BILL NUMBER: S3563

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 econ-
omy, 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 indi-
vidual 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 poli-
cy 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 regula-
tory 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:
S3736 of 2019-20 3.4654 of 2017-18

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
Immediately.