Ease Broker Insurance Rules

Section 1. Subparagraph (A) of paragraph 3 of subsection (b) of section 2118 of the insurance law, as amended by section 12 of part I of chapter 61 of the laws of 2011, is amended to read as follows:

(A) Except as provided in subparagraph (F) and subject to subparagraph (C) of this paragraph, submission of insurance documents to the excess line association shall be accompanied by a statement subscribed to, and affirmed by, the licensee or sublicensee as true under the penalties of perjury that, after diligent effort, the full amount of insurance required could not be procured, from authorized insurers, each of which is authorized to write insurance of the kind requested and which the licensee has reason to believe might consider writing the type of coverage or class of insurance involved, and further showing that the amount of insurance procured from an unauthorized insurer is only the excess over the amount procurable from an authorized insurer. The licensee, however, shall be excused from affirming that a diligent effort, as defined above, was made to procure the coverage from authorized insurers if the licensee's affidavit is accompanied by the affidavit of another broker involved in the placement affirming as true under the penalties of perjury that, after diligent effort by the affirming broker, the

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD06625-04-0

A. 8842--A 2

required insurance could not be procured from an authorized insurer which the affirming broker had reason to believe might consider writing the type of coverage or class of insurance involved. The licensee and the affirming broker shall be excused from affirming that a diligent effort was made if the superintendent determines, pursuant to paragraph four of this subsection, that no declinations are required. Notwithstanding anything to the contrary contained in this chapter, where a retail insurance broker seeks to procure or place commercial lines insurance through an unaffiliated wholesale excess line insurance broker, both the retail insurance broker and the wholesale excess line insurance broker shall be excused from making any diligent effort otherwise required by this article.

§ 2. Subparagraph (C) of paragraph 3 of subsection (b) of section 2118 of the insurance law, as amended by chapter 684 of the laws of 1993, is amended to read as follows:

(C) Every licensee, or affirming broker, in connection with the placement of each risk pursuant to this section not otherwise exempt from the diligent effort requirement, shall record on the affidavit required pursuant to subparagraph (A) of this paragraph the name and National Association of Insurance Commissioners (NAIC) code of each authorized insurer declining a risk and information relied upon that formed the basis of such licensee's or affirming broker's reason to believe that the authorized insurer might consider writing the type of coverage or class of insurance involved. No additional diligent effort information shall be reported on the affidavit.

§ 3. Section 2118 of the insurance law is amended by adding a new subsection (g) to read as follows:

(g) (1) For the purposes of this section:

(A) a "retail insurance broker" means an insurance broker licensee who directly deals with an insured;

(B) a "wholesale excess line insurance broker" means the licensed excess line insurance broker from whom or through whom the retail insurance broker has procured excess line coverage on behalf of the insured; and

(C) "commercial lines insurance" means any policy of insurance not defined as a "covered policy" in subsection (a) of section three thousand four hundred twenty-five of this chapter.

(2) A retail insurance broker and a wholesale excess line insurance broke are unaffiliated if one does not control, is not controlled by, or is not under common control with the other. One has control over the other if the broker directly or indirectly or acting through one or more other persons owns, controls, or has the power to vote twenty-five percent or more of any class of voting securities of the other; or controls in any manner the election of a majority of the directors or trustees of the other.

§ 4. This act shall take effect immediately, provided, however, that the amendments to subparagraphs (A) and (C) of paragraph 3 of subsection (b) of section 2118 of the insurance law made by sections one and two of this act shall not affect the expiration of such paragraph and shall be deemed to expire therewith.