STATE OF NEW YORK
________________________________________________________________________
7540
IN SENATE
January 22, 2018
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Introduced by Sen. SEWARD -- read twice and ordered printed, and when
printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to enhancing the finan-
cial condition of domestic mutual property and casualty insurance
companies
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subsection (a) of section 4110 of the insurance law, as
2 amended by chapter 1 of the laws of 2015, is amended to read as follows:
3 (a) No domestic mutual property/casualty insurance company licensed to
4 write a kind of insurance specified in paragraph seven, eight, nine,
5 ten, eleven, thirteen, fourteen, fifteen, sixteen or seventeen of
6 subsection (a) of section one thousand one hundred thirteen of this
7 chapter shall expend in any one calendar year for management expenses a
8 greater amount than thirty percent of the sum of its net premium income
9 and seventy-five percent of its investment income for such year;
10 provided that any insurer whose principal line of business is medical
11 malpractice liability insurance or any insurer who is the subject of a
12 proceeding pursuant to article seventy-four of this chapter shall not
13 expend in any one calendar year for management expenses, a greater
14 amount than thirty percent of its net premium income for such year.
15 Management expenses shall be held to include all expenses of the company
16 except expenses incurred in the investigation, adjustment and settlement
17 of claims, taxes, fees and expenses of examination, expenses incurred in
18 complying with subsection (b) of section three hundred seven of this
19 chapter, subsection (g) of section four thousand one hundred seventeen
20 of this article and part five hundred of title twenty-three of the New
21 York Codes, Rules and Regulations, and taxes, repairs and expenses on
22 real estate. In applying the provisions of this section the net premium
23 income of, and expenses of, boiler and machinery insurance or elevator
24 insurance shall not be included. In the event expenses incurred in
25 making a new system upgrade result in this subsection's management
26 expenses limit being exceeded, then the insurer shall inform the super-
27 intendent sixty days in advance of the expense limit being exceeded.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14038-02-8
S. 7540 2
1 Subject to approval by the superintendent, the limit shall be temporar-
2 ily raised to the amount necessary to encompass the aforestated new
3 system upgrade, provided that in no event shall the limit be raised more
4 than five percentage points and shall not be in effect for more than
5 three years, and provided further that an insurer may submit to the
6 superintendent, for the superintendent's prior approval, a written
7 request to temporarily raise the limit for up to an additional three
8 years, for a total of no more than six years. An insurer shall submit
9 such written request to the superintendent at least sixty days but not
10 more than one hundred twenty days before the expiration of the initial
11 period during which the limit was raised. The insurer shall not increase
12 premiums solely as a result of the management expenses cap limit being
13 exceeded. For purposes of this subsection, a new system upgrade is
14 defined as the acquisition of electronic data processing apparatus and
15 related equipment constituting a data processing, record keeping or
16 accounting system and operating and non-operating software.
17 § 2. Subsection (b) of section 6613 of the insurance law, as amended
18 by chapter 284 of the laws of 1989, is amended to read as follows:
19 (b) Management expenses shall include all the expenses of such compa-
20 ny, except expenses incurred in the investigation, adjustment and
21 settlement of claims, taxes, fees, expenses of examination, expenses
22 incurred in complying with subsection (b) of section three hundred seven
23 of this chapter, subsection (g) of section four thousand one hundred
24 seventeen of this chapter and part five hundred of title twenty-three of
25 the New York Codes, Rules and Regulations, and taxes, repairs, and
26 expenses on real estate.
27 § 3. This act shall take effect immediately.
