Relates to assessments to defray operating expenses of the department

7 Co-sponsors

• Thomas F. O'Mara
• Gary Finch
• Clifford Crouch
• Nancy Calhoun
• Louis Tobacco
• Robert Oaks
• Jane Corwin

3 Multi-sponsors

• Stephen Hawley
• Michael Montesano
• David Townsend

BILL NUMBER:A10774

Title of bill

An act to amend the insurance law, in relation to assessments to defray operating expenses of the department

Purpose or general idea of bill

To reduce the cost of insurance in New York State.

Summary of specific provisions

Section one amends Insurance Law section 332(a) to remove the authority of the State to assess the cost of indirect expenses of Insurance Department on the insurance industry. Section two is the effective date..

Effects of present law this bill would alter

Existing law authorizes the State of New York to assess to the insurance industry the cost of direct and indirect expenses of the Insurance Department for industry oversight and consumer protection.

Justification

For approximately a decade, expenses above and beyond those necessary to support the mission of the Insurance Department have been levied against the insurance industry and suballocated to other agencies for efforts unrelated to insurance industry regulation. Exam- ples include suballocations to the, Department of State for building code enforcement and the State fire reporting system and to the Depart- ment of Health for lead poisoning and childhood obesity prevention programs. These are worthy programs but for the purpose of transparency should be funded through the general fund, rather than on industry assessments that are ultimately paid for by those who purchase health, auto and homeowners insurance, among others.

These "332 assessments" began in a relatively modest fashion, with approximately $21 million being suballocated in 2001-02. However, in recent years the amounts levied and suballocated has grown at an alarm- ing rate, reaching a total suballocation of approximately $317 million in the 2009-10 budget.

The authority for these assessments is found in section 332 of the Insurance Law, and the statutory basis used, is based on language authorizing assessments for the direct and indirect costs of the expenses of the Insurance Department. By removing the statutory authori- ty to assess these indirect costs, this legislation will save insurance policyholders across New York at least $317 million.

Prior legislative history

New bill.

FISCAL IMPLICATIONS FOR. STATE AND LOCAL GOVERNMENTS: The State will be forced to evaluate programs currently funded by 332 assessments and determine whether other funding sources arc appropriate or funding should be discontinued. Savings will occur for local governments.

Effective date

January 1 next succeeding enactment.