-
ance policy, the employer shall have to provide notice to the Fund
including intention to withdraw, demonstration they have secured a new
insurance policy and the effective date of cancellation which shall be
the date the new policy takes effect.
Section two the bill relates to the effective date.
 
JUSTIFICATION:
The State Insurance Fund (SIF) is a non-profit agency of the State of
New York established in 1914 to provide a guaranteed source of workers'
compensation insurance coverage for employers in New York State. SIF is
the largest single carrier of workers' compensation insurance in the
State, with 40 percent of the market.
Although a quasi-public agency, SIF was intended by the Legislature to
be treated the same as a private insurance company. See Commissioners of
State insurance Fund v. Low, 285 App. Div. 525, 138 N.Y.S 2d 437 (3rd
Dept 1955) It is more closely equated to an insurance company than to a
typical state agency Martin Minkiowtiz, PRACTICE COMMENTARIES, N.Y.
Work. Comp. Section 76 (McKinney 1994)
Despite the fact that SIF was intended to be treated as a private insur-
ance company, it is not licensed by the New York State DFS, nor is it
subject to the Department's oversight and regulation. As a result, SIF
policyholders are put at a disadvantage when compared to policyholders
of private workers' compensation insurers.
As a result, SIF policyholders have reported various unfair practices
which have gone unchecked. One common complaint is that SIF takes retal-
iatory actions against policyholders who seek to move their business
from SIF to another coverage provider. Policyholders have reported
aggressive and unfair tactics, such as SIF suddenly revising audits and
questioning classifications in an effort to charge a departing customer
a higher premium.
To rectify one of these inequities, the bill would place SIF on an even
footing with other insurers providing workers' compensation insurance by
removing the 30 day notice requirement placed upon policyholders who
have secured a new insurance policy with another carrier. Currently, SIF
policyholders that want to cancel their policy with SIF because they
have found other coverage must provide SIF with 30 days advance written
notice. During this notice period, policyholders report that SIF employs
aggressive and retaliatory tactics in an effort to retain the business.
Under the legislation, the 30 day notice requirement would only be
required when you are not replacing a policy. If you are replacing a
policy, the 30 day notice is not required and the effective date of
cancellation is the effective date of the new policy. Therefore, you can
move the policy at any point, even less than 30 days, if you can demon-
strate that you have a replacement policy and provide them with notice.
Moreover, if SIF policyholders cannot provide 30 days notice, they find
themselves subject to excessive short-rate penalty provisions that
unfairly burden New York's businesses.
It is simply unfair to require policyholders of the SIF to provide more
notice than is required of policyholders of private carrier's. This
statutory provision has outlived its usefulness and has become an arti-
cle of anti-competitive protectionism for the Fund.
 
LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become law.
STATE OF NEW YORK
________________________________________________________________________
7742--A
2015-2016 Regular Sessions
IN ASSEMBLY
May 26, 2015
___________
Introduced by M. of A. ZEBROWSKI, HAWLEY, SCHIMMINGER, DiPIETRO, SKOUFIS
-- Multi-Sponsored by -- M. of A. KEARNS -- read once and referred to
the Committee on Labor -- recommitted to the Committee on Labor in
accordance with Assembly Rule 3, sec. 2 -- committee discharged, bill
amended, ordered reprinted as amended and recommitted to said commit-
tee
AN ACT to amend the workers' compensation law, in relation to the
requirement for policyholders to provide 30-days notice to withdraw
from the state insurance fund
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision a of section 94 of the workers' compensation
2 law, as amended by chapter 635 of the laws of 1996, is amended to read
3 as follows:
4 a. Any employer may, upon complying with subdivision two or three of
5 section fifty of this chapter, withdraw from the fund by turning in his
6 insurance contract for cancellation, provided he has given written
7 notice to the fund of his intention to withdraw not less than thirty
8 days before the effective date of such cancellation. Upon receipt of
9 such notice the fund shall, at least ten days prior to the effective
10 date file in the office of the chairman a notice of such cancellation
11 date. In the event that an employer intends to withdraw from the fund
12 and has secured insurance with another insurance carrier, the employer
13 shall provide written notice to the fund which shall include their
14 intention to withdraw, demonstration that the employer has secured a new
15 insurance policy and the effective date of cancellation which shall be
16 the date of when such other coverage becomes effective.
17 [In no event shall the insurance contract be deemed cancelled until at
18 least ten days after the date of such filing, any earlier date mentioned
19 in the notice to the contrary notwithstanding.]
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10972-02-6
A. 7742--A 2
1 If an employer withdraws from the fund upon complying with subdivision
2 two of section fifty of this chapter, the new insurance contract with
3 the stock corporation, mutual corporation or reciprocal insurer shall be
4 deemed not to take effect until the cancellation of such employer's
5 contract with the state insurance fund has become effective.
6 § 2. This act shall take effect on the ninetieth day after it shall
7 have become a law.