NY State Senate Bill 2011-S4952

Senate Bill S4952

2011-2012 Legislative Session

Relates to authorizing the state and public authorities and public corporations to provide surety bonds and insurance policies for building or construction projects

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Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 04, 2012	referred to insurance
Jun 09, 2011	print number 4952a
Jun 09, 2011	amend (t) and recommit to insurance
May 02, 2011	referred to insurance

Bill Amendments

Original

A (Active)

2011-S4952 - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §2504, Ins L

2011-S4952 - Summary

Relates to authorizing the state and public authorities and public corporations to provide surety bonds and insurance policies for building or construction projects.

2011-S4952 - Sponsor Memo

                                BILL NUMBER:S4952

TITLE OF BILL:
An act
to amend the insurance law, in relation to authorizing the state, public
corporations and public authorities to provide wrap-up insurance
programs and surety bonds for their public building and construction
projects

SUMMARY OF PROVISIONS:
This bill amends Insurance Law §2504(b) by repealing language that
prevents the State, nonexempt public authorities, public
corporations, and others acting on their behalf (such as a
construction manager) from procuring wrap-up insurance or surety
bonds when such insurance or bonds could be procured by contractors
and subcontractors. It then adds a new §2504(b) to make clear that a
public corporation or public authority, or others acting on its
behalf, may provide wrap-up insurance or surety bonds without
reimbursement from the contractor or subcontractor, and also may
require that a contractor or subcontractor account for, or otherwise
provide a credit in his or her bid which reflects, the amount the
bidding contractor or subcontractor would otherwise add if he or she
provided his or her own insurance or bonds a required in the bid
specifications.

JUSTIFICATION:

This bill has been requested by the New York City Office of the Mayor.
For most large-scale construction projects, it is best for all
concerned - owners, contractors, workers, and the public for insurance
to be purchased through a single insurance "wrap-up" program (known
as an Owner-Controlled Insurance Program, or OCIP, if bought by the
owner, or a Contractor Controlled Insurance Program, or CCIP if bought
by the construction manager or general contractor). A wrap-up covers
everyone involved in the project, including the owner, all
contractors and subcontractors, and all workers, thereby making
unnecessary the multiple insurance policies each project participant
would otherwise have to purchase on its own. In doing so, it
centralizes project safety programs (protecting the safety of workers
and the public) and eliminates wasteful litigation among participants
and their insurers to decide who pays a single claim.

By reducing these transaction costs, wrap-ups save a significant
amount of money - according to a study by the Federal government, "up
to 50% of the cost of traditional insurance, or from 1 to
3% of a project's construction costs." This saves taxpayer dollars and
allows public funds to go further, increasing the number of
construction projects and jobs. Wrap-ups also assure that the
planned-for insurance actually exists when a claim is made and often
allow claimants, including workers and the general public, to be paid
faster and more easily. Finally, wrap-ups facilitate the market entry
of emerging small businesses and minority and women-owned businesses
(MWBEs), which often have limited access to the insurance markets.
Small contractors, including MWBEs, can be chosen by construction
managers based on their ability to do the work rather than access to
insurance.


For all these reasons, wrap-ups are routinely used in large-scale
construction projects throughout the private sector. They are also
used in government projects around the country and, in New York, in
billions of dollars worth of projects undertaken by public
authorities that are exempt from Insurance Law § 2504(b)'s
prohibition on wrap-ups, notably the Metropolitan Transportation
Authority, the School Construction Authority, and the Port Authority
of New York and New Jersey. Insurance Law §3504(b) currently
restricts the State, other public authorities and public corporations
from using wrap-ups. This should be repealed.

EFFECTIVE DATE:
Immediately.

2011-S4952 - Bill Text download pdf

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

                                  4952

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               May 2, 2011
                               ___________

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 authorizing the state,
  public corporations and public authorities to provide  wrap-up  insur-
  ance   programs  and  surety  bonds  for  their  public  building  and
  construction projects

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

  Section  1.  Section  2504  of the insurance law is amended to read as
follows:
  S 2504. Designation of particular insurer, agent or broker for  insur-
ance  in  certain  public  construction contracts. (a) (1) No officer or
employee of this state, or of  any  public  corporation  as  defined  in
section  sixty-six  of  the  general  construction law, or of any public
authority, and no person acting or purporting to act on behalf  of  such
officer,  employee,  public corporation or public authority, shall, with
respect to any public building or construction contract which  is  about
to  be, or which has been, competitively bid, require the bidder to make
application to any particular insurance company, agent or broker for  or
to obtain or procure therefrom, any surety bond or contract of insurance
specified  in  connection  with  such contract, or specified by any law,
general, special or local.
  (2) In paragraph one hereof, "public corporation" and "public authori-
ty" shall not include:
  (A) a public corporation  or  public  authority  created  pursuant  to
agreement or compact with another state, or
  (B) the city of New York, a public corporation or public authority, in
connection  with  the  construction  of electrical generating and trans-
mission facilities or construction, extensions and  additions  of  light
rail or heavy rail rapid transit and commuter railroads.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11011-01-1

S. 4952                             2

  (b)  [No  such officer or employee, and no person, firm or corporation
acting or purporting to act on behalf of such officer or employee, shall
negotiate, make application for, obtain or procure any  of  such  surety
bonds  or  contracts  of  insurance  (except  contracts of insurance for
builders  risk  or owners protective liability) which can be obtained or
procured by the bidder, contractor or subcontractor] THIS SECTION  SHALL
NOT  PREVENT THE STATE, A PUBLIC CORPORATION OR PUBLIC AUTHORITY, OR ANY
PERSON, FIRM OR CORPORATION ACTING OR PURPORTING TO ACT ON  ITS  BEHALF,
FROM PROVIDING SURETY BONDS OR INSURANCE POLICIES REQUIRED BY ANY PUBLIC
BUILDING   OR  CONSTRUCTION  CONTRACT  WITHOUT  REIMBURSEMENT  FROM  THE
CONTRACTOR OR SUBCONTRACTOR, OR FROM  REQUIRING  THAT  A  CONTRACTOR  OR
SUBCONTRACTOR  ACCOUNT  FOR, OR OTHERWISE PROVIDE A CREDIT IN HIS OR HER
BID WHICH REFLECTS, THE AMOUNT THE BIDDING CONTRACTOR  OR  SUBCONTRACTOR
WOULD  OTHERWISE  ADD  IF HE OR SHE PROVIDED HIS OR HER OWN INSURANCE AS
REQUIRED IN THE BID SPECIFICATIONS.
  (c) This section shall not[, however,] prevent the  exercise  by  such
officer or employee on behalf of the state or such public corporation or
public  authority  of  its  right  to  approve the form, sufficiency, or
manner of execution, of surety bonds or contracts of insurance furnished
by the insurance company selected by the bidder to underwrite such bonds
or contracts.
  (D) Any provisions in any invitation  for  bids,  or  in  any  of  the
contract documents, WHICH ARE in conflict [herewith] WITH THE PROVISIONS
OF THIS SECTION are contrary to the public policy of this state.
  S 2. This act shall take effect immediately.

2011-S4952A (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §2504, Ins L

2011-S4952A (ACTIVE) - Summary

Relates to authorizing the state and public authorities and public corporations to provide surety bonds and insurance policies for building or construction projects.

2011-S4952A (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S4952A

TITLE OF BILL:
An act
to amend
the insurance law, in relation to authorizing any city with a population
of one million or more to provide wrap-up insurance programs and surety
bonds for their public building and construction projects; and providing
for the repeal of such provisions upon expiration thereof

SUMMARY OF PROVISIONS:
This bill amends Insurance Law §2504(b) to permit any city with a
population of one million or more and others acting on their behalf
(such as a construction manager) to procure wrapup insurance or
surety bonds when such insurance or bonds could be procured by
contractors and subcontractors. It also adds new language to §2504(b)
to make clear that any city with a population of one million or more,
or others acting on its behalf, may provide such wrap-up insurance or
surety bonds without reimbursement from the contractor or
subcontractor, and also may require that a contractor or
subcontractor account for, or otherwise provide a credit in his or
her bid that reflects, the amount the bidding contractor or
subcontractor would otherwise add if he or she provided his or her own
insurance or bonds as required in the bid specifications. The bill
also provides that any city that provides such surety bonds or
insurance policies shall do so only for projects that are subject to

a project labor agreement. The bill will take effect immediately and
will expire and be deemed repealed five years after the effective
date, except with regard to those contracts for which a solicitation
was issued within five years of the effective date.

JUSTIFICATION:
This bill has been requested by the New York City Office of the Mayor.
For most large-scale construction projects, it is best for all
concerned - owners, contractors, workers, and the public for insurance
to be purchased through a single insurance "wrap-up" program (known
as an Owner-Controlled Insurance Program, or OCIP, if bought by the
owner, or a Contractor Controlled Insurance Program, or CCIP if bought
by the construction manager or general contractor). A wrap-up covers
everyone involved in the project, including the owner, all
contractors and subcontractors, and all workers, thereby making
unnecessary the multiple insurance policies each project participant
would otherwise have to purchase on its own. In doing so, it
centralizes project safety programs (protecting the safety of workers
and the public)
and eliminates wasteful litigation among participants and their
insurers to decide who pays a single claim.

By reducing these transaction costs, wrap-ups save a significant
amount of money - according to a study by the Federal government, "up
to .50% of the cost of traditional insurance, or from 1 to 3% of a

project's construction costs." This saves taxpayer dollars and allows
public funds to go further, increasing the number of construction
projects and jobs. Wrap-ups also assure that the planned-for
insurance actually exists when a claim is made and often allow
claimants, including workers and the general public, to be paid
faster and more easily.

Finally, wrap-ups facilitate the market entry of emerging small
businesses and minority and women-owned businesses (MWBEs), which
often have limited access to the insurance markets.
Small contractors, including MWBEs, can be chosen by construction
managers based on their ability to do the work rather than access to
insurance.

For all these reasons, wrap-ups are routinely used in large-scale
construction projects throughout the private sector. They are also
used in government projects around the country and, in New York, in
billions of dollars worth of projects undertaken by public
authorities that are exempt from Insurance Law § 2504(b)'s
prohibition on wrap-ups, notably the Metropolitan Transportation
Authority, the School Construction Authority, and the Port Authority
of New York and New Jersey. Insurance Law §3504(b) currently
restricts the State, other public authorities and public corporations
from using wrap-ups. This should be repealed.

EFFECTIVE DATE:
Immediately.

2011-S4952A (ACTIVE) - Bill Text download pdf

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

                                 4952--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               May 2, 2011
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee  on  Insurance  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN  ACT  to amend the insurance law, in relation to authorizing any city
  with a population of one million or more to provide wrap-up  insurance
  programs  and  surety bonds for their public building and construction
  projects; and providing for the repeal of such provisions upon expira-
  tion thereof

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

  Section  1.  Section  2504  of the insurance law is amended to read as
follows:
  S 2504. Designation of particular insurer, agent or broker for  insur-
ance  in  certain  public  construction contracts. (a) (1) No officer or
employee of this state, or of  any  public  corporation  as  defined  in
section  sixty-six  of  the  general  construction law, or of any public
authority, and no person acting or purporting to act on behalf  of  such
officer,  employee,  public corporation or public authority, shall, with
respect to any public building or construction contract which  is  about
to  be, or which has been, competitively bid, require the bidder to make
application to any particular insurance company, agent or broker for  or
to obtain or procure therefrom, any surety bond or contract of insurance
specified  in  connection  with  such contract, or specified by any law,
general, special or local.
  (2) In paragraph one hereof, "public corporation" and "public authori-
ty" shall not include:
  (A) a public corporation  or  public  authority  created  pursuant  to
agreement or compact with another state, or
  (B) the city of New York, a public corporation or public authority, in
connection  with  the  construction  of electrical generating and trans-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11011-04-1

S. 4952--A                          2

mission facilities or construction, extensions and  additions  of  light
rail or heavy rail rapid transit and commuter railroads.
  (b)  [No]  EXCEPT AS SET FORTH BELOW, NO such officer or employee, and
no person, firm or corporation acting or purporting to act on behalf  of
such  officer or employee, shall negotiate, make application for, obtain
or procure any of such surety bonds or contracts  of  insurance  (except
contracts of insurance for builders risk or owners protective liability)
which  can  be obtained or procured by the bidder, contractor or subcon-
tractor. NOTWITHSTANDING THE ABOVE, THIS SECTION SHALL NOT PREVENT,  FOR
ANY  CONTRACT  THAT  IS SUBJECT TO A PROJECT LABOR AGREEMENT PURSUANT TO
SECTION TWO HUNDRED TWENTY-TWO OF THE LABOR LAW, ANY CITY WITH  A  POPU-
LATION OF ONE MILLION OR MORE, OR ANY PERSON, FIRM OR CORPORATION ACTING
OR  PURPORTING  TO  ACT  ON  ITS  BEHALF, FROM PROVIDING SURETY BONDS OR
INSURANCE POLICIES REQUIRED  BY  ANY  PUBLIC  BUILDING  OR  CONSTRUCTION
CONTRACT  WITHOUT REIMBURSEMENT FROM THE CONTRACTOR OR SUBCONTRACTOR, OR
FROM REQUIRING THAT A CONTRACTOR OR SUBCONTRACTOR ACCOUNT FOR, OR OTHER-
WISE PROVIDE A CREDIT IN HIS OR HER BID WHICH REFLECTS, THE  AMOUNT  THE
BIDDING  CONTRACTOR  OR  SUBCONTRACTOR  WOULD OTHERWISE ADD IF HE OR SHE
PROVIDED HIS OR HER OWN INSURANCE AS REQUIRED IN THE BID SPECIFICATIONS.
  (c) This section shall not, however,  prevent  the  exercise  by  such
officer or employee on behalf of the state or such public corporation or
public  authority  of  its  right  to  approve the form, sufficiency, or
manner of execution, of surety bonds or contracts of insurance furnished
by the insurance company selected by the bidder to underwrite such bonds
or contracts.
  (D) Any provisions in any invitation  for  bids,  or  in  any  of  the
contract  documents,  in  conflict  herewith  are contrary to the public
policy of this state.
  S 2. This act  shall  take  effect  immediately  and  shall  apply  to
contracts  for  which a solicitation was issued within five years of the
effective date of this act. Except with regard to such  contracts,  this
act  shall  expire  and  be deemed repealed five years after the date on
which it shall have taken effect.

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