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S3633Senate2019-2020 Session

Update Insurance Reserve Rules

Official title

“Relates to principle based reserves”

Sponsor Neil D. BreslinSD-44+1 co-sponsorAffects Finance
Status
In Senate Committee
Insurance
Impact
5/10
Moderate
Passage
0%

Bill progress

Step 2 of 7

In committee · Insurance

What's happening

This bill updates insurance law to require principle-based reserves for certain life insurance policies and annuities issued after January 1, 2020, using standards set by the superintendent.

Why it matters

  1. Aligns New York insurance regulation with national standards. by referencing the Valuation Manual adopted by the National Association of Insurance Commissioners, potentially improving consistency and competitiveness for insurers operating in multiple states.

  2. Shifts reserve requirements to a principle-based approach. , allowing insurers to use more flexible and risk-sensitive methods to calculate reserves, which can lead to more accurate reflections of financial risk and potentially impact the amount of capital insurers must hold.

  3. Empowers the state superintendent with broad regulatory discretion. , enabling the superintendent to deviate from national standards if necessary to better protect New Yorkers or address state-specific concerns—balancing national alignment with local oversight.

  4. Aims to strengthen consumer protection and insurer solvency. by clarifying that these new standards do not limit the superintendent’s authority to take additional actions to safeguard policyholders and ensure the fiscal health of insurance companies.

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Who cares

  • Life insurers and annuity issuers

    The bill would require minimum reserves for individual and group policies and contracts issued on or after January 1, 2020, to follow the superintendent’s principle-based valuation method.

  • Department of Financial Services

    The superintendent would establish reserve standards by regulation using the specified NAIC valuation manual, with authority to depart from it when reasonably necessary to protect policyholders or New Yorkers.

  • Life insurance policyholders and annuity contract holders

    The bill would change reserve requirements for newly issued coverage while preserving the superintendent’s powers to protect policyholders and ensure insurers’ solvency.

Headline styles

Update Insurance Reserve Rules

Plain English, a few words. Used as the page title.

Sponsors

Primary sponsor
Neil D. Breslin

Senator · Senate District 44

Chair, Insurance

1 Co-sponsor

History

  1. Referred to insurance
  2. Referred to insurance

Full text

2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗

STATE OF NEW YORK

3633

2019-2020 Regular Sessions

IN SENATE

February 11, 2019

Introduced by Sens. BRESLIN, 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 principle based reserves

The People of the State of New York, represented in Senate and Assembly, do enact as follows:

Section 1. Section 4217 of the insurance law is amended by adding a new subsection (h) to read as follows:

(h) (1) This subsection shall apply only to individual and group life insurance policies and annuity contracts issued on or after January first, two thousand twenty.

(2) For purposes of this subsection, "valuation manual" means the valuation manual adopted by the National Association of Insurance Commissioners on December second, two thousand twelve, as subsequently amended on June eighth, two thousand fifteen, November twenty-second, two thousand fifteen, April sixth, two thousand sixteen, and August twenty-ninth, two thousand sixteen.

(3) Notwithstanding subsection (c) of this section and section four thousand two hundred eighteen of this article, the minimum reserve requirements and the minimum standard for the valuation of all individual and group life insurance policies and annuity contracts issued on or after January first, two thousand twenty shall be the superintendent's principle based valuation method defined in paragraph four of this subsection and all regulations promulgated thereunder. Nothing contained within this subsection shall lessen the superintendent's powers under any other provisions of this chapter or the financial services law, including, without limitation, the superintendent's powers and obligations to ensure the solvency and fiscal health of insurers and to protect policyholders.

(4) (A) The superintendent's principle based valuation method shall be the reserve standards, valuation methods, assumptions, and related

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

[ ] is old law to be omitted.

LBD09799-01-9

S. 3633 2

requirements set forth in regulations to be promulgated by the superintendent.

(B) Subject to subparagraphs (C) and (D) of this paragraph, the regulations establishing the superintendent's principle based valuation method shall utilize the reserve standards, valuation methods, and related requirements in the valuation manual.

(C) The regulations establishing the superintendent's principle based valuation method may deviate from any of the reserve standards, valuation methods, assumptions, and related requirements in the valuation manual if the superintendent determines that an alternative reserve standard, valuation method, assumption, and/or related requirement is reasonably necessary to protect policyholders or the people of this state.

(D) The regulations establishing the superintendent's principle based valuation method may deviate from the reserve standards, valuation methods, and related requirements in the valuation manual if the superintendent determines that an amendment to the valuation manual adopted by the National Association of Insurance Commissioners after August twentyninth, two thousand sixteen, is reasonably necessary to protect policyholders or the people of this state and should be incorporated into the superintendent's principle based valuation method.

§ 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 principle based reserves

Purpose

This bill would amend the Insurance Law to conform to the laws of other states by allowing principle based reserving for certain life insurance policies issued on or after January 1, 2018.

Summary of provisions

Section 1 of the bill would amend Insurance Law § 4217(d) to allow the promulgation of regulations with principle based reserve standards to be applied to all individual and group life insurance policies and annuity contracts issued after January 1, 2018.

Section 2 of the bill would provide an immediate effective date.

Justification

This proposal would explicitly allow the Department of Financial Services ("DFS") to promulgate regulations allowing life insurance companies regulated by DFS to use principle-based reserving as an alter- native to the current formulaic rules that are required for reserve calculations.

Principle-based reserving is designed to allow companies to hold reserves based on credible experience that is more closely tailored to the companies' particular products within the strict guidelines that will be promulgated by the Department by regulation. As a general rule, the NAIC and most insurance regulators are relying more and more on principle based reserving as the best reserve mechanism for protecting policyholders while not requiring insurers to maintain excess reserves that fail to reflect the insurer's liabilities and unnecessarily tie up excess capital.

Legislative history

S6439a of 2017-18

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.