NY State Senate Bill 2025-S5310

Senate Bill S5310

2025-2026 Legislative Session

Permits a waiver of the diligent effort requirement in limited circumstances for certain insurance coverage to be placed by licensed excess line brokers with unauthorized insurers

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Current Bill Status - On Floor Calendar

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

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 03, 2025	1st report cal.423
Feb 20, 2025	referred to insurance

Votes

- Mar 3, 2025 - Insurance Committee Vote
  S5310
  
  11
  
  Aye
  
  0
  
  Nay
  
  0
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Insurance Committee Vote: Mar 3, 2025
      
      aye (11)
      
      Addabbo Jr.
      
      Ashby
      
      Bailey
      
      Cooney
      
      Fernandez
      
      Gounardes
      
      Harckham
      
      Helming
      
      O'Mara
      
      Sanders Jr.
      
      Skoufis

co-Sponsors

2025-S5310 (ACTIVE) - Details

See Assembly Version of this Bill:: A6060
Law Section:: Insurance Law
Laws Affected:: Amd §2118, Ins L
Versions Introduced in Other Legislative Sessions:: 2021-2022: S8128, A9117
2023-2024: S5896, A5253

2025-S5310 (ACTIVE) - Summary

Permits a waiver of the diligent effort requirement in limited circumstances for certain insurance coverage to be placed by licensed excess line brokers with unauthorized insurers where a retail producing insurance broker seeks to procure or place commercial lines insurance through an unaffiliated wholesale excess line insurance broker.

2025-S5310 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S5310

SPONSOR: BAILEY
 
TITLE OF BILL:

An act to amend the insurance law, in relation to permitting a waiver of
the diligent effort requirement in limited circumstances for certain
insurance coverage to be placed by licensed excess line brokers with
unauthorized insurers

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill would exempt certain commercial lines insurance transactions
placed by wholesale insurance brokers from the excess line diligent
effort requirement. The bill would eliminate both a process and exces-
sive data reporting which provide no benefit to insureds and instead
allow brokers to focus on providing services that consumers need and
value.

 
SUMMARY OF PROVISIONS:

Section one amends subparagraph (A) of paragraph 3 of subsection (b) of

section 2118 of the insurance law, as amended by section 12 of part I of
chapter 61 of the laws of 2011, to establish a waiver of the diligent
effort requirement in limited circumstances.

Section two amends section 2118 of the insurance law by adding a new
subsection (g).

 
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 law requires that brokers make a good faith attempt to seek coverage
from a licensed insurer before turning to the excess line market. This
is called a diligent effort. The law considers a diligent effort to be
complete when three licensed insurers have considered and then rejected
a risk. The bill would exempt commercial insurance policies placed by
retail insurance brokers through unaffiliated wholesale excess line
brokers from the diligent effort requirement. Diligent effort would
still apply to all personal lines policies as well as commercial lines
policies that are not placed through an unaffiliated wholesale excess
line broker.

A substantial portion of excess line risks are placed by small main
street retail insurance brokers who turn to wholesale excess line
brokers when they have exhausted their own licensed insurer options.  It
is inherent to the insurance industry that retail brokers will exhaust
all licensed market options before seeking excess line coverage through
a wholesale broker. Retail brokers will not choose to split their
commissions with wholesale excess line brokers unless that is the only
way to obtain coverage for an insured. Retail brokers know the under-
writers at the licensed insurers with whom they deal regularly and are
familiar with their policy forms, their licensed companies often direct-
ly bill insureds and therefore eliminate collection risks, and policies
issued by licensed insurers are covered by state security funds that
also de facto protect retail brokers by supporting their clients. A
retail broker loses these benefits in excess line transactions.

Therefore, diligent effort is unneeded to ensure that commercial risks
are placed with licensed insurers when feasible where retail brokers
place risks with unaffiliated wholesale excess line brokers. The process
and data reporting under these circumstances places an unnecessary delay
and cost on placing insurance policies that is detrimental to consumers.

 
PRIOR LEGISLATIVE HISTORY:

2023-24: S5896 - Passed Senate

2021-22: S8128 - Passed Senate

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
Immediately.

2025-S5310 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5310
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                             February 20, 2025
                                ___________
 
 Introduced  by  Sens.  BAILEY, GALLIVAN, PALUMBO, WEBB -- 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 permitting a waiver of
   the  diligent  effort requirement in limited circumstances for certain
   insurance coverage to be placed by licensed excess line  brokers  with
   unauthorized insurers
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subparagraph (A)  of  paragraph  3  of  subsection  (b)  of
 section 2118 of the insurance law, as amended by section 12 of part I of
 chapter 61 of the laws of 2011, is amended to read as follows:
   (A)  Except  as  provided  in  subparagraph  (F) OF THIS PARAGRAPH AND
 SUBJECT TO SUBPARAGRAPH (C) of this paragraph, submission  of  insurance
 documents  to  the  excess  line  association  shall be accompanied by a
 statement subscribed to, and affirmed by, the licensee or sublicensee as
 true under the penalties of perjury that,  after  diligent  effort,  the
 full amount of insurance required could not be procured, from authorized
 insurers,  each  of  which  is authorized to write insurance of the kind
 requested and which the licensee has reason to  believe  might  consider
 writing the type of coverage or class of insurance involved, and further
 showing  that  the  amount  of  insurance  procured from an unauthorized
 insurer is only the excess over the amount procurable from an authorized
 insurer. The licensee, however, shall be excused from affirming  that  a
 diligent effort, as defined above, was made to procure the coverage from
 authorized  insurers  if  the licensee's affidavit is accompanied by the
 affidavit of another broker involved in the placement affirming as  true
 under  the  penalties  of  perjury  that,  after  diligent effort by the
 affirming broker, the required insurance could not be procured  from  an
 authorized  insurer  which  the  affirming  broker had reason to believe
 might consider writing the  type  of  coverage  or  class  of  insurance
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD09627-01-5

 S. 5310                             2
 
 involved.  The  licensee  and the affirming broker shall be excused from
 affirming that a diligent effort was made if the  superintendent  deter-
 mines,  pursuant  to paragraph four of this subsection, that no declina-
 tions  are  required.  NOTWITHSTANDING  ANY  PROVISION  TO  THE CONTRARY
 CONTAINED IN   THIS CHAPTER,   WHERE   A  RETAIL    PRODUCING  INSURANCE
 BROKER   SEEKS  TO PROCURE  OR PLACE COMMERCIAL LINES INSURANCE  THROUGH
 AN  UNAFFILIATED WHOLESALE  EXCESS  LINE  INSURANCE BROKER,   BOTH   THE
 RETAIL  PRODUCING  INSURANCE BROKER AND THE WHOLESALE EXCESS LINE INSUR-
 ANCE BROKER SHALL BE EXCUSED FROM MAKING ANY DILIGENT  EFFORT  OTHERWISE
 REQUIRED BY THIS ARTICLE.
   §  2.  Section  2118  of  the insurance law is amended by adding a new
 subsection (g) to read as follows:
   (G) (1) AS USED IN THIS SECTION:
   (A) "RETAIL PRODUCING INSURANCE  BROKER"  MEANS  AN  INSURANCE  BROKER
 LICENSEE WHO DIRECTLY DEALS WITH AN INSURED;
   (B) "WHOLESALE EXCESS LINE INSURANCE BROKER" MEANS THE LICENSED EXCESS
 LINE  INSURANCE  BROKER  FROM  WHOM OR THROUGH WHOM THE RETAIL INSURANCE
 BROKER HAS PROCURED EXCESS LINE COVERAGE ON BEHALF OF THE INSURED; AND
   (C) "COMMERCIAL LINES INSURANCE" MEANS ANY  POLICY  OF  INSURANCE  NOT
 DEFINED  AS  A "COVERED POLICY" IN SUBSECTION (A) OF SECTION THREE THOU-
 SAND FOUR HUNDRED TWENTY-FIVE OF THIS CHAPTER.
   (2) A RETAIL PRODUCING INSURANCE BROKER AND A  WHOLESALE  EXCESS  LINE
 INSURANCE  BROKER  ARE  UNAFFILIATED IF SUCH BROKER DOES NOT CONTROL, IS
 NOT CONTROLLED BY, OR IS NOT UNDER COMMON  CONTROL  WITH  THE  OTHER.  A
 RETAIL  PRODUCING  INSURANCE BROKER OR A WHOLESALE EXCESS LINE INSURANCE
 BROKER HAS CONTROL OVER THE OTHER IF THE BROKER: (A) DIRECTLY  OR  INDI-
 RECTLY  OR  ACTING  THROUGH ONE OR MORE OTHER PERSONS OWNS, CONTROLS, OR
 HAS THE POWER TO VOTE TWENTY-FIVE PERCENT OR MORE OF ANY CLASS OF VOTING
 SECURITIES OF THE OTHER, OR (B) CONTROLS IN ANY MANNER THE ELECTION OF A
 MAJORITY OF THE DIRECTORS OR TRUSTEES OF THE OTHER.
   § 3. This act shall take effect immediately, provided,  however,  that
 the  amendments  to subparagraph (A) of paragraph 3 of subsection (b) of
 section 2118 of the insurance law made by section one of this act  shall
 not  affect  the  expiration  of  such subsection and shall be deemed to
 expire therewith.

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Senate Bill S5310

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Sponsored By

Jamaal T. Bailey