Enacts provisions providing sponsored group personal insurance and allows such insurance to be written by authorized insurers

Summary of specific provisions

Renumbers section 3445 to 3453 (there are two sections 3445 in the stat- ute), provides for a new section 3454 to permit personal floaters, vintage automobile and renters insurance to be written on a group basis.

Justification

New York's current Employer Sponsored Group Personal Excess law (section 3445*2) permits the sale of group personal excess insurance but only to designated employees of an employer that sponsors the group. This bill would:

(1) Permit officers and directors to be members of an employer sponsored group in addition to just employees, as well as the spouses and immedi- ate family members and household members of employees.

(2) Allow other types of groups, clubs or associations (not just employ- ers) to sponsor a group insurance program. Examples include groups like stamp or coin collectors club sponsoring a group insurance program for personal property floaters covering valuable stamp or coin collections, a vintage auto enthusiast club sponsoring programs for antique auto insurance, etc. We also propose that banks and other financial insti- tutions that own large portfolios of residential properties (e.g., fore- closed homes), that are renting out such properties, could sponsor a program for renters insurance for their tenants.

(3) Consistent with the examples outlined above, permit group insurance for a few new types of insurance in addition to group personal excess. specifically group personal property floaters (as in our stamp/coin collection example), group vintage vehicle insurance (as in our antique auto enthusiast club example) and group renters insurance (as in our foreclosed properties example).

(4) Set standards for groups that can sponsor group programs. The stand- ards in our proposed draft are similar to standards found in other state laws or regulations -- e.g., a sponsor group cannot be a fictitious group, cannot have been formed for the purpose of buying or selling insurance, must involve members engaged in a common pursuit or enter- prise, must have 25 or more members, have been in existence for at least three years, have adopted by-laws and a method to enroll or register members.

(5) Adopt consumer safeguards with respect to the cancellation or non- renewal of a group policy and with regard to premium payments collected by the sponsor group acting on behalf of the insurer.

The rest of the law remains unchanged -- in particular, the law would still clearly state that no member of a group is ever obligated to buy any insurance.

These types of group insurance programs can be beneficial to the public in a number of ways. With respect to valuable collections, such as coins, stamps and other collectibles, we believe that many collectors are under-insured. There are sub limits in typical Homeowners policies applicable to such items. So, group programs for collectors could increase their awareness of this coverage and, by grouping such homoge- neous collectors, make such insurance products more affordable, too. Similarly, group programs can raise the awareness of renters insurance among tenants.

The market for antique and collectible auto insurance is dominated by a few Managing General Agents. Permitting group antique auto programs could inject some additional competition into this market. And, members of antique auto clubs also have homogeneous risk characteristics - e.g., vehicles typically are garaged, driven very little, often towed to shows instead of being driven, kept in mint condition, and clubs often are formed around owning a specific type or model of car.

Prior legislative history

New Bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately after it shall have become a law.