BILL NUMBER: S8127

SPONSOR: BRESLIN
 
TITLE OF BILL:

An act to amend the insurance law, in relation to simplifying the excess
line insurance placement affidavit requirements

 
PURPOSE OR GENERAL IDEA OF BILL:

This legislation would streamline the excess line affidavit regarding
declinations that are filed by both retail and wholesale insurance
brokers when placing excess line transactions. The bill would reduce
excessive reporting requirements that provide no benefit to insureds and
allow brokers to focus on providing services that consumers need and
value.

 
SUMMARY OF PROVISIONS:

Section one - Amends subparagraph (C) of paragraph 3 of subsection (b)
of section 2118 of the insurance law, as amended by chapter 684 of the
laws of 1993, to simplify excess line insurance placement affidavit
              

requirements.

Section two - establishes the effective date.

 
JUSTIFICATION:

The excess line market exists as a matter of public policy to insure
risks which New York admitted insurers choose not to underwrite because
the risks are distressed, unique, volatile, or involve new businesses or
coverages without loss history. The legislature reasoned that New York
businesses could not operate without a secondary market to insure risks
that are rejected by licensed insurers. The excess line market is of
vital importance to New York and nimble processing is essential to
effectively serve consumer needs.

The bill would reduce the number of data elements that a broker is
required to collect and report for each of three declining licensed
insurers from seven to three. The insurer name, NAIC number and the
reason the broker believed the licensed insurer would consider under-
writing the risk would still be recorded in an affidavit. The name of
the insurer representative who declined the risk and their affiliation
with the insurer, and the date and reason the risk was declined would no
longer be recorded in the affidavit. Insurance brokers would still be
required to file insurance coverage documents and affidavits with the
Excess Line Association of New York (ELANY).

The current affidavit forms are unduly complex, burdensome and time-con-
suming to complete. As a result, mistakes are frequently made and time
spent correcting the affidavits results in unnecessary delays to the
detriment of consumers. Many submissions to insurers are made through
web portals which generate either an electronic quote or a declination
to insure the risk. A web portal declination does not contain the name
of an individual or their affiliation (company employee, agent, other).
The current affidavit requires this information, placing brokers in an
untenable situation.


Fewer than 20% of New York-licensed retail brokers place excess line
business through wholesale brokers, averaging twenty-five annual trans-
actions each. Of those retail brokers, 70% place less than 10 trans-
actions with wholesale excess line brokers. This is a powerful indicator
that retailers only go to wholesalers when the retailers' licensed
markets refuse to insure a risk and that most retail brokers have little
experience in completing the excess line placement affidavit.

New York is among a minority of states that require the filing of decli-
nation information for each policy and the only state that requires
twenty-one elements in total for three separate declinations. An excess
line broker that is required to file declinations and also allocate tax
liability for non-U.S. risk exposures must currently submit seventy-one
affidavit data elements. The bill would reduce declination data elements
from twenty-one to nine.

 
PRIOR LEGISLATIVE HISTORY:

New Bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
Immediately.