BILL NUMBER:  S4654

 TITLE OF BILL :

An act to amend the insurance law, in relation to exemption from
filing requirements only with respect to rates and policy forms

 PURPOSE :

The purpose of the bill is to modernize the insurance law by allowing
insurers to take advantage of the Free Trade Zone regardless of
whether or not they maintain a physical office in the state.

 SUMMARY OF PROVISIONS :

The bill amends Section 6303 (a) of the insurance law to repeal the
provision which requires that business must be underwritten and
transacted from an office within the state in order to be eligible for
placement in the Free Trade Zone.

 JUSTIFICATION :

The Free Trade Zone (FTZ) is a useful tool for insurers that provides
some flexibility from the usual rate and form filing process as it
relates to larger, sophisticated or highly specialized risks.
Unfortunately, the FTZ fails to be utilized to its fullest potential
              

because current law requires that, in order to be eligible to place a
risk in the FTZ, the business must be underwritten and transacted from
an office within New York State. This means that an insurer must
maintain a physical office location in the state, even though they are
duly licensed to write in the NY admitted market.

In the context of today's global economy, this requirement is
unnecessary and fails to reflect advancements in technology and
innovation which makes it possible for business to be transacted from
practically anywhere in the world. The intent of the FTZ is to allow
greater freedom to insureds that are sophisticated enough to
understand and negotiate their own insurance needs. They simply do not
warrant the same level of protection from DFS as an individual
consumer or small business. If an insured is sophisticated enough to
assume responsibility for their own insurance needs (often working
with risk managers, agents, or brokers), the location in which the
policy is underwritten is irrelevant. In today's era of advancing
technology and innovation, the most important factor for businesses is
that they can readily access enhanced insurance products that keep
pace with their evolving risks. The physical location where the
insurance transaction occurs simply does not come into the equation.

Additionally, the FTZ is beneficial because it makes it possible for
authorized insurers to compete more effectively with the non-admitted
market. However, the physical office requirement has just the opposite
effect, penalizing authorized insurers who do not have a physical
presence and incentivizing them to enter the non-admitted market.

The proposed legislation will lead to a more dynamic and modernized
regulatory system that better reflects the current global financial
services marketplace. This in turn will give businesses purchasing
insurance a broader range of competitive price options and insurance
products that can be readily customized to fit their company's risk
profile.

 LEGISLATIVE HISTORY :

New bill.

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
Immediately.