Permits unauthorized foreign or alien insurers to contact nonresident persons, firms, associations or corporations to make insurance contracts

BILL NUMBER:S3665A

Title of bill

An act to amend the insurance law, in relation to permitting unauthorized foreign or alien insurers to contact nonresident persons, firms, associations or corporations to make insurance contracts

Purpose or general idea of bill

This bill would permit a person as defined under section one thousand five hundred and one of the insurance law to act on behalf an unauthorized insurer in relation to non-New York residents as long as that person and the unauthorized insurer are part of the same holding company system as a domestic insurer.

Summary of specific provisions

Section one amends Insurance Law section 1101 by adding a new paragraph 8 that would allow a person in the same holding company system as a domestic insurer and unauthorized insurer to act in this state on behalf of the unauthorized insurer with respect to persons not resident in the state.

Section two amends Insurance Law section 2117 by adding a new subsection (k) by adding similar language stated above.

Section three provides that the bill shall take effect immediately.

Justification

Under current law, an entity cannot act on behalf of an unauthorized insurer from offices in the State even if the actions including the solicitation, negotiation or underwriting of risks do not involve New York residents. Thus, business that could otherwise be transacted in New York must take place outside of the state. By forcing these companies beyond the State's borders, the existing law drives jobs and the benefits related thereto out of the State.

This legislation would allow these entities which are part of the holding company system of a domestic insurer and the unauthorized insurer, along with the employees that support them, to come into the State and set up office facilities within its borders. It would allow such entities to operate from an office in the State so that it may provide those services necessary to support an unauthorized insurer's overseas operations. Such services would include underwriting, negotiating contract terms and quoting premiums with respect to non-New York residents. This legislation would allow these entities to undertake those support functions necessary to operate their business, from within the State, without affecting New York policyholders. The protections afforded New York policyholders will be unimpaired by the proposed legislation.

Importantly, this will allow jobs to be established in New York related to the conduct of business in New York that has no nexus to citizens of the State and will not affect the regulation of insurance as it relates to New York residents.

Prior legislative history

2010 (S.7674)

Fiscal implications for state and local governments

None.

Effective date

Immediately.