Relates to the duties of excess line brokers in selecting unauthorized insurers

BILL NUMBER:S3548

Title of bill

An act to amend the insurance law, in relation to duties of excess line brokers

Purpose

To modernize certain aspects of New York's Insurance Law pertaining to the placement of risks in the excess line market.

Summary of provisions

This bill amends section 2118 of the insurance law to recognize that where a quote for coverage from an authorized insurer exceeds by twenty-five percent or more a quote for comparable coverage from the excess line market, the licensed insurer quote may be regarded as a declination from the authorized insurer.

The bill further expands the authority of the Superintendent of Insur- ance to waive the diligent effort requirement and declare certain cover- ages eligible for export to the excess line market based upon the best interests of the insureds seeking coverage

Finally, the bill also relieves an excess line broker's diligent effort obligation in the circumstances in which the diligent effort standard would not apply is where a policy is renewed with the same insurer for a second or third consecutive one year term.

Section 3 of the bill provides for an effective date.

Existing law

Current law grants the Superintendent discretion to waive the diligent effort, but in limited circumstances

Expanding the authority of the Superintendent to waive the diligent effort will confer a degree of commercial flexibility required for excess line brokers to meet New York insurance consumers' coverage needs in an efficient manner. This bill amends the insurance law to remediate redundancies that add expenses and unnecessary delay to the procurement of insurance from the excess line market.

Justification

The excess line market is an important segment of New York's insurance marketplace The excess line market provides a source of additional insurance capacity and an avenue for coverage in situations involving hard-to-place risks that the licensed market cannot or will not write. This bill seeks to modernize the excess line law with tailored reforms aimed at ameliorating the burdens and costs of certain reporting requirements that are currently an unnecessary element of New York's regulatory compliance regime, but in a manner that preserves consumer protections extant in the insurance law

LEGISLATIVE. HISTORY: S.6552 of 2012.

Fiscal implications

None.

Effective date

Immediately, with provisions.