NY State Senate Bill 2019-S3625

Senate Bill S3625

2019-2020 Legislative Session

Promotes competitive property and casualty insurance markets for business to business insurance transactions

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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 08, 2020	referred to insurance
Feb 11, 2019	referred to insurance

co-Sponsors

2019-S3625 (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §§2302 & 3201, Ins L
Versions Introduced in Other Legislative Sessions:: 2017-2018: S4719
2021-2022: S3560

2019-S3625 (ACTIVE) - Summary

Promotes competitive property and casualty insurance markets for business to business insurance transactions.

2019-S3625 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S3625

SPONSOR: BRESLIN
 
TITLE OF BILL:  An act to amend the insurance law, in relation to
promoting competitive property and casualty insurance markets for busi-
ness to business insurance transactions

 
PURPOSE:

The purpose of the bill is to modernize the regulation of commercial
lines insurance by providing additional exemptions from rate and form
filing requirements.

 
SUMMARY OF PROVISIONS:

Section one, entitles this bill as the "Competitive Commercial Insurance
Markets Act."

Section two of the bill amends Section 2302 of the insurance law to add
to the list of lines of business currently exempt from rate and form
filing requirements. Thus, insurers offering these business insurance

products would not be required to submit their rates or forms to DFS for
approval prior to their use. The bill further grants the superintendent
the authority to designate additional exemptions if he or she deems it
necessary in order to enhance competition or more effectively utilize
Department resources.

The bill also gives the superintendent the authority to temporarily
reinstate filings for up to a one year period if, after a hearing, the
superintendent finds that a reasonable degree of competition does not
exist for that specific type of insurance coverage.

Section three of the bill amends section 3201 of the insurance law to
provide an exemption from rate and form filing requirements for commer-
cial travel insurance products.

Section four provides for the effective date.

 
JUSTIFICATION:

In an era of advancing technology and innovation, businesses are demand-
ing access to enhanced insurance products that keep pace with their
evolving risks by tailoring coverages to meet their specific needs.
Unfortunately, regulatory filing and review requirements often interfere
with the ability of businesses to gain the benefit of robust market
competition by locking insurers into "off the shelf" products that can
limit the range of available product choices. In addition to making
product customization difficult, policy form and rate filings slow the
introduction of innovative new insurance products, which can discourage
new market entrants and make it harder for existing competitors to
develop new products in a timely fashion.  While the Free Trade Zone has
been beneficial to insurers and does provide some flexibility, it does
not provide complete freedom from rate and form filing. A more dynamic
and modernized regulatory system would allow businesses purchasing
insurance to benefit from a broader range of competitive price options
and insurance products that can be readily customized to fit their
company's risk profile.


The coverages that would be exempt from rate and form filing require-
ments under the proposed legislation are not commonly purchased by Main
Street "Mom and Pop" businesses. Rather, these specialty commercial
insurance products typically are purchased by more sophisticated policy-
holders who simply do not warrant the same level of regulatory
protection as individual consumers or small businesses. Virtually all of
the specialty products included in the bill are purchased in the insur-
ance market by businesses working closely with licensed insurance
producers, and many of these coverages are regularly placed in the
surplus lines insurance market, where there is no regulation of policy
forms or rates.

The bill does not apply to personal lines, nor would it impact the most
common insurance purchases for small Main Street businesses, including
motor vehicle and workers' compensation insurance. The bill also does
not apply to medical malpractice insurance. These coverages would remain
subject to current filing requirements under the bill.

Consumers will benefit from the proposed legislation because DFS will be
able to focus more of its resources and attention to the regulation of
personal lines insurance and commercial insurance sold to small, Main
Street businesses. Additionally, as referred to above, many of the
specialty coverages included in the proposed legislation are written
frequently in the surplus lines market, which is not subject to rate or
form filing requirements. By providing an exemption from rate and form
filing requirements, this proposal would give specialty insurers an
incentive to introduce more products into the admitted insurance market
in New York, enhancing competition.

While specialty commercial lines coverages would not be required to file
rates and forms with DFS for prior approval, DFS would continue to
perform critical oversight functions under the proposed legislation.
Specifically, insurers would be required to maintain underwriting files,
premium, loss and expense statistics, financial and other records which
would be subject to examination by the superintendent. This ensures that
DFS would continue to have the capability to oversee the market conduct
and financial solvency of insurers selling commercial specialty products
and could pursue enforcement actions, if necessary.

Further, to provide another backstop in the unlikely event that issues
arise, should the superintendent determine that a reasonable degree of
competition does not exist in a specific insurance market, the proposed
legislation would authorize the superintendent to reinstate rate and
policy form filing requirements for that market for a period of up to
one year. This power would give the superintendent time to take correc-
tive actions designed to restore competition for that type of insurance.

The proposed legislation also will help from an economic development
standpoint and promote job growth in New York State, as companies with
rapidly evolving risks will be better able to secure the necessary
insurance coverage needed to respond rapidly to changes in the market-
place.

 
LEGISLATIVE HISTORY:

S4719 of 2017-18.

 
FISCAL IMPLICATIONS:
None.

 
EFFECTIVE DATE:
January first of the next succeeding year on which it shall have become
law.

2019-S3625 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3625
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             February 11, 2019
                                ___________
 
 Introduced  by  Sens. BRESLIN, 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 promoting  competitive
   property  and  casualty  insurance  markets  for  business to business
   insurance transactions

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  This  act shall be known and may be cited as the "Compet-
 itive Commercial Insurance Markets Act".
   § 2. Section 2302  of  the  insurance  law,  paragraphs  5  and  6  of
 subsection  (a) as amended and paragraph 7 of subsection (a) as added by
 chapter 614 of the laws of 1997, is amended to read as follows:
   § 2302. Applicability. (a) This article shall apply to  all  kinds  of
 insurance  written  on  risks  or operations in this state by an insurer
 authorized to do business in this state except:
   (1) reinsurance (other than joint reinsurance to the extent stated  in
 section two thousand three hundred seventeen of this article);
   (2) accident and health insurance;
   (3)  annuities, life insurance, including provisions for non-cancella-
 ble disability benefits in conjunction therewith;
   (4) marine insurance (other  than  PERSONAL  inland  marine  insurance
 COVERING  PROPERTY OF INDIVIDUALS OR HOUSEHOLDS and insurance upon auto-
 mobiles[, airplanes, seaplanes, dirigibles or other aircraft]);
   (5) marine protection and indemnity insurance;
   (6) insurance issued  by  an  assessment  cooperative  fire  insurance
 company; [and]
   (7) service contract reimbursement insurance; AND
   (8) COMMERCIAL LINES SPECIALTY INSURANCE, WHICH INCLUDES:
   (I) AIRCRAFT LIABILITY AND HULL INSURANCE;
   (II) SURETY AND FIDELITY INSURANCE;
   (III) COMMERCIAL INLAND MARINE INSURANCE;

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

                                                            LBD09800-01-9

 S. 3625                             2
 
   (IV) BOILER AND MACHINERY INSURANCE;
   (V) ENVIRONMENTAL IMPAIRMENT/POLLUTION LIABILITY INSURANCE;
   (VI) KIDNAP AND RANSOM INSURANCE;
   (VII) POLITICAL RISK OR EXPROPRIATION INSURANCE;
   (VIII) EXCESS AND UMBRELLA LIABILITY INSURANCE;
   (IX) DIRECTORS' AND OFFICERS' LIABILITY INSURANCE;
   (X) FIDUCIARY LIABILITY INSURANCE;
   (XI) EMPLOYMENT PRACTICES LIABILITY INSURANCE;
   (XII) ERRORS AND OMISSION AND PROFESSIONAL LIABILITY INSURANCE
   (OTHER THAN MEDICAL MALPRACTICE);
   (XIII) MEDIA LIABILITY INSURANCE;
   (XIV) PRODUCT LIABILITY, PRODUCT RECALL OR COMPLETED OPERATIONS INSUR-
 ANCE;
   (XV)  CYBERSECURITY INSURANCE, INCLUDING FIRST AND THIRD PARTY COMMER-
 CIAL LINES COVERAGE FOR LOSSES ARISING OUT OF OR RELATING TO DATA PRIVA-
 CY BREACHES, NETWORK SECURITY, COMPUTER VIRUSES AND  SIMILAR  EXPOSURES,
 AND  INCLUDING  IDENTITY  THEFT  GROUP  INSURANCE POLICIES UNDER SECTION
 THREE THOUSAND FOUR HUNDRED FIFTY-ONE OF THIS CHAPTER;
   (XVI) HIGHLY PROTECTED COMMERCIAL PROPERTY INSURANCE;
   (XVII) COMMERCIAL FLOOD INSURANCE (OTHER THAN NATIONAL FLOOD INSURANCE
 PROGRAM);
   (XVIII) COMMERCIAL LINES TRAVEL INSURANCE,  INCLUDING  GROUP  PROPERTY
 TRAVEL  INSURANCE  POLICIES  UNDER  SECTION  THREE THOUSAND FOUR HUNDRED
 FIFTY-TWO OF THIS CHAPTER;
   (XIX) ALL COMMERCIAL LINES KINDS OF INSURANCE  AND  CLASSES  OF  RISK,
 OTHER   THAN   WORKERS'  COMPENSATION  AND  AUTOMOBILE  INSURANCE,  WHEN
 PURCHASED BY A COMMERCIAL POLICYHOLDER WITH AGGREGATE ANNUAL  COMMERCIAL
 PROPERTY AND CASUALTY INSURANCE PREMIUMS OF TWENTY-FIVE THOUSAND DOLLARS
 OR MORE EXCLUDING PREMIUMS PAID FOR WORKERS' COMPENSATION AND AUTOMOBILE
 INSURANCE; AND
   (XX)  ANY OTHER COMMERCIAL LINES KINDS OF INSURANCE OR CLASSES OF RISK
 THAT THE SUPERINTENDENT DEEMS, PURSUANT TO REGULATION, EXEMPT FROM  RATE
 AND  POLICY FORM FILING REQUIREMENTS IN ORDER TO PROMOTE ENHANCED COMPE-
 TITION OR TO MORE EFFECTIVELY USE THE RESOURCES OF THE  DEPARTMENT  THAT
 OTHERWISE  MIGHT  BE  USED  TO  REVIEW COMMERCIAL LINES SPECIALTY POLICY
 INSURANCE FORM OR RATE FILINGS.
   (b) The superintendent may from time to time make investigations  with
 respect to classes of risks of the kinds of insurance exempted in [para-
 graph  one  hereof] SUBSECTION (A) OF THIS SECTION and may call upon all
 authorized insurers and rate service organizations making rates for such
 risks to furnish information relative thereto.
   (C) WITH RESPECT TO THE CLASSES OF RISKS OF  THE  KINDS  OF  INSURANCE
 EXEMPTED  IN  PARAGRAPH  EIGHT  OF  SUBSECTION  (A) OF THIS SECTION, THE
 SUPERINTENDENT MAY TEMPORARILY REINSTATE, FOR A PERIOD OF NO LONGER THAN
 ONE YEAR, THE REQUIREMENT FOR RATE OR FORM FILINGS FOR A SPECIFIC  CLASS
 OF  RISK IF, AFTER A HEARING, THE SUPERINTENDENT MAKES A FINDING OF FACT
 THAT A REASONABLE DEGREE OF COMPETITION DOES NOT EXIST FOR THAT SPECIFIC
 CLASS OF RISK. SUCH A FINDING OF FACT BY THE SUPERINTENDENT MUST SPECIFY
 THE RELEVANT TESTS USED TO DETERMINE WHETHER  A  LACK  OF  A  REASONABLE
 DEGREE  OF COMPETITION EXISTS AND THE RESULTS THEREOF. IN THE ABSENCE OF
 SUCH SPECIFIC FINDINGS OF FACT  BY  THE  SUPERINTENDENT,  A  COMPETITIVE
 MARKET IS PRESUMED TO EXIST.
   §  3.  Section  3201  of  the insurance law is amended by adding a new
 subsection (e) to read as follows:
   (E) EXCEPT FOR PARAGRAPHS ONE AND THREE  OF  SUBSECTION  (C)  OF  THIS
 SECTION,  THIS SECTION SHALL NOT APPLY TO COMMERCIAL LINES TRAVEL INSUR-

 S. 3625                             3
 
 ANCE. HOWEVER, WITH RESPECT TO COMMERCIAL LINES  TRAVEL  INSURANCE,  THE
 SUPERINTENDENT MAY TEMPORARILY REINSTATE, FOR A PERIOD OF NO LONGER THAN
 ONE  YEAR,  THE REQUIREMENT FOR POLICY FORM FILINGS IF, AFTER A HEARING,
 THE  SUPERINTENDENT  MAKES A FINDING OF FACT THAT A REASONABLE DEGREE OF
 COMPETITION DOES NOT EXIST FOR THAT SPECIFIC TYPE OF INSURANCE.  SUCH  A
 FINDING  OF  FACT  BY THE SUPERINTENDENT MUST SPECIFY THE RELEVANT TESTS
 USED TO DETERMINE WHETHER A LACK OF A REASONABLE DEGREE  OF  COMPETITION
 EXISTS AND THE RESULTS THEREOF. IN THE ABSENCE OF SUCH SPECIFIC FINDINGS
 OF  FACT  BY  THE  SUPERINTENDENT,  A  COMPETITIVE MARKET IS PRESUMED TO
 EXIST.
   § 4. This act shall take effect on the first of January next  succeed-
 ing  the date on which it shall have become a law and shall apply to all
 property and casualty insurance policies issued, renewed or modified  on
 or after such date.

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Senate Bill S3625

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Sponsored By

Neil D. Breslin