S06238 Summary:

BILL NOS06238
 
SAME ASNo same as
 
SPONSORPARKER
 
COSPNSR
 
MLTSPNSR
 
Add Art 44-A SS945 - 947, Exec L; amd SS2305, 2321 & 2329, Ins L; amd S89-d, St Fin L
 
Enacts the comprehensive motor vehicle insurance rate reform act; amends provisions applicable to automobile insurance rates including establishing a program for consumer information on insurers and establishing an office of public insurance advocate; revives previously expired provisions of law relating to automobile and property/casualty insurance rates.
Go to top    

S06238 Actions:

BILL NOS06238
 
01/17/2012REFERRED TO FINANCE
Go to top

S06238 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          6238
 
                    IN SENATE
 
                                    January 17, 2012
                                       ___________
 
        Introduced  by  Sen.  PARKER -- read twice and ordered printed, and when
          printed to be committed to the Committee on Finance
 
        AN ACT to amend the executive law,  the  insurance  law  and  the  state
          finance  law, in relation to enacting the "Comprehensive Motor Vehicle
          Insurance Rate Reform Act"
 
          The People of the State of New York, represented in Senate and  Assem-

        bly, do enact as follows:
 
     1    Section  1.  Short  title. This act shall be known and may be cited as
     2  the "Comprehensive Motor Vehicle Insurance Rate Reform Act".
     3    § 2.  The executive law is amended by adding a  new  article  44-A  to
     4  read as follows:
     5                                 ARTICLE 44-A
     6                     OFFICE OF PUBLIC INSURANCE ADVOCATE
     7  Section 945. Office of public insurance advocate.
     8          946. Insurance consumer advocate.
     9          947. Powers and duties.
    10    § 945. Office of public insurance advocate. There is hereby created in
    11  the  executive  department  an  independent office of insurance consumer
    12  advocate (hereinafter referred to as "office") to represent  the  inter-

    13  ests of nonbusiness automobile insurance consumers in New York state.
    14    §  946. Insurance consumer advocate. 1.  The governor, with the advice
    15  and consent of the senate, shall appoint an insurance consumer  advocate
    16  (hereinafter referred to as "advocate") who shall serve as the executive
    17  director  of the office of insurance consumer advocate and shall receive
    18  an annual salary to be fixed by the governor within the amount available
    19  therefor by appropriation.
    20    2. (a) To be eligible to serve as advocate, a person must be  a  resi-
    21  dent  of  New  York state. The advocate shall be a person who has demon-
    22  strated a strong commitment and involvement in efforts to safeguard  the

    23  rights  of  the  public  and  who possesses the knowledge and experience
    24  necessary to practice effectively in insurance proceedings.
    25    (b) A person is not eligible for appointment as advocate if the person
    26  or the person's spouse:
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06464-03-2

        S. 6238                             2
 
     1    (i) is employed by or participates in the  management  of  a  business
     2  entity  or  other  organization regulated by the insurance department or
     3  receiving funds from the department;

     4    (ii)  owns  or controls, directly or indirectly, more than ten percent
     5  interest in a business entity or other  organization  regulated  by  the
     6  insurance department or receiving funds from the insurance department or
     7  the office;
     8    (iii)  uses  or  receives  a  substantial  amount  of  tangible goods,
     9  services, or funds from the insurance department or  the  office,  other
    10  than  compensation  or reimbursement authorized by law for the insurance
    11  department or office membership, attendance or expenses.
    12    3. The advocate shall serve for a term of two years expiring on Febru-
    13  ary first of each odd-numbered year.
    14    4. It is a ground for removal from office if the advocate:

    15    (a) does not have  at  the  time  of  appointment  the  qualifications
    16  required by this section;
    17    (b)  does  not  maintain during service as advocate the qualifications
    18  required by this section;
    19    (c) violates a prohibition established by this section; or
    20    (d) cannot discharge the advocate's duties for a substantial  part  of
    21  the term for which the advocate is appointed because of illness or disa-
    22  bility.
    23    5. The validity of an action of the office is not affected by the fact
    24  that it is taken when a ground for removal of the advocate exists.
    25    6.  (a)  A  person may not serve as the advocate or act as the general
    26  counsel for the office of advocate if the person is required to register

    27  as a lobbyist pursuant to article one-A of the legislative law.
    28    (b) A person serving as the advocate may not,  for  a  period  of  two
    29  years  after the date the person ceases to be an advocate, represent any
    30  person in a proceeding before the superintendent  of  insurance  or  the
    31  insurance  department  or  receive compensation for services rendered on
    32  behalf of any person regarding  a  case  before  the  superintendent  of
    33  insurance or the insurance department.
    34    (c)  An officer, employee or paid consultant of a trade association in
    35  the field of insurance may not serve as the advocate or be  an  employee
    36  of the office.
    37    (d)  A  person  who  is  the  spouse  of  an officer, manager, or paid

    38  consultant of a trade association in the  field  of  insurance  may  not
    39  serve as the advocate and may not be an office employee.
    40    (e) For the purposes of this section, a trade association is a nonpro-
    41  fit,  cooperative,  and  voluntarily  joined  association of business or
    42  professional competitors designed to assist its members and its industry
    43  or profession in dealing with mutual business or  professional  problems
    44  and in promoting their common interest.
    45    §  947.  Powers  and duties. 1. The advocate, as executive director of
    46  the office, shall be charged with the responsibility  of  administering,
    47  enforcing  and  carrying  out  the provisions of this article, including

    48  preparation of a budget for the office, employing all necessary  profes-
    49  sional,  technical,  and other employees to carry out provisions of this
    50  article, approval of expenditures for professional services, travel, per
    51  diem, and other actual and necessary expenses incurred in  administering
    52  the  office.  Expenses  for the office shall be paid from the assessment
    53  imposed in section nine thousand one hundred ten of the  insurance  law.
    54  The  compensation of employees of the office shall be fixed by the advo-
    55  cate within the appropriation provided therefor.

        S. 6238                             3
 
     1    2. The office shall file annually with the governor and the  presiding

     2  officer of each house of the legislature a complete and detailed written
     3  report  accounting  for  all  funds received and disbursed by the office
     4  during the preceding fiscal year. The annual report must be in the  form
     5  and reported as part of the executive budget.
     6    3.  All money paid to the office under this article shall be deposited
     7  in the state treasury.
     8    4. The office may assess the impact of  insurance  rates,  rules,  and
     9  regulations  on  nonbusiness  automobile insurance consumers in New York
    10  state and, in its own name, may advocate on behalf of positions that are
    11  most advantageous to a substantial  number  of  insurance  consumers  as
    12  determined by the advocate.
    13    5. The advocate:

    14    (a)  may  appear  or  intervene as a matter of right before the super-
    15  intendent of insurance or insurance department as a party  or  otherwise
    16  on  behalf of insurance consumers as a class in matters involving rates,
    17  rules, and regulations affecting nonbusiness automobile insurance;
    18    (b) may initiate or intervene as a matter of right or otherwise appear
    19  in any judicial proceeding involving or arising out of any action  taken
    20  by an administrative agency in a proceeding in which the advocate previ-
    21  ously appeared under the authority granted by this article;
    22    (c)  is  entitled  to  access  any  records of the department that are
    23  available to any party in a  proceeding  before  the  superintendent  of

    24  insurance  or  insurance  department under the authority granted by this
    25  article;
    26    (d) is entitled to obtain discovery of any non-privileged matter  that
    27  is relevant to the subject matter involved in a proceeding or submission
    28  before  the  superintendent  of  insurance  or  insurance  department as
    29  authorized by this article;
    30    (e) may recommend legislation to the legislature that, in the judgment
    31  of the advocate, would affect positively the  interests  of  nonbusiness
    32  automobile insurance consumers;
    33    (f)  may appear or intervene as a matter of right as a party or other-
    34  wise on behalf of nonbusiness automobile insurance consumers as a  class
    35  in  all proceedings in which the advocate determines that such consumers

    36  need representation, except that the advocate may not intervene  in  any
    37  enforcement  or parens patriae proceeding brought by the attorney gener-
    38  al.
    39    6. (a)  The  office  shall  prepare  information  of  public  interest
    40  describing the functions of the office. The office shall make the infor-
    41  mation  available  to  the public, lawmakers and appropriate state agen-
    42  cies.
    43    (b) The  office  shall  prepare  and  maintain  a  written  plan  that
    44  describes  how  each  person  who does not speak English can be provided
    45  reasonable access to the office's programs.
    46    (c) The office shall prepare and distribute public education materials
    47  for consumers, legislators and regulators.

    48    (d) The office may participate in trade associations.
    49    § 3. Subsection (d) of section 2321 of the insurance law is amended to
    50  read as follows:
    51    (d) Proceedings pursuant to subsections (b) and (c) [hereof]  of  this
    52  section  may  be instituted upon the initiative of the superintendent or
    53  upon written application to the superintendent by any  aggrieved  person
    54  or  organization, other than a rate service organization, for a hearing,
    55  if the superintendent finds that the application is made in  good  faith
    56  and  that  the  grounds  otherwise  justify holding such a hearing which

        S. 6238                             4
 
     1  shall be held within fifteen days of  the  request;  provided,  however,

     2  that the superintendent shall hold such a hearing within fifteen days of
     3  an application therefor from the insurance consumer advocate established
     4  under article forty-four-A of the executive law. In the case of a denial
     5  of  an  application  for  a hearing filed by any aggrieved person or any
     6  other organization, the superintendent shall provide the reasons  there-
     7  for in writing to the applicant within fifteen days of such denial.
     8    § 4. Subsection (c) of section 2305 of the insurance law is amended to
     9  read as follows:
    10    (c)  Rates  filed  with the superintendent shall be accompanied by the
    11  information upon which the insurer supports the rate  as  set  forth  in
    12  subsection  (b) of section two thousand three hundred four of this arti-

    13  cle.  With respect to rates filed for nonbusiness  automobile  policies,
    14  such  filings  shall include all statistical data relied upon to support
    15  the filing and  such  other  information  as  the  superintendent  shall
    16  require.  Such  filings  and  supporting  information shall conform with
    17  standards of uniformity which  the  superintendent  shall  prescribe  by
    18  regulation  on or before the January immediately following the effective
    19  date of the chapter of the laws of two thousand twelve that amended this
    20  subsection.
    21    § 5. Section 89-d of the state finance law, as amended by chapter  170
    22  of  the laws of 1994 and subdivision 2 as amended by section 4 of part T
    23  of chapter 56 of the laws of 2009, is amended to read as follows:

    24    § 89-d. Motor vehicle theft and insurance fraud  prevention  fund.  1.
    25  There is hereby established in the custody of the comptroller, a special
    26  fund  to  be  known  as  the  "motor  vehicle  theft and insurance fraud
    27  prevention fund".
    28    2. Such fund shall consist of all moneys received by the state  pursu-
    29  ant  to  subsection  (b) of section nine thousand one hundred ten of the
    30  insurance law that are transferred to the fund pursuant to paragraph one
    31  of subsection (e) of section nine thousand one hundred ten of the insur-
    32  ance law and all other grants, bequests or  other  moneys  appropriated,
    33  credited  or  transferred thereto from any other fund or source pursuant
    34  to law.
    35    3. Moneys in the motor vehicle theft and  insurance  fraud  prevention
    36  fund  shall  be kept separate and apart and shall not be commingled with

    37  any other moneys in the custody of the comptroller  and  shall  only  be
    38  expended  herein  and in such amounts as approved by the division of the
    39  budget.
    40    4. [The] Except as provided in this subdivision, the  moneys  received
    41  by  such  fund  shall be expended pursuant to appropriation only to fund
    42  provider agencies which have been awarded grants by  the  motor  vehicle
    43  theft  and  insurance  fraud  prevention  board  established pursuant to
    44  section eight hundred forty-six-l  of  the  executive  law.  All  moneys
    45  expended  pursuant to this subdivision shall be for the reimbursement of
    46  costs incurred by provider agencies; provided, however that no less than
    47  one million two hundred thousand dollars shall be used for the  purposes
    48  of creating, administering and operating the office of insurance consum-

    49  er  advocate  created  pursuant to article forty-four-A of the executive
    50  law.
    51    § 6. Section 2329 of the insurance law, as amended by chapter  102  of
    52  the laws of 2011, is amended to read as follows:
    53    § 2329. Motor vehicle insurance rates; excess profits.  (a) In accord-
    54  ance  with  regulations  prescribed  by the superintendent, each insurer
    55  issuing policies which are subject to article fifty-one of this chapter,
    56  including policies of motor vehicle personal injury liability  insurance

        S. 6238                             5
 
     1  or  policies  of  motor  vehicle  property damage liability insurance or
     2  insurance for loss or damage to a motor vehicle, shall establish a fair,
     3  practicable, and nondiscriminatory plan for refunding or otherwise cred-

     4  iting  to  those  purchasing  such policies their share of the insurer's
     5  excess profit, if any, on such policies. An excess  profit  shall  be  a
     6  profit  beyond  a percentage rate of return on net worth attributable to
     7  such policies, computed in accordance with the  regulation  required  by
     8  section  two  thousand  three  hundred twenty-three of this article, and
     9  determined by the superintendent to be so far above a reasonable average
    10  profit as to amount to an excess profit, taking into  consideration  the
    11  fact  that  losses or profits below a reasonable average profit will not
    12  be recouped from such policyholders. Each plan  shall  apply  to  policy
    13  periods  for  the  periods  January first, nineteen hundred seventy-four
    14  through August second, two thousand one, and the effective date  of  the
    15  property/casualty insurance availability act through June thirtieth, two

    16  thousand  fourteen.  In  prescribing such regulations the superintendent
    17  may limit the duration of such plans, waive any requirement  for  refund
    18  or  credit which he or she determines to be de minimis or impracticable,
    19  adopt forms of returns which shall be made to him or  her  in  order  to
    20  establish  the amount of any refund or credit due, establish periods and
    21  times for the determination and distribution of refunds and credits, and
    22  shall provide that  insurers  receive  appropriate  credit  against  any
    23  refunds  or credits required by any such plan for policyholder dividends
    24  and for return premiums which may be due under rate credit or retrospec-
    25  tive rating plans based on experience.
    26    (b)(1) On or before November first, two thousand thirteen, and annual-
    27  ly thereafter, the superintendent shall complete a recalculation of  the

    28  points  for  reasonable  rate  of  return and excess profits established
    29  under the regulations promulgated pursuant to this  section,  using  the
    30  most  recent six year period for which data is available. If such recal-
    31  culation results in a change in such points,  the  superintendent  shall
    32  immediately  adopt such points in regulation, and, if, under such recal-
    33  culation, excess profits have been realized, shall immediately  activate
    34  plans  for  refunding  or  otherwise  crediting to those purchasing such
    35  policies their share of insurers' excess profit, in accordance with  the
    36  regulations promulgated hereunder.
    37    (2)  On  or before December first, two thousand thirteen, and annually

    38  thereafter, the superintendent  shall  hold  a  public  hearing  on  the
    39  results  of  such  recalculation  and any actions instituted pursuant to
    40  this section as a result of such recalculation.  On  or  before  January
    41  first,  two  thousand fourteen, and annually thereafter, the superinten-
    42  dent shall send a transcript of the hearing to  the  legislature  and  a
    43  report  on  the results of such recalculation and any actions instituted
    44  as required by this section.
    45    (3) On or before October first, two thousand thirteen, the superinten-
    46  dent shall issue a request for proposals to conduct an independent audit
    47  and evaluation, with respect to  nonbusiness  automobile  insurance,  of

    48  insurer  compliance  with  and  the  superintendent's implementation and
    49  enforcement of the provisions of this section.  The superintendent shall
    50  provide the chairs of the assembly and senate  committees  on  insurance
    51  with  the responses to the request for proposals, and shall consult with
    52  such chairs on the selection of the firm to conduct the audit.
    53    Such audit shall be completed  and  a  report  submitted  by  November
    54  first,  two thousand fourteen to the superintendent and the legislature.
    55  The scope of the audit shall include, but not be limited to:

        S. 6238                             6
 
     1    (i) an identification and evaluation of events and  conditions  influ-

     2  encing  insurer  profits,  including,  but  not limited to: the business
     3  climate and changes in economic conditions, including interest rates;
     4    (ii)  an  assessment  of  the  appropriateness  of the methodology for
     5  selecting a reasonable rate of return and excess profit threshold  under
     6  such regulation;
     7    (iii)  an  assessment  of  the feasibility of using individual insurer
     8  results rather than aggregate industry data for testing profitability;
     9    (iv) an assessment of the feasibility of averaging data over less than
    10  a six year period for measuring excess profits;
    11    (v) an assessment of  the  department's  activities  with  respect  to
    12  recalculating  the  points  for  reasonable  rate  of  return and excess
    13  profits;

    14    (vi) a recalculation of the points for reasonable rate of  return  and
    15  excess  profits  using the most recent six year period for which data is
    16  available; and
    17    (vii) an identification and evaluation of other states' excess profits
    18  laws, regulations, implementation of  such  laws  and  regulations,  and
    19  methodologies for calculating points for reasonable rate of return.
    20    The  report shall include, but not be limited to:  recommendations for
    21  changes to the law, regulations and implementation  and  enforcement  of
    22  such  provisions  based  on  the  findings of such audit and evaluation.
    23  Within three months of the receipt of such  report,  the  superintendent
    24  shall  hold a public hearing with regard to the department's response to

    25  the findings and recommendations of the report.
    26    § 7.  This act shall take effect immediately, provided, however,  that
    27  this  act  shall  apply  to  insurance contracts issued or renewed on or
    28  after such effective date, and shall apply at the next  required  policy
    29  period,  commencing  on  or  after  such date, to any insurance contract
    30  written prior to the effective date of this act.
Go to top