BILL NUMBER: S4354A

SPONSOR: BRESLIN
 
TITLE OF BILL:

An act to amend the insurance law, in relation to the examination of
records maintained by the excess line association; and to amend chapter
630 of the laws of 1988, amending the insurance law relating to estab-
lishing an excess line advisory organization, in relation to extending
the effectiveness thereof

 
PURPOSE:

This bill would extend the statutory authority of the Excess Line Asso-
ciation of New York ("ELANY")

 
SUMMARY OF PROVISIONS:

Section 1 of the bill would amend the language from Section 5 of Chapter
630 of the Laws of 1988, the enabling legislation for ELANY, to extend
its "sunset" date of July 1, 2024 to July 1, 2029.

              

Section 2 of the bill would make technical clarifications by revising

Section 2130 of the Insurance Law to incorporate language contained in
section 2118 of the Insurance Law granting ELANY power to examine the
records of excess line brokers pertaining to placement of excess line
risks.

Section 3 of the bill clarifies that ELANY has the authority granted to
all unincorporated associations under the general associations law
regarding the capacity of an unincorporated association to protect the
rights in a legal proceeding.

Section 4. Effective Date

 
EXISTING LAW:

Chapter 630 of the Laws of 1988 amended the Insurance Law to add Section
2130, the enabling legislation for ELANY. Section 5 of Chapter 630
currently provides that Section 2130 would cease to be of any force or
effect after July 1, 2014.

 
JUSTIFICATION:

Established by the Legislature in 1988, ELANY, which is financially
self-sustaining, quickly became an indispensable component in the regu-
lation of the excess line market. The excess line market is a small, but
extremely important marketplace, which serves as an "incubator" for
innovative insurance products, as well as a market for hard-to- place
risks. Foremost among ELANY's accomplishments has been its success in
collecting and processing insurance data and monitoring the solvency of
insurers in the excess line marketplace.  These activities are of para-
mount importance to a properly functioning excess line market in New
York.

As a centralized source of information, ELANY has greatly contributed to
the Department of Financial Services' (aka Insurance Department) know-
ledge of a vital segment of New York's insurance market. ELANY also
assists the Department of Financial Services in the calculation and
collection of excess line premium taxes. In fulfilling its statutory
mandate to notify the Superintendent if ELANY believes that an unauthor-
ized insurer does not meet the standards of eligibility imposed by New
York, ELANY has compiled extensive data on every foreign and alien
insurer writing business in New York, while monitoring their activities.
Based on ELANY's recommendations, the Department of Financial Services
has prohibited the placement of risks with a number of insurers that
were determined by ELANY not to meet the minimum financial criteria
required by New York law. In this manner, ELANY has protected the inter-
ests of New York State consumers by ensuring that their insurance needs
are met by the most financially secure insurers possible.

In addition, ELANY has taken various measures directed at increasing
compliance by excess line licensees with New York's excess line law.  As
part of its effort to achieve this goal, ELANY has created an electronic
platform for the submission, and processing of excess line transactions
for use by its member brokers. The use of the electronic system has
reduced frictional cost and improved efficiency and productivity for
both member brokers and ELANY staff ELANY publishes newsletters, bulle-
tins and compliance advisors, which describe and explain the complexi-
ties and interaction of New York's excess line law. Department of Finan-
cial Services regulations and various procedures relating to placing
insurance in New York's excess line market. ELANY also maintains an
extensive website of organized information and data, which serves as
both an educational and compliance tool for producers.

In fact ELANY recently added a Video Library to its website, which
currently contains nine Education/Training videos. Finally, ELANY has
held numerous educational sessions as a Department of Financial Servic-
es-certified educational provider (for both individuals and groups).

Extending ELANY's statutory authority for another five years is essen-
tial to the ability of ELANY to attract capable personnel and executives
in order to maintain the organization's commitment to excellence and to
make the significant investments in technology that will enable ELANY to
keep pace with developments in the excess line marketplace. Based on its
excellent performance record over its twenty plus year existence, it is
clear that ELANY has demonstrated its importance to the insurance
marketplace. Therefore, there is absolutely no reason to why ELANY's
role in helping to regulate the excess line market should not be
substantially extended.

 
LEGISLATIVE HISTORY:

Chapter 20 of the laws of 2013.

Chapter 488 of the laws of 2018

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately; provided, however that amend-
ments to section 2310 of the insurance law made by sections two and
three of this act shall not affect the expiration of such section and
shall be deemed to expire therewith.