S T A T E   O F   N E W   Y O R K
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                                  9793

                          I N  A S S E M B L Y

                              May 22, 2014
                               ___________

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

AN ACT to amend the insurance law, in relation to encouraging moderniza-
  tion  of  mutual  and  cooperative  insurance  companies'  information
  systems technology

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

  Section  1.  Subsection  (a)  of section 4110 of the insurance law, as
amended by chapter 527 of the laws  of  2006,  is  amended  to  read  as
follows:
  (a) No domestic mutual property/casualty insurance company licensed to
write  a  kind  of  insurance specified in paragraph seven, eight, nine,
ten, eleven,  thirteen,  fourteen,  fifteen,  sixteen  or  seventeen  of
subsection  (a)  of  section  one  thousand one hundred thirteen of this
chapter shall expend in any one calendar year for management expenses  a
greater  amount than thirty percent of the sum of its net premium income
and seventy-five  percent  of  its  investment  income  for  such  year;
provided  that  any  insurer whose principal line of business is medical
malpractice liability insurance or any insurer who is the subject  of  a
proceeding  pursuant  to  article seventy-four of this chapter shall not
expend in any one calendar  year  for  management  expenses,  a  greater
amount  than  thirty  percent  of  its net premium income for such year.
Management expenses shall be held to include all expenses of the company
except expenses incurred in the investigation, adjustment and settlement
of claims, taxes, fees and expenses of examination, and  taxes,  repairs
and  expenses on real estate. In applying the provisions of this section
the net premium income of, and expenses of, boiler and machinery  insur-
ance or elevator insurance shall not be included.  IN THE EVENT EXPENSES
INCURRED  IN  MAKING  A  NEW  SYSTEM UPGRADE RESULT IN THIS SUBSECTION'S
MANAGEMENT EXPENSES LIMIT BEING EXCEEDED, THEN THE INSURER SHALL  INFORM
THE  SUPERINTENDENT  SIXTY  DAYS  IN  ADVANCE OF THE EXPENSE LIMIT BEING
EXCEEDED. SUBJECT TO APPROVAL BY THE SUPERINTENDENT, THE LIMIT SHALL  BE
TEMPORARILY  RAISED TO THE AMOUNT NECESSARY TO ENCOMPASS THE AFORESTATED
NEW SYSTEM UPGRADE, PROVIDED THAT IN NO EVENT SHALL THE LIMIT BE  RAISED

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

                                                           LBD08132-03-4

A. 9793                             2

MORE  THAN  FIVE  PERCENTAGE  POINTS AND SHALL NOT BE IN EFFECT FOR MORE
THAN SIX YEARS.  THE INSURER SHALL NOT INCREASE  PREMIUMS  SOLELY  AS  A
RESULT  OF  THE  MANAGEMENT  EXPENSES  CAP  LIMIT  BEING EXCEEDED.   FOR
PURPOSES  OF  THIS  SUBSECTION,  A  NEW SYSTEM UPGRADE IS DEFINED AS THE
ACQUISITION OF ELECTRONIC DATA PROCESSING APPARATUS AND  RELATED  EQUIP-
MENT CONSTITUTING A DATA PROCESSING, RECORD KEEPING OR ACCOUNTING SYSTEM
AND OPERATING AND NON-OPERATING SOFTWARE.
  S  2.  Subsection (a) of section 6613 of the insurance law, as amended
by chapter 284 of the laws of 1989, is amended to read as follows:
  (a) The expenses of management of any  co-operative  property/casualty
insurance  company  shall  not exceed in any one calendar year forty-two
and one-half percent of its net premiums written for such year. The term
"net premiums written" means direct premiums  written  plus  reinsurance
assumed  less  return  premiums  and  reinsurance  ceded.   IN THE EVENT
EXPENSES INCURRED  IN  MAKING  A  NEW  SYSTEM  UPGRADE  RESULT  IN  THIS
SUBSECTION'S  MANAGEMENT EXPENSES LIMIT BEING EXCEEDED, THEN THE INSURER
SHALL INFORM THE SUPERINTENDENT SIXTY DAYS IN  ADVANCE  OF  THE  EXPENSE
LIMIT  BEING  EXCEEDED.  SUBJECT  TO APPROVAL BY THE SUPERINTENDENT, THE
LIMIT SHALL BE TEMPORARILY RAISED TO THE AMOUNT NECESSARY  TO  ENCOMPASS
THE  AFORESTATED NEW SYSTEM UPGRADE, PROVIDED THAT IN NO EVENT SHALL THE
LIMIT BE RAISED MORE THAN FIVE PERCENTAGE POINTS AND  SHALL  NOT  BE  IN
EFFECT FOR MORE THAN SIX YEARS.  THE INSURER SHALL NOT INCREASE PREMIUMS
SOLELY  AS A RESULT OF THE MANAGEMENT EXPENSES CAP LIMIT BEING EXCEEDED.
FOR PURPOSES OF THIS SUBSECTION, A NEW SYSTEM UPGRADE IS DEFINED AS  THE
ACQUISITION  OF  ELECTRONIC DATA PROCESSING APPARATUS AND RELATED EQUIP-
MENT CONSTITUTING A DATA PROCESSING, RECORD KEEPING OR ACCOUNTING SYSTEM
AND OPERATING AND NON-OPERATING SOFTWARE.
  S 3. This act shall take effect immediately.