What's happening
This bill allows excess line coverage for medical malpractice insurance for general hospitals, physicians, and dentists without requiring a declination from state plans or associations.
Why it matters
Easier access to specialized or higher-limit malpractice insurance. By removing the declination requirement for general hospitals, physicians, and dentists, these medical providers can more readily obtain excess line (out-of-state or non-standard) medical malpractice coverage, which may be crucial if state-authorized insurers do not offer adequate limits or specialized products.
Potential for increased competition and more options. Allowing access to excess line insurers without first being rejected by state plans/associations could encourage more insurers to offer innovative or tailored malpractice products, potentially driving down costs or improving coverage options for providers.
Shift in regulatory protections and risks. Policies from excess line insurers are not subject to full New York State regulatory oversight or insolvency protections, so while access is easier, hospitals, doctors, and dentists must be more cautious about the financial stability and claims-paying reputation of these insurers.
Could impact insurance market dynamics and patient care. Easier access to necessary malpractice coverage may support provider retention and recruitment, particularly in high-risk specialties or underserved areas, potentially improving patient access to medical services.
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Who cares
Headline styles
Change Malpractice Insurance Rules
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to insurance
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Ease Medical Malpractice Coverage
In Assembly Committee · Insurance · Sponsor Kevin Cahill
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
422
2017-2018 Regular Sessions
IN SENATE (Prefiled)
January 4, 2017
Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to excess line coverage for certain medical malpractice insurance
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subsection (e) of section 2118 of the insurance law, as added by chapter 684 of the laws of 1993, subparagraph (A) of paragraph 2 as amended by chapter 587 of the laws of 2002, subparagraph (C) of paragraph 2 as amended by chapter 498 of the laws of 1996, is amended to read as follows:
(e)(1) Except as provided in paragraph two of this subsection, no licensee shall be required to obtain a declination from an association established pursuant to article fifty-four or fifty-five of this chapter, or to apply for insurance through a plan established pursuant to article fifty-three of this chapter, as a condition of procuring insurance pursuant to this section.
(2) (A) Unless the licensee obtains a declination from the appropriate association, or from an insurer pursuant to an application for coverage through a plan, no diligent effort shall be considered to have been made if the insurance is available from the plan or association in connection with the placement of:
(i) a policy of non-commercial motor vehicle liability insurance; or
(ii) [medical malpractice insurance for a general hospital, as defined in subdivision ten of section two thousand eight hundred one of the public health law, a physician or dentist; or
(iii)] insurance which by law must be provided by an authorized insurer.
(B) In connection with the placement of any other kind of insurance, a declination from the appropriate association, or from an insurer pursu-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01681-01-7
S. 422 2
ant to an application for coverage through a plan, shall be required unless prior to the placement the insured has been advised of the availability of insurance from the plan or association.
(C) The affirming broker shall provide written notice to the insured that the placement was made with an unauthorized insurer. A copy of this notice shall be attached to the affirming broker's affidavit. The affidavits required by this section to be completed by the affirming broker shall include a statement that the affirming broker advised the insured in writing:
(i) that the unauthorized insurer with which the coverage is being placed is not authorized to do an insurance business in this state and is not subject to supervision by this state;
(ii) that in the event of the insolvency of the unauthorized insurer, losses will not be covered by any New York state insolvency fund;
(iii) that the policy may not be subject to all of the regulations of the superintendent pertaining to policy forms; and
(iv) such other information as the superintendent may, by regulation, require.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to excess line coverage for certain medical malpractice insurance
Purpose
To repeal the requirement that excess line brokers must obtain a declination from the medical malpractice insurance pool before the broker can place primary malpractice insurance in the excess line market
Summary of provisions
Section 1 amends subsection (e) of section 2118 of the insurance law.
Section 2 is the effective date.
Justification
New York State continues to suffer in numerous ways from a malfunctioning medical malpractice insurance marketplace that many describe as a crisis. There are only four insurers which assume a significant volume of medical malpractice business, insuring over 80% of the entire New York market. Threeof those insurers support the fourth insurer financially by bearing a portion of the losses which exceed premium. That fourth market is the residual market, Medical Malpractice Insurance Pool ("MMIP"). MMIP exists to underwrite all medical malpractice risks rejected by licensed insurers. MMIP insures physicians and hospitals which cannot obtain insurance from other licensed insurers in New York willing to write medical malpractice risks.
New York Law (§ 2118(e) (2) (A) (ii)) currently requires excess line brokers to obtain a declination from the MMIP before the broker can place primary malpractice insurance in the excess line market. As a practical matter, MMIP will not decline such risks except in the rarest of circumstances, which, by and large, bars the excess line market from this line of business in New York. This bill would repeal the requirement for the excess line brokers to obtain a declination from the MMIP. Repealing the MMIP declination requirement will provide doctors, dentists and general hospitals a broader array of choices, products, terms and conditions to suit a professional's particular insurance needs. While all insurers, including MMIP, will be permitted to continue to make available their malpractice insurance products, the addition of excess line insurers will allow insureds greater choice in the selection of insurance policies which best suit their needs from a number of additional, highly rated insurers.
While excess line brokers will continue to be required to diligently search the licensed market before placing coverage with an excess line insurer, the insured professional will be permitted to accept an offer of coverage from an excess line insurer when the policy terms and conditions are superior to those offered by MMIP. This legislation will bolster the marketplace and treat the medical malpractice residual market MMIP, in a manner consistent with the New York Property Insurance Association and the Assigned Risk Plan. As a result, these changes will provide medical professionals with more secure coverage options, while also benefiting consumers who need protection and support should an unfortunate medical event occur.
Legislative history
S.7339 of 2016. FISCAL IMPLICATIONS :
None.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.