Relates to enacting the "insurance modernization act of 2016"

Title of bill

An act to amend the insurance law, in relation to enacting the "insurance modernization act of 2016"

Purpose

There are two areas of the insurance law where the current law does not accurately reflect the realities of insurance operations. First, with the advent of electronic signatures and the ubiquitous nature of faxed or scanned documents with copies of signatures, the current Department of Financial Services' (DFS) requirement that applications by continuing insurance education providers must have original signatures is anachronistic. This bill would permit both original signatures and copies of signatures.

Second, current law through an oversight does not expressly include advance premium cooperatives as a type of cooperative allowed to invest in certificates of deposit in a certain manner that is presently allowed for assessment cooperatives. This bill would correct this oversight by stating that all co-operative property/casualty insurance companies may invest in certificates of deposit under this applicable section of law.

Summary of provisions

Section 1 and 2 of the bill provide for the title and legislative intent.

Section 3. Amend Insurance Law section 2132 (i) (3) by stipulating that a continuing education course provider under the insurance law may satisfy signature requirements through compliance with New York General Construction Law section 46, Signature.

Section 4. Amends Insurance Law section 6623 (c) to delete the words "an assessment corporation" and replace them with the words "a co-operative property/casualty insurance company".

Section 5. Effective date is immediately upon enactment.

Justification

DFS currently requires continuing education course providers to submit all documents with original, or "wet", signatures. Modern technology with its extensive use of faxed documents, scanned documents and even electronic signatures has overtaken the anachronistic practice of obtaining original signatures in all cases. In fact, DFS's predecessor agency, the Department of Insurance, opined in a 2007 office of general counsel opinion (Opinion No. 07-02-11) that an insurance producer may use a stamped signature on an application for group insurance. Furthermore, New York has the Electronic Signatures and Records Act (New York Technology Law sections 101-109), which authorizes the use and acceptance of electronic signatures in commercial transactions throughout New York state. This bill would modernize DFS's practices regarding signatures submitted by continuing education providers by allowing a copy of a signature or an electronic signature, as well as an original signature, on documents submitted by such providers.

One of the chapter laws of 2000 amended Insurance Law section 6623 to allow assessment corporations, one of the two types of cooperative insurance companies in New York with the other one being advance premium corporations, to invest in certificates of deposit (CDs) with any one institution in an amount not to exceed the amount guaranteed by the Federal Deposit Insurance Corporation (FDIC). The impetus for this change was the prohibition, prior to this 2000 law, on cooperative insurers investing more than 10% of their admitted assets in any one financial institution. According to the sponsor memorandum for the 2000 law, the change in the statute was necessitated by the fact that assessment corporations are often located in small, rural areas with few investment opportunities. Since this fact also exists for many advance premium corporations, they should similarly be included within this authorization to invest in certificates of deposit. This measure would resolve that inequity by including advance premium corporations under the section of law authorizing investments in CDs.

Legislative history

Similar to S.6526-A of 2014.

Fiscal implications

None.

Effective date

Immediately.