Provides an exemption to certain provisions relating to risk-based capital for property/casualty insurance companies and to financial regulation of medical malpractice; repealer

1 Co-sponsor

• Ruth Hassell-Thompson

Title of bill

An act to amend the insurance law, in relation to an exemption to certain provisions of law relating to risk-based capital for property/casualty insurance companies; and in relation to the financial regulation of medical malpractice liability insurance companies; and to repeal certain provisions of such law relating thereto

Summary of provisions

Section 1: Amends Insurance Law section 1301 to allow medical malpractice insurance to apply the value of surcharges or assessments to admitted asset calculations without having to collect such surcharges or assessments, except on a schedule and subject to limitations already provided for in law.

Section 2: Amends Insurance Law section 1311 to provide for the inclusion of admitted assets allowed under this legislation into the calculation of required surplus.

Section 3: Amends Insurance Law section 1325 to permanently exempt medical malpractice insurance companies from the provisions of law relating to the risk based financial standards applying to all property casualty insurance companies pursuant to section 1324 of the insurance law. It also directs the superintendent of insurance to develop a new financial standards framework for medical malpractice insurers operating in the state. The new standards are to be created by June 2011 and put into effect in January 2012. The new financial standards to be developed by the Department should be based on consultations with insurers and other interested parties.

Section 4: Creates Insurance Law section 1326 to limit the application of contingent liabilities to the financial statements of medical malpractice insurers. Three of the bill also provides authority for insurers to adjust rates upward no more than five percent per year on a file and use basis.

Section 5: Amends Insurance Law section 2343 to make permanent certain prohibitions on requests for orders of rehabilitation or liquidation for medical malpractice insurance carriers.

Section 6: Amends Insurance Law section 6108 to create a presumption for reciprocal insurers that surcharges or assessments are components of admitted assets.

Section 7: Amends Insurance Law section 6111 to allow for contingent liabilities of subscribers to be included in the calculation of admitted assets for the purpose of completion of the financial statement.

Justification

Medical malpractice insurance is a unique business in New York. The vast majority of the state's medical malpractice insurance capacity is provided by admitted, single-state, mono-line insurance carriers, most of which are mutuals or reciprocal insurers that are owned or controlled by physicians which provide medical malpractice coverage to physicians. However, in addition to financial challenges, these insurers, admitted in New York State, have been confronted with mounting competition from Federally sanctioned out-of-state Risk Retention Groups which are less-regulated than New York admitted carriers. These Risk Retention groups may be able to provide cheaper medical malpractice coverage in the short term, but may not have the financial wherewithal to pay claims over the long term.

This bill modernizes the Insurance Law as it relates to medical malpractice insurance. It recognizes the unique place that medical malpractice insurance holds in the provision of health care in New York. Further, the unique financial realities of these carriers which are mono-line, doctor-owned entities where premium cost controls and continuity in the availability of coverage are primary business objectives.

Fiscal information

None to the State.

Effective date

Immediately.