S T A T E O F N E W Y O R K
________________________________________________________________________
4356
2019-2020 Regular Sessions
I N A S S E M B L Y
February 4, 2019
___________
Introduced by M. of A. WEPRIN -- read once and referred to the Committee
on Insurance
AN ACT to amend the insurance law, in relation to removing the exemption
of the state insurance fund from licensing and other requirements; to
amend the workers' compensation law, in relation to requiring the
superintendent of insurance to approve the rules adopted by the state
insurance fund for the conduct of its business; to amend the workers'
compensation law, in relation to the requirement for policyholders to
provide 30 days notice to withdraw from the state insurance fund; and
to permit the state insurance fund to compensate licensed insurance
brokers for services provided to clients insured by the fund
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 1108 of the insurance law, subsection (c) as
amended by section 38 of part SS of chapter 54 of the laws of 2016,
subsection (j) as added by section 2 of part R of chapter 56 of the laws
of 2010, subsection (k) as added by chapter 181 of the laws of 2012,
subsection (k) as added by chapter 246 of the laws of 2012 and
subsection (n) as added by chapter 454 of the laws of 2014, is amended
to read as follows:
§ 1108. Insurers exempt from licensing and other requirements. The
following insurers, their officers, agents, representatives and employ-
ees shall be exempt from licensing and other requirements imposed by the
provisions of this chapter (except article seventy-four hereof) to the
extent specified below:
(a) Any charitable annuity society which complies with the require-
ments of section one thousand one hundred ten of this article, to the
extent therein stated.
(b) Any fraternal benefit society, membership corporation or other
organization exempted under the provisions of article forty-five of this
chapter, to the extent therein stated.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08568-01-9
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(c) [The state insurance fund of this state, except as to the
provisions of subsection (d) of section two thousand three hundred thir-
ty-nine, section three thousand one hundred ten, subsection (a), para-
graph one of subsection (b), paragraph three of subsection (c) and
subsection (d) of section three thousand two hundred one, sections three
thousand two hundred two, three thousand two hundred four, subsections
(a) through (d) of section three thousand two hundred twenty-one,
subsections (b) and (c) of section four thousand two hundred twenty-
four, section four thousand two hundred twenty-six and subsections (a)
and (b), (g) through (j), and (n) of section four thousand two hundred
thirty-five of this chapter and except as otherwise specifically
provided by the laws of this state.
(d)] Any corporate trustee or board of trustees acting pursuant to the
banking law in relation to the fund for insurance of deposits in savings
banks or the fund for insurance of shares of savings and loan associ-
ations.
[(e)] (D) Any corporation, organized under the laws of any state,
solely to provide gratuitously for support or relief of the priests,
clergy or ministers of any religious denomination, or their dependents,
is exempt from all provisions of this chapter, except that any such
corporation, created by special act of incorporation of this state,
which by the provisions of such act is subject to the requirement of
examination by, and making annual reports to, the superintendent, shall
be subject to the provisions of article three of this chapter relating
to examinations and statements or reports by insurers.
[(f)] (E) Any retirement system or pension fund that was doing busi-
ness on January first, nineteen hundred forty under the education law,
the civil service law, the mental hygiene law, any special act of incor-
poration of this state, or any municipal charter adopted under the laws
of this state, exclusively for the benefit of the members of such system
or fund or for all or any classes of the employees of this state or any
municipality thereof, shall be exempt from the provisions of this chap-
ter, except that if the law under which such system or fund was organ-
ized subjects it to examination by, and the making of annual reports to,
the superintendent, such system or fund shall be subject to the
provisions of article three of this chapter relating to examinations and
statements or reports by insurers.
[(g)] (F) Any membership corporation or voluntary association organ-
ized and operating in this state prior to January first, nineteen
hundred thirty-nine and its members may act as indemnitors of a licensed
property/casualty insurance company in respect to surety bonds or poli-
cies of insurance required to be filed by such members pursuant to
section three hundred seventy of the vehicle and traffic law and are
exempted from the requirement of having an insurer's license; but no
such membership corporation or association shall become a surety on any
such bond or otherwise do an insurance business.
[(h)] (G) Any relief department or pension plan of any common carrier
subject to the the Railroad Retirement Act of 1974 (45 U.S.C. § 31),
whose privileges and membership are confined to employees or former
employees of such carrier or its affiliated or subsidiary companies, or
to any association of such common carriers which administers any such
department or plan.
[(i)] (H) Every blood credit system established by a city, pursuant to
section twenty-one-d of the general city law.
[(j)] (I) Any group of employers authorized by the workers' compen-
sation board to provide workers' compensation benefits for the employees
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of all member employers pursuant to subdivision three-a of section fifty
of the workers' compensation law.
[(k)] (J) A charitable bail organization holding a certificate issued
by the superintendent pursuant to section six thousand eight hundred
five of this chapter.
(k) An institution of higher education, as defined in paragraph two of
subsection (a) of section one thousand one hundred twenty-four of this
article, that has a certificate of authority from the superintendent and
complies with the requirements of section one thousand one hundred twen-
ty-four of this article, to the extent therein stated.
[(n)] (L) A resolution facility established pursuant to section seven
thousand seven hundred nineteen of this chapter.
§ 2. Paragraph 2 of subsection (a) of section 4522 of the insurance
law is amended to read as follows:
(2) Organizations which limit their membership to the employees of a
particular city or town, or of a designated business corporation or
firm, or of one or more business corporations or firms having business
interests in common, except as otherwise provided in subsection [(f)]
(E) of section one thousand one hundred eight of this chapter. Any such
organization which limits its membership to the employees of a corpo-
ration having more than five thousand employees may provide for hospi-
tal, surgical and medical benefits for the employee, his or her spouse,
and his or her child or children not over eighteen years of age.
§ 3. Section 83 of the workers' compensation law, as amended by chap-
ter 34 of the laws of 2010, is amended to read as follows:
§ 83. Rules. The [commissioner] COMMISSIONERS shall adopt rules for
the conduct of the business of the state fund, and may from time to time
alter, amend or repeal any rule therefore adopted. At least six affirma-
tive votes shall be required for the adoption of any rule, or the amend-
ment or repeal of any rule. No rule, and no resolution proposing to
alter, amend or repeal any rule, shall be effective unless approved by
the [commissioner of labor. If the commissioner of labor fails to act
upon any such rule or resolution within thirty days after it is communi-
cated to him or her, such rule or resolution shall be deemed to have
been approved] SUPERINTENDENT OF FINANCIAL SERVICES.
The rules of the commissioners shall provide for the conduct of the
business of the state insurance fund, including the issuance of policies
and their terms and conditions, the fixing of premium rates, the keeping
of records, auditing of payrolls, and the billing and collection of
premiums therefor, the inspection of risks and the setting of the stand-
ards of safety, the adjustment and payment of claims and awards, and the
investigation of all matters relating thereto, the medical examination
of persons claiming compensation and the furnishing and supervision of
medical and surgical treatment to persons injured as set forth in this
chapter, the conduct of the legal business of the fund and the enforce-
ment of the subrogated rights of the fund against third parties, the
investment of the surplus and reserves of the fund, THE COMPENSATION OF
INSURANCE PRODUCERS THROUGH COMMISSIONS, and the collection and analysis
of statistics of payrolls, premiums, losses and expenses and the actuar-
ial consideration thereof.
§ 4. Subdivision a of section 94 of the workers' compensation law, as
amended by chapter 635 of the laws of 1996, is amended to read as
follows:
a. Any employer may, upon complying with subdivision two or three of
section fifty of this chapter, withdraw from the fund by turning in his
insurance contract for cancellation, [provided he has given written
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notice to the fund of his intention to withdraw not less than thirty
days before the effective date of such cancellation] ALONG WITH WRITTEN
NOTICE OF THE EFFECTIVE DATE OF THE CANCELLATION. Upon receipt of such
notice the fund shall[, at least ten days prior to the effective date]
file in the office of the chairman a notice of such cancellation date.
[In no event shall the insurance contract be deemed cancelled until at
least ten days after the date of such filing, any earlier date mentioned
in the notice to the contrary notwithstanding.]
If an employer withdraws from the fund upon complying with subdivision
two of section fifty of this chapter, the new insurance contract with
the stock corporation, mutual corporation or reciprocal insurer shall be
deemed not to take effect until the cancellation of such employer's
contract with the state insurance fund has become effective.
§ 5. Subdivision 1 of section 89 of the workers' compensation law, as
amended by chapter 135 of the laws of 1998, is amended to read as
follows:
1. Employments and employees in the state fund shall be divided into
such groups and classes as shall be equitable based upon differences of
industry or hazard for the purpose of establishing premium rates for
workers' compensation insurance, and for such purpose a system of merit
rating may be employed which shall take account of the peculiar hazard
of each individual risk. Such premiums in the state fund shall be fixed
at the lowest possible rates consistent with the maintenance of a
solvent fund and of reasonable reserves and surplus, NOTWITHSTANDING THE
PAYMENT OF BROKER COMMISSION ARRANGEMENTS AS PROVIDED FOR IN THIS ARTI-
CLE.
§ 6. Subdivision 5 of section 76 of the workers' compensation law is
renumbered subdivision 6 and a new subdivision 5 is added to read as
follows:
5. THE PURPOSES OF SUCH STATE INSURANCE FUND ARE HEREBY FURTHER
ENLARGED TO PERMIT IT TO COMPENSATE LICENSED INSURANCE BROKERS FOR THE
SERVICES THEY PROVIDE THEIR CLIENTS WHO ARE INSURED IN THE FUND THROUGH
THE PAYMENT OF COMMISSIONS. THE COMMISSIONERS OF THE STATE INSURANCE
FUND ARE HEREBY AUTHORIZED AND DIRECTED TO ESTABLISH, WITHIN THE EXIST-
ING RATE STRUCTURE, A FACTOR TO COMPENSATE LICENSED INSURANCE PRODUCERS
FOR THE SERVICES PROVIDED TO THEIR CLIENTS WHO OBTAIN COVERAGE THROUGH
THE FUND.
§ 7. This act shall take effect on the ninetieth day after it shall
have become a law.