Revises the standards relating to incorporation of stock/mutual insurance companies in New York state

4 Co-sponsors

• William T. Stachowski
• Kevin S. Parker
• Hiram Monserrate
• Antoine M. Thompson

Title of bill

An act to amend the insurance law, in relation to revising the standards relating to the incorporation of stock or mutual insurance companies

Purpose or general idea of bill

To revise the standards relating to the incorporation of stock or mutual insurance companies so that the incorporators of an insurance corporation need only list their city and state of residence in newspapers and the company charter. This bill would also reduce the number of directors from thirteen to seven. The bill also reduces the number of directors who must be residents of New York State from two to one. The bill would also reduce the number of officers who must be directors from two to one.

Summary of provisions

This bill would amend Section 1201(a)(3) of the Insurance Law to remove the requirement that the proposed incorporators of a New York insurance corporation publish their city and state of residence. The bill would also amend Section 1201(a)(5) (vii) to remove the requirement that the residence address of the proposed incorporators be contained in the corporate charter and require, instead, that they only publish their city and state of residence.

In addition, Sections 1201(a)(5)(v), 1202(a)(2), and 1209(b) of the Insurance Law would be amended to reduce the number of directors necessary to incorporate a stock or mutual insurance company from thirteen to seven. Section 1201(a)(5)(vi) would be amended to reduce the number of directors who must be residents of New York State from two to one.

Justification

The requirement that the incorporators of a new insurance corporation in New York must publicize their home addresses has been a potential impediment to the formation of new companies in the state. It is understandable that these individuals would be uncomfortable with disclosing their home addresses in the newspaper and it is not essential for the public to know this information. Rather, it appears that publication of the city and state of residence would be sufficient for this purpose.

In today's global economy, a smaller board of directors would allow more companies to incorporate and respond to the rapidly changing economy. Likewise, there does not appear to be a rationale for requiring that at least two of the board members be New York State residents. Many insurers in New York are now global enterprises and, given the increased demands for improved corporate governance being placed upon financial services corporations, it does not seem necessary to require that two directors be state residents. The primary consideration for selecting members of a company's Board of Directors should be to identify individuals with superior intelligence and high values who have an understanding of the business at hand, regardless of their location.

Prior legislative history

2008: A.8767, S.2085-A 2009: A.1005-A

Fiscal implications

None.

Effective date

This act will take effect immediately.