BILL NUMBER: S3736

SPONSOR: BRESLIN
 
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 trans-
acted from an office within the state in order to be eligible for place-
ment 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.  Unfortu-
nately, 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 phys-
ical 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 unneces-
sary 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 pres-
ence 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:

S.4654 of 2017-18

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
Immediately.