S T A T E O F N E W Y O R K
________________________________________________________________________
2348
2015-2016 Regular Sessions
I N S E N A T E
January 22, 2015
___________
Introduced by Sen. SEWARD -- 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 the duties of excess
line brokers
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Paragraph 1 of subsection (a) of section 2118 of the insur-
2 ance law, as amended by chapter 220 of the laws of 1986, is amended to
3 read as follows:
4 (1) (A) Every licensee licensed pursuant to section two thousand one
5 hundred five of this article shall be required to use due care in
6 selecting the unauthorized insurer from whom policies are procured under
7 his license.
8 (B) A LICENSEE IS PRESUMED TO HAVE EXERCISED DUE CARE IN SELECTING AN
9 UNAUTHORIZED INSURER IF AT THE TIME OF PLACEMENT, THE EXCESS LINE ASSO-
10 CIATION ESTABLISHED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED THIRTY
11 OF THIS ARTICLE HAS PUBLISHED THE NAME OF SUCH INSURER ON A LIST OF
12 ELIGIBLE UNAUTHORIZED INSURERS. THE EXCESS LINE ASSOCIATION WILL LIST NO
13 INSURER UNLESS IT HAS CONDUCTED AN ANALYSIS OF SUCH INSURER UPDATED NO
14 LESS THAN ANNUALLY AND DETERMINED SUCH INSURER,
15 (I) IS FINANCIALLY SOLVENT AND STABLE;
16 (II) MAINTAINS ADEQUATE CAPACITY AND POLICYHOLDER'S SURPLUS TO MEET
17 ITS OBLIGATIONS TO POLICYHOLDERS, AND ALL OTHER LIABILITIES;
18 (III) IS MANAGED BY INDIVIDUALS WHO ARE TRUSTWORTHY AND COMPETENT; AND
19 (IV) MAINTAINS CLAIMS PRACTICES IN A SATISFACTORY MANNER.
20 S 2. Subparagraph (C) of paragraph 3 of subsection (b) of section 2118
21 of the insurance law, as amended by chapter 684 of the laws of 1993, is
22 amended to read as follows:
23 (C) Every licensee, or affirming broker, in connection with the place-
24 ment of each risk pursuant to this section, shall record on the affida-
25 vit required pursuant to subparagraph (A) of this paragraph [the infor-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06935-01-5
S. 2348 2
1 mation] THE NAME OF THE INSURER DECLINING SUCH RISK AND AN
2 IDENTIFICATION NUMBER FOR SUCH INSURER ISSUED BY THE NATIONAL ASSOCI-
3 ATION OF INSURANCE COMMISSIONERS OR DEPARTMENT OF FINANCIAL SERVICES.
4 INFORMATION relied upon [that] WHICH formed the basis of such licensee's
5 or affirming broker's reason to believe that the authorized insurer
6 might consider writing the type of coverage or class of insurance
7 involved SHALL BE MAINTAINED BY SUCH LICENSEE OR AFFIRMING BROKER IN
8 WRITING FOR A PERIOD OF THREE YEARS FROM THE EXPIRATION OF SUCH POLICY.
9 S 3. Paragraph 4 of subsection (b) of section 2118 of the insurance
10 law, as amended by chapter 630 of the laws of 1988, is amended to read
11 as follows:
12 (4) (A) The number of declinations constituting diligent effort in
13 regard to placement of coverage with authorized insurers for purposes of
14 paragraph three of this subsection shall be three, unless the super-
15 intendent after a hearing, on a record, upon findings and conclusions,
16 determines that another number of such declinations is appropriate in
17 regard to particular coverages. In making such determinations, the
18 superintendent shall consider relevant market conditions, including
19 unavailability of particular coverages from authorized insurers, and may
20 conduct market surveys. Any such determination shall be reviewed at
21 least annually by the superintendent.
22 (B) THE DILIGENT EFFORT MADE BY A LICENSEE OR AFFIRMING BROKER FOR ANY
23 POLICY THAT PROVIDES COVERAGE FOR A ONE YEAR PERIOD, SHALL BE DEEMED A
24 VALID DILIGENT EFFORT FOR THE FIRST AND SECOND ANNUAL RENEWAL THEREOF
25 WHEN THE SAME INSURER PROVIDES SUCH RENEWAL COVERAGE.
26 S 4. This act shall take effect on the ninetieth day after it shall
27 have become a law and apply to insurance policies placed or procured on
28 and after such date, provided, however, that the amendments to
29 subsection (b) of section 2118 of the insurance law made by sections two
30 and three of this act shall not affect the expiration and reversion of
31 such subsection and shall be deemed to expire therewith.