Protect Small Insurance Companies

Section two of the bill provides the legislative intent declaring that the legislature intends to protect small insurance companies that write commercial automobile insurance, to encourage new entrants into the insurance market and novel insurance products, and to foster competition in the marketplace, which will benefit policyholders and the public.

Section three of the bill adds § 7402-a to the insurance law to specify conditions under which the rehabilitation or liquidation of a small insurer can occur. Subdivision 1 prohibits an application for an order of rehabilitation or liquidation of a small insurer on the grounds of insolvency as defined in § 1309 of the insurance law or as a result of a failure or refusal to comply, within the time designated by the super- intendent of financial services, with an order of the superintendent to make good an impairment of its capital, or minimum surplus to policy- holders if a stock insurer, or of its minimum surplus if a mutual insur- er, a reciprocal insurer, Lloyds underwriters, or a co-operative fire insurance corporation, unless the aforementioned order is based on either the superintendent's adoption of a report on examination finding the company insolvent as defined in § 1309 of t he insurance law or the annual or quarterly financial statements of the company either demon- strate that the company's admitted assets do not exceed its liabilities and surplus to policyholders and if the company does not maintain reserves in an amount determined reasonable by its independent loss reserve specialist or, if no independent loss reserve specialist is required, by its appointed actuary.

Subdivision two declares that this section shall not restrict the super- intendent right to direct an examination nor shall the superintendent's regulatory authority be interfered with. In addition, this section shall not restrict an insurer's rights and remedies in any judicial or admin- istrative proceeding.

Subdivision three defines "small insurer" as a domestic property/casualty insurance company with a maximum annual net direct written premiums written of twenty-five million dollars, of which a minimum of seventy-five percent is from the commercial automobile liability business. This subdivision also defines "direct written premi- ums" as the gross direct written premiums less return premiums on such direct business.

Section four of the bill provides the effective date.

Justification

Affordable commercial auto insurance can be difficult to obtain, partic- ularly for new and niche business ventures, because institutional insur- ers are often unwilling to take on these risks. Some of those most affected are for hire vehicle operators that service residents in New York City as well as all of New York State. Yet smaller insurance compa- nies can find it hard to compete against large, institutional carriers in the heavily regulated insurance industry.

This bill attempts to level the playing field by relieving some of the economic pressures facing small insurers and ensuring that they cannot be liquidated on grounds of insolvency when their financial statements show that the companies are solvent. This bill will ease entry by, and retention of, small insurance companies in the property and casualty industry in New York, resulting in greater competition and innovation in the industry and ensuring that for-hire vehicles can operate in the State, for the benefit of all.

Prior legislative history

New bill for 2019.

Fiscal implications

None to State or Local Governments.

Effective date

Thirtieth day after becoming law. Effective immediately the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized to be made and completed on or before such date.