What's happening
This bill allows limited equity housing cooperatives in New York to form insurance captives, with limits on risk concentration per county and city.
Why it matters
Expands risk management options for affordable housing. By allowing limited equity cooperatives (often affordable or income-restricted housing) to establish their own insurance captives, the bill could make it easier and potentially less expensive for these cooperatives to secure insurance coverage—an area where they often struggle in the commercial market.
Aims to prevent risk concentration and potential financial instability. The bill sets upper limits on how much risk a single captive can hold in a county (30%) and in New York City as a whole (60%). This is designed to prevent any one captive from becoming too exposed to localized disasters, which could otherwise undermine the captive’s ability to pay out claims.
Sets regulatory guardrails and oversight. The legislation requires that captives be formed as separate entities, maintain strict financial standards, and submit to state oversight and regular reporting. This helps ensure that the captives are financially sound and operated with proper accountability, which is crucial for protecting cooperative members.
Membership in the captive is voluntary and requires buy-in. Cooperative members are not forced to join the captive, but those who do must contribute capital and premiums according to established policies. This allows individual cooperatives some flexibility while still requiring financial participation to support the insurance pool.
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Who cares
Headline styles
Let Co-ops Form Insurance Pools
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to insurance
- Referred to insurance
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1022
2025-2026 Regular Sessions
IN SENATE (Prefiled)
January 8, 2025
Introduced by Sen. JACKSON -- 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 enacting the "limited equity cooperative insurance captive authorization and county cap act"
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Short title. This act shall be known and may be cited as the "limited equity cooperative insurance captive authorization and county cap act".
§ 2. Legislative purpose and findings. The purpose of this act is to enable limited equity cooperatives in the state of New York to establish insurance captives to enhance their ability to manage risks, improve insurance coverage, and promote financial stability. Furthermore, it aims to prevent concentration of risk by capping the number of insurance captives that limited equity cooperatives can establish to one per county.
§ 3. The insurance law is amended by adding a new section 7013 to read as follows:
§ 7013. Limited equity cooperative insurance captive. (a) As used in this section, the term "limited equity cooperative" shall mean a limited equity cooperative organized as a nonprofit housing development fund company pursuant to article eleven of the private housing finance law.
(b) Limited equity cooperatives are hereby authorized to establish insurance captives for the purpose of providing insurance coverage to their members and managing related risks. No limited equity cooperative shall hold more than thirty percent of its risk in the same county and shall hold no more than sixty percent of its risk in New York City. A limited equity cooperative insurance captive shall have no fewer than ten thousand units under its risk management.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02938-01-5
(c) The limited equity cooperative shall create and organize the insurance captive in accordance with the requirements set forth by the department and other applicable laws and regulations. Any insurance captive established pursuant to the provisions of this section shall be subject to oversight and regulation by the department.
(d) An insurance captive established pursuant to the provisions of this section shall be operated as a distinct entity from the limited equity cooperative itself, maintaining separate financial records and accounts.
(e) A limited equity cooperative insurance captive may offer coverage for property and casualty risks, liability risks, and any other risks deemed appropriate by the department, subject to approval of the department.
(f) A limited equity cooperative insurance captive shall adhere to all solvency requirements and financial standards established by department, ensuring its ability to meet the insurance needs of the limited equity cooperative members.
(g) Participation in the limited equity cooperative insurance captive by limited equity cooperative members shall be voluntary. Any member opting to participate shall contribute to the limited equity cooperative insurance captive's capital and premium reserves as required by the captive's policies and procedures.
(h) The insurance captive shall be subject to periodic financial and operational examinations by the department to ensure compliance with applicable laws and regulations.
(i) The department shall establish reporting requirements for limited equity cooperatives operating insurance captives, including but not limited to financial statements, risk assessments, and claims data.
(j) The department shall promulgate all rules and regulations necessary for the implementation of this section.
§ 4. Severability. If any clause, sentence, paragraph, section or part of this act shall be adjudged by any court of competent jurisdiction to be invalid and after exhaustion of all further judicial review, the judgment shall not affect, impair or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, section or part of this act directly involved in the controversy in which the judgment shall have been rendered.
§ 5. This act shall take effect on the first of January next succeeding the date on which it shall have become a 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 effective date.
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 enacting the "limited equity cooperative insurance captive authorization and county cap act"
Purpose
Enacts the "limited equity cooperative insurance captive authorization and county cap act"
Summary of provisions
Section 1 of the bill is title "limited equity cooperative insurance captive authorization and county cap act"
Section two is the legislative purpose: The purpose of this act is to enable limited equity cooperatives in the state of New York to establish insurance captives to enhance their ability to manage risks, improve insurance coverage, and promote financial stability. Furthermore, it aims to prevent concentration of risk by capping the number of insurance captives that limited equity cooperatives can establish to one per coun- ty.
Section 3 amends insurance law by adding a new section 7013 to authorize the limited equity cooperatives in the state of New York.
Section 4 is Severability clause - If any clause, sentence, paragraph, section or part of this act shall be adjudged by any court of competent jurisdiction to be invalid and after exhaustion of all further judicial review, the judgment shall not affect, impair or invalidate the remain- der thereof, but shall be confined in its operation to the clause, sentence, paragraph, section or part of this act directly involved in the controversy in which the judgment shall have been rendered.
Section 5 is the enactment clause.
Justification
Limited equity cooperatives, like any other organization, face various risks ranging from property damage to liability claims. By establishing insurance captives, these cooperatives can effectively manage their risks by tailoring insurance coverage to their specific needs. Captives allow them to have more control over their insurance programs, poten- tially leading to better coverage and lower costs.
Improved Insurance Coverage: Traditional insurance options may not always adequately address the unique needs of limited equity cooper- atives. By establishing captives, these cooperatives can design insur- ance policies that align closely with their risk profiles and opera- tional requirements. This can result in improved coverage tailored specifically to the cooperative's circumstances, ensuring better protection against potential losses.
Promotion of Financial Stability: Insurance captives can contribute to the financial stability of limited equity cooperatives by providing a reliable mechanism for managing risks and securing adequate insurance coverage. With greater control over their insurance programs, cooper- atives can mitigate the impact of unexpected events, thereby enhancing their financial; resilience and sustainability.
Legislative history
2024 - S. 9632 - REFERRED TO INSURANCE
State and local fiscal implications
N/A
Effective date
This act shall take effect on the first of January next succeeding the date on which it shall have become a law. Effective immediately, the addition, amendment and/or repeal of any rule orò regulation necessary for the implementation of this act on its effective date are authorized to be made and completed on or before such effective date.
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