Bill Text: NY A01651 | 2009-2010 | General Assembly | Introduced
Bill Title: An act to amend the insurance law, in relation to enacting the market conduct surveillance act, and to repeal certain sections of such law relating to administrative and procedural provisions
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-01-06 - referred to insurance [A01651 Detail]
Download: New_York-2009-A01651-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
1651
2009-2010 Regular Sessions
I N A S S E M B L Y
(PREFILED)
January 7, 2009
___________
Introduced by M. of A. CALHOUN -- read once and referred to the Commit-
tee on Insurance
AN ACT to amend the insurance law, in relation to enacting the market
conduct surveillance act, and to repeal certain sections of such law
relating to administrative and procedural provisions
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. The insurance law is amended by adding a new article 3-A to
2 read as follows:
3 ARTICLE 3-A
4 MARKET CONDUCT SURVEILLANCE ACT
5 SECTION 360. SHORT TITLE.
6 361. PURPOSE AND LEGISLATIVE INTENT.
7 362. DEFINITIONS.
8 363. MARKET ANALYSIS PROCEDURES.
9 364. PROTOCOLS FOR MARKET CONDUCT ACTIONS.
10 365. TARGETED ON-SITE MARKET CONDUCT EXAMINATIONS.
11 366. CONFIDENTIALITY REQUIREMENTS.
12 367. MARKET CONDUCT SURVEILLANCE PERSONNEL.
13 368. IMMUNITY FOR MARKET CONDUCT SURVEILLANCE PERSONNEL.
14 369. FINES AND PENALTIES.
15 370. PARTICIPATION IN NATIONAL MARKET CONDUCT DATABASES.
16 371. COORDINATION WITH OTHER STATES THROUGH THE NAIC.
17 372. ADDITIONAL DUTIES OF THE SUPERINTENDENT.
18 S 360. SHORT TITLE. THIS ACT SHALL BE KNOWN AND MAY BE CITED AS THE
19 "MARKET CONDUCT SURVEILLANCE ACT".
20 S 361. PURPOSE AND LEGISLATIVE INTENT. THE PURPOSE OF THIS ACT IS TO
21 ESTABLISH A FRAMEWORK FOR THE DEPARTMENT'S MARKET CONDUCT ACTIONS,
22 INCLUDING:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02211-01-9
A. 1651 2
1 (A) PROCESSES AND SYSTEMS FOR IDENTIFYING, ASSESSING AND PRIORITIZING
2 MARKET CONDUCT PROBLEMS THAT HAVE A SUBSTANTIAL ADVERSE IMPACT ON
3 CONSUMERS, POLICYHOLDERS AND CLAIMANTS;
4 (B) MARKET CONDUCT ACTIONS BY THE SUPERINTENDENT TO SUBSTANTIATE SUCH
5 MARKET CONDUCT PROBLEMS AND A MEANS TO REMEDY SIGNIFICANT MARKET CONDUCT
6 PROBLEMS; AND
7 (C) PROCEDURES TO COMMUNICATE AND COORDINATE MARKET CONDUCT ACTIONS
8 AMONG STATES TO FOSTER THE MOST EFFICIENT AND EFFECTIVE USE OF
9 RESOURCES.
10 S 362. DEFINITIONS. (A) "COMPLAINT" MEANS A WRITTEN OR DOCUMENTED
11 ORAL COMMUNICATION MADE TO THE DEPARTMENT PRIMARILY EXPRESSING A GRIEV-
12 ANCE, MEANING AN EXPRESSION OF DISSATISFACTION. FOR HEALTH COMPANIES, A
13 GRIEVANCE IS A WRITTEN COMPLAINT SUBMITTED BY OR ON BEHALF OF A COVERED
14 PERSON.
15 (B) "MARKET CONDUCT ACTION" MEANS ANY OF THE FULL RANGE OF ACTIVITIES
16 THAT THE SUPERINTENDENT MAY INITIATE TO ASSESS THE MARKET AND PRACTICES
17 OF INDIVIDUAL INSURERS, BEGINNING WITH MARKET ANALYSIS AND EXTENDING TO
18 TARGETED EXAMINATIONS.
19 (C) "MARKET ANALYSIS" MEANS A PROCESS WHEREBY MARKET CONDUCT SURVEIL-
20 LANCE PERSONNEL COLLECT AND ANALYZE INFORMATION FROM FILED SCHEDULES,
21 SURVEYS, REQUIRED REPORTS AND OTHER SOURCES IN ORDER TO DEVELOP A BASE-
22 LINE AND TO IDENTIFY PATTERNS OR PRACTICES OF INSURERS THAT DEVIATE
23 SIGNIFICANTLY FROM THE NORM OR THAT MAY POSE A POTENTIAL RISK TO THE
24 INSURANCE CONSUMER.
25 (D) "MARKET CONDUCT SURVEILLANCE PERSONNEL" MEANS THOSE INDIVIDUALS
26 EMPLOYED OR CONTRACTED BY THE SUPERINTENDENT TO COLLECT, ANALYZE, REVIEW
27 OR ACT ON INFORMATION ON THE INSURANCE MARKETPLACE WHICH IDENTIFIES
28 PATTERNS OR PRACTICES OF INSURERS.
29 (E) "NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS" (NAIC) MEANS THE
30 ORGANIZATION OF INSURANCE REGULATORS FROM THE FIFTY STATES, THE DISTRICT
31 OF COLUMBIA AND FOUR UNITED STATES TERRITORIES.
32 (F) "NAIC MARKET ANALYSIS HANDBOOK" MEANS THE OUTLINE OF THE ELEMENTS
33 AND OBJECTIVES OF MARKET ANALYSIS DEVELOPED AND ADOPTED BY THE NAIC, AND
34 THE PROCESS BY WHICH STATES CAN ESTABLISH AND IMPLEMENT MARKET ANALYSIS
35 PROGRAMS.
36 (G) "NAIC MARKET CONDUCT EXAMINER'S HANDBOOK" MEANS THE SET OF GUIDE-
37 LINES DEVELOPED AND ADOPTED BY THE NAIC, WHICH DOCUMENTS ESTABLISHED
38 PRACTICES TO BE USED BY MARKET CONDUCT SURVEILLANCE PERSONNEL IN DEVEL-
39 OPING AND EXECUTING AN EXAMINATION.
40 (H) "NAIC MARKET CONDUCT UNIFORM EXAMINATION PROCEDURES" MEANS THE SET
41 OF GUIDELINES DEVELOPED AND ADOPTED BY THE NAIC DESIGNED TO BE USED BY
42 MARKET CONDUCT SURVEILLANCE PERSONNEL IN CONDUCTING AN EXAMINATION.
43 (I) "NAIC STANDARD DATA REQUEST" MEANS THE SET OF FIELD NAMES AND
44 DESCRIPTIONS DEVELOPED AND ADOPTED BY THE NAIC FOR USE BY MARKET CONDUCT
45 SURVEILLANCE PERSONNEL IN AN EXAMINATION.
46 (J) "QUALIFIED CONTRACT EXAMINER" MEANS A PERSON UNDER CONTRACT TO THE
47 SUPERINTENDENT, WHO IS QUALIFIED BY EDUCATION, EXPERIENCE AND, WHERE
48 APPLICABLE, PROFESSIONAL DESIGNATIONS, TO PERFORM MARKET CONDUCT
49 ACTIONS.
50 (K) "TARGETED EXAMINATION" MEANS A FOCUSED EXAM, BASED ON THE RESULTS
51 OF MARKET ANALYSIS INDICATING THE NEED TO REVIEW EITHER A SPECIFIC LINE
52 OF BUSINESS OR SPECIFIC BUSINESS PRACTICES, INCLUDING BUT NOT LIMITED
53 TO, UNDERWRITING AND RATING, MARKETING AND SALES, COMPLAINT HANDLING
54 OPERATIONS/MANAGEMENT, ADVERTISING MATERIALS, LICENSING, POLICYHOLDER
55 SERVICES, NON-FORFEITURES, CLAIMS HANDLING, OR POLICY FORMS AND FILINGS.
A. 1651 3
1 A TARGETED EXAMINATION MAY BE CONDUCTED BY DESK EXAMINATION OR BY AN
2 ON-SITE EXAMINATION:
3 (1) "DESK EXAMINATION" MEANS A TARGETED EXAMINATION THAT IS CONDUCTED
4 BY AN EXAMINER AT A LOCATION OTHER THAN THE INSURER'S PREMISES. A DESK
5 EXAMINATION IS USUALLY PERFORMED AT THE DEPARTMENT'S OFFICES WITH THE
6 INSURER PROVIDING REQUESTED DOCUMENTS BY HARD COPY, MICROFICHE, DISCS OR
7 OTHER ELECTRONIC MEDIA, FOR REVIEW.
8 (2) "ON-SITE EXAMINATION" MEANS A TARGETED EXAMINATION CONDUCTED AT
9 THE INSURER'S HOME OFFICE OR THE LOCATION WHERE THE RECORDS UNDER REVIEW
10 ARE STORED.
11 (L) "SIGNIFICANT PREMIUM VOLUME" MEANS FIVE PERCENT OR MORE OF AN
12 INSURER'S TOTAL DIRECT BUSINESS PREMIUM FOR A GIVEN CATEGORY OF COVERAGE
13 AS IDENTIFIED ON THE INSURER'S ANNUAL FINANCIAL STATEMENT.
14 (M) "THIRD PARTY MODEL OR PRODUCT" MEANS A MODEL OR PRODUCT PROVIDED
15 BY AN ENTITY SEPARATE FROM AND NOT UNDER DIRECT OR INDIRECT CORPORATE
16 CONTROL OF THE INSURER USING THE MODEL OR PRODUCT.
17 S 363. MARKET ANALYSIS PROCEDURES. (A)(1) THE SUPERINTENDENT SHALL
18 GATHER INFORMATION FROM DATA CURRENTLY AVAILABLE TO THE DEPARTMENT, AS
19 WELL AS SURVEYS AND REQUIRED REPORTING REQUIREMENTS, INFORMATION
20 COLLECTED BY THE NAIC AND A VARIETY OF OTHER SOURCES IN BOTH THE PUBLIC
21 AND PRIVATE SECTORS, AND INFORMATION FROM WITHIN AND OUTSIDE THE INSUR-
22 ANCE INDUSTRY.
23 (2) SUCH INFORMATION SHALL BE ANALYZED IN ORDER TO DEVELOP A BASELINE
24 UNDERSTANDING OF THE MARKETPLACE AND TO IDENTIFY FOR FURTHER REVIEW
25 INSURERS AND/OR PRACTICES THAT DEVIATE SIGNIFICANTLY FROM THE NORM OR
26 THAT MAY POSE A POTENTIAL RISK TO THE INSURANCE CONSUMER. THE SUPER-
27 INTENDENT SHALL USE THE NAIC MARKET ANALYSIS HANDBOOK AS ONE RESOURCE IN
28 PERFORMING THIS ANALYSIS (OR PROCEDURES, ADOPTED BY REGULATION, THAT ARE
29 SUBSTANTIALLY SIMILAR TO THE NAIC MARKET ANALYSIS HANDBOOK).
30 (B) IF THE ANALYSIS COMPELS THE SUPERINTENDENT TO INQUIRE FURTHER INTO
31 A PARTICULAR INSURER OR PRACTICE, THE FOLLOWING CONTINUUM OF MARKET
32 CONDUCT ACTIONS MAY BE CONSIDERED PRIOR TO CONDUCTING A TARGETED,
33 ON-SITE MARKET CONDUCT EXAMINATION. THE ACTION SELECTED SHALL BE MADE
34 KNOWN TO THE INSURER IN WRITING. THESE ACTIONS MAY INCLUDE, BUT SHALL
35 NOT BE LIMITED TO:
36 (1) CORRESPONDENCE WITH THE INSURER;
37 (2) INSURER INTERVIEWS;
38 (3) INFORMATION GATHERING;
39 (4) POLICY AND PROCEDURE REVIEWS;
40 (5) INTERROGATORIES;
41 (6) REVIEW OF INSURER SELF-EVALUATION (IF NOT SUBJECT TO A PRIVILEGE
42 OF CONFIDENTIALITY) AND COMPLIANCE PROGRAMS, INCLUDING MEMBERSHIP IN A
43 BEST-PRACTICE ORGANIZATION;
44 (7) DESK EXAMINATION.
45 THE SUPERINTENDENT SHALL SELECT A MARKET CONDUCT ACTION THAT IS COST
46 EFFECTIVE FOR THE DEPARTMENT AND THE INSURER, WHILE STILL PROTECTING THE
47 INSURANCE CONSUMER.
48 (C) THE SUPERINTENDENT SHALL TAKE THOSE STEPS REASONABLY NECESSARY TO
49 ELIMINATE DUPLICATIVE INQUIRIES AND COORDINATE MARKET CONDUCT ACTIONS
50 AND FINDINGS WITH OTHER STATES.
51 S 364. PROTOCOLS FOR MARKET CONDUCT ACTIONS. (A) MARKET CONDUCT
52 ACTIONS TAKEN AS A RESULT OF A MARKET ANALYSIS SHALL FOCUS ON THE GENER-
53 AL BUSINESS PRACTICES AND COMPLIANCE ACTIVITIES OF INSURERS, RATHER THAN
54 IDENTIFYING INFREQUENT OR UNINTENTIONAL RANDOM ERRORS.
55 (B) (1) THE SUPERINTENDENT IS AUTHORIZED TO DETERMINE THE FREQUENCY
56 AND TIMING OF SUCH MARKET CONDUCT ACTIONS. THE TIMING SHALL DEPEND UPON
A. 1651 4
1 THE SPECIFIC MARKET CONDUCT ACTION TO BE INITIATED, UNLESS EXTRAORDINARY
2 CIRCUMSTANCES INDICATING A RISK TO CONSUMERS REQUIRE IMMEDIATE ACTION.
3 (2) IF THE SUPERINTENDENT HAS INFORMATION THAT MORE THAN ONE INSURER
4 IS ENGAGED IN COMMON PRACTICES THAT MAY VIOLATE STATUTE OR REGULATIONS,
5 HE/SHE MAY SCHEDULE AND COORDINATE MULTIPLE EXAMINATIONS SIMULTANEOUSLY.
6 (C) THE INSURER MAY BE GIVEN AN OPPORTUNITY TO RESOLVE MATTERS THAT
7 ARISE AS A RESULT OF A MARKET ANALYSIS TO THE SATISFACTION OF THE SUPER-
8 INTENDENT BEFORE ANY ADDITIONAL MARKET CONDUCT ACTIONS ARE TAKEN AGAINST
9 THE INSURER.
10 (D) FOR ANY CHANGE MADE TO AN NAIC WORK PRODUCT REFERENCED IN THIS
11 ARTICLE WHICH MATERIALLY CHANGES THE WAY IN WHICH MARKET CONDUCT ACTIONS
12 ARE CONDUCTED, THE SUPERINTENDENT SHALL GIVE NOTICE AND PROVIDE PARTIES
13 WITH AN OPPORTUNITY FOR A PUBLIC HEARING PURSUANT TO THE STATE ADMINIS-
14 TRATIVE PROCEDURE ACT. IF NO HEARING IS HELD, THE SUPERINTENDENT SHALL
15 USE THE VERSIONS OF SUCH WORK PRODUCTS MOST RECENTLY DEVELOPED AND
16 ADOPTED BY THE NAIC.
17 S 365. TARGETED ON-SITE MARKET CONDUCT EXAMINATIONS. (A) WHEN LESS
18 INTRUSIVE MARKET CONDUCT ACTIONS IDENTIFIED IN SUBSECTION (B) OF SECTION
19 THREE HUNDRED SIXTY-THREE OF THIS ARTICLE ARE NOT APPROPRIATE, THE
20 SUPERINTENDENT IS AUTHORIZED TO CONDUCT TARGETED, ON-SITE MARKET CONDUCT
21 EXAMINATIONS IN ACCORDANCE WITH THE NAIC MARKET CONDUCT UNIFORM EXAMINA-
22 TION PROCEDURES AND THE MARKET CONDUCT EXAMINERS HANDBOOK (OR PROCE-
23 DURES, ADOPTED BY REGULATION, THAT ARE SUBSTANTIALLY SIMILAR TO THE
24 FOREGOING NAIC PRODUCTS).
25 (B) CONCOMITANT WITH THE NOTIFICATION REQUIREMENTS ESTABLISHED IN
26 SUBSECTION (E) OF THIS SECTION, THE SUPERINTENDENT SHALL POST NOTIFICA-
27 TION ON THE NAIC EXAMINATION TRACKING SYSTEM, OR COMPARABLE NAIC PRODUCT
28 AS DETERMINED BY THE SUPERINTENDENT, THAT A MARKET CONDUCT EXAMINATION
29 HAS BEEN SCHEDULED.
30 (C) IN LIEU OF AN EXAMINATION OF A FOREIGN OR ALIEN INSURER LICENSED
31 IN THIS STATE UNDER THIS ARTICLE, THE SUPERINTENDENT MAY ACCEPT AN EXAM-
32 INATION REPORT ON THE INSURER AS PREPARED BY THE SUPERINTENDENT OF THE
33 INSURER'S STATE OF DOMICILE OR OF A STATE IN WHICH THE INSURER WROTE
34 SIGNIFICANT PREMIUM VOLUME, ACCORDING TO SUCH INSURER'S MOST RECENT
35 ANNUAL FINANCIAL STATEMENT, PROVIDED THAT THE STATE HAS ADOPTED THIS LAW
36 OR A MARKET CONDUCT SURVEILLANCE LAW THAT THE SUPERINTENDENT DEEMS
37 COMPARABLE.
38 (D) (1) PRIOR TO COMMENCEMENT OF A TARGETED ON-SITE MARKET CONDUCT
39 EXAMINATION, MARKET CONDUCT SURVEILLANCE PERSONNEL SHALL PREPARE A WORK
40 PLAN AND PROPOSED BUDGET. SUCH PROPOSED BUDGET, WHICH SHALL BE REASON-
41 ABLE FOR THE SCOPE OF THE EXAMINATION, AND WORK PLAN SHALL BE PROVIDED
42 TO THE COMPANY UNDER EXAMINATION.
43 (2) MARKET CONDUCT EXAMINATIONS SHALL, TO THE EXTENT FEASIBLE, UTILIZE
44 DESK EXAMINATIONS AND DATA REQUESTS PRIOR TO A TARGETED ON-SITE EXAMINA-
45 TION.
46 (3) MARKET CONDUCT EXAMINATIONS SHALL BE CONDUCTED IN ACCORDANCE WITH
47 THE PROVISIONS SET FORTH IN THE NAIC MARKET CONDUCT EXAMINERS HANDBOOK
48 AND THE NAIC MARKET CONDUCT UNIFORM EXAMINATIONS PROCEDURES (OR PROCE-
49 DURES, ADOPTED BY REGULATION, THAT ARE SUBSTANTIALLY SIMILAR TO THE
50 FOREGOING NAIC PRODUCTS).
51 (4) PRIOR TO THE CONCLUSION OF A TARGETED ON-SITE MARKET CONDUCT EXAM-
52 INATION, THE INDIVIDUAL AMONG THE MARKET CONDUCT SURVEILLANCE PERSONNEL
53 WHO IS DESIGNATED AS THE EXAMINER-IN-CHARGE SHALL SCHEDULE AN EXIT
54 CONFERENCE WITH THE INSURER.
55 (E) ANNOUNCEMENT OF THE EXAMINATION SHALL BE SENT TO THE INSURER AND
56 POSTED ON THE NAIC'S EXAMINATION TRACKING SYSTEM (OR COMPARABLE NAIC
A. 1651 5
1 PRODUCT, AS DETERMINED BY THE SUPERINTENDENT) AS SOON AS POSSIBLE BUT IN
2 NO CASE LATER THAN SIXTY DAYS BEFORE THE ESTIMATED COMMENCEMENT OF THE
3 ON-SITE EXAMINATION. SUCH ANNOUNCEMENT SHALL CONTAIN:
4 (1) THE NAME AND ADDRESS OF THE INSURER(S) BEING EXAMINED;
5 (2) THE NAME AND CONTACT INFORMATION OF THE EXAMINER-IN-CHARGE;
6 (3) THE REASON(S) FOR THE TARGETED, ON-SITE EXAMINATION;
7 (4) THE DATE THE ON-SITE EXAMINATION IS SCHEDULED TO BEGIN;
8 (5) NOTICE OF ANY NON-INSURANCE DEPARTMENT PERSONNEL WHO WILL ASSIST
9 IN THE EXAMINATION;
10 (6) A BUDGET AND WORK PLAN FOR THE TARGETED, ON-SITE EXAMINATION; AND
11 (7) A REQUEST FOR THE INSURER TO NAME ITS EXAMINATION COORDINATOR.
12 (F) THE SUPERINTENDENT SHALL CONDUCT A PRE-EXAMINATION CONFERENCE WITH
13 THE INSURER EXAMINATION COORDINATOR AND KEY PERSONNEL TO CLARIFY EXPEC-
14 TATIONS THIRTY (30) DAYS PRIOR TO COMMENCEMENT OF THE EXAMINATION.
15 (G) THE DEPARTMENT SHALL USE THE NAIC STANDARD DATA REQUEST (OR COMPA-
16 RABLE PRODUCT, ADOPTED BY REGULATION, THAT IS SUBSTANTIALLY SIMILAR TO
17 THE FOREGOING NAIC PRODUCT).
18 (H) (1) THE SUPERINTENDENT SHALL ADHERE TO THE FOLLOWING TIMELINE,
19 UNLESS A MUTUAL AGREEMENT IS REACHED WITH THE INSURER TO MODIFY THE
20 TIMELINE:
21 (A) THE SUPERINTENDENT SHALL DELIVER THE DRAFT REPORT TO THE INSURER
22 WITHIN SIXTY DAYS OF THE COMPLETION OF THE EXAMINATION. COMPLETION OF
23 THE EXAMINATION SHALL BE DEFINED AS THE DATE THE SUPERINTENDENT CONFIRMS
24 IN WRITING THAT THE EXAMINATION IS COMPLETED.
25 (B) THE INSURER MUST RESPOND WITH WRITTEN COMMENTS WITHIN THIRTY DAYS
26 OF RECEIPT OF THE DRAFT REPORT.
27 (C) THE DEPARTMENT MUST INFORMALLY RESOLVE ISSUES AND PREPARE A FINAL
28 REPORT WITHIN THIRTY DAYS OF RECEIPT OF THE INSURER'S WRITTEN COMMENTS,
29 UNLESS A MUTUAL AGREEMENT IS REACHED TO EXTEND THE DEADLINE. THE SUPER-
30 INTENDENT MAY MAKE CORRECTIONS AND OTHER CHANGES, AS APPROPRIATE.
31 (D) THE INSURER SHALL, WITHIN THIRTY DAYS, ACCEPT THE FINAL REPORT,
32 ACCEPT THE FINDINGS OF THE REPORT OR REQUEST A HEARING. AN ADDITIONAL
33 THIRTY DAYS SHALL BE ALLOWED IF AGREED TO BY THE SUPERINTENDENT AND THE
34 INSURER. ANY SUCH HEARING REQUEST MUST BE MADE IN WRITING AND MUST BE
35 CONDUCTED PURSUANT TO THE STATE ADMINISTRATIVE PROCEDURE ACT.
36 (2) THE FINAL WRITTEN AND ELECTRONIC MARKET CONDUCT REPORT SHALL
37 INCLUDE THE INSURER'S WRITTEN COMMENTS AND ANY AGREED-TO CORRECTIONS OR
38 CHANGES.
39 (I) (1) UPON ADOPTION OF THE EXAMINATION REPORT PURSUANT TO SUBSECTION
40 (H) OF THIS SECTION, THE SUPERINTENDENT SHALL CONTINUE TO HOLD THE
41 CONTENT OF THE EXAMINATION REPORT AS PRIVATE AND CONFIDENTIAL FOR A
42 PERIOD OF THIRTY DAYS, EXCEPT TO THE EXTENT PROVIDED FOR IN PARAGRAPH
43 TWO OF THIS SUBSECTION. THEREAFTER, THE SUPERINTENDENT SHALL OPEN THE
44 REPORT FOR PUBLIC INSPECTION, PROVIDED NO COURT OF COMPETENT JURISDIC-
45 TION HAS STAYED ITS PUBLICATION.
46 (2) NOTHING CONTAINED IN THIS ARTICLE SHALL PREVENT OR BE CONSTRUED AS
47 PREVENTING THE SUPERINTENDENT FROM DISCLOSING THE CONTENT OF AN EXAMINA-
48 TION REPORT, PRELIMINARY EXAMINATION REPORT OR RESULTS, OR ANY MATTER
49 RELATING THERETO, TO THE DEPARTMENT OF THIS OR ANY OTHER STATE OR AGENCY
50 OF THE FEDERAL GOVERNMENT AT ANY TIME, PROVIDED THE AGENCY OR OFFICE
51 RECEIVING THE REPORT OR MATTERS RELATING THERETO AGREES TO HOLD IT
52 CONFIDENTIAL AND IN A MANNER CONSISTENT WITH THIS ARTICLE.
53 (J) (1) WHERE THE REASONABLE AND NECESSARY COST OF A MARKET CONDUCT
54 EXAMINATION IS TO BE ASSESSED AGAINST THE INSURER UNDER EXAMINATION,
55 SUCH FEES SHALL BE CONSISTENT WITH THAT OTHERWISE AUTHORIZED BY LAW.
A. 1651 6
1 SUCH FEES SHALL BE ITEMIZED AND BILLS SHALL BE PROVIDED TO THE INSURER
2 ON A MONTHLY BASIS FOR REVIEW PRIOR TO SUBMISSION FOR PAYMENT.
3 (2) THE SUPERINTENDENT SHALL MAINTAIN ACTIVE MANAGEMENT AND OVERSIGHT
4 OF EXAMINATION COSTS, INCLUDING COSTS ASSOCIATED WITH HIS OR HER OWN
5 EXAMINERS AND WITH RETAINING QUALIFIED CONTRACT EXAMINERS NECESSARY TO
6 PERFORM AN ON-SITE EXAMINATION. TO THE EXTENT THE SUPERINTENDENT RETAINS
7 OUTSIDE ASSISTANCE, THE SUPERINTENDENT MUST HAVE IN WRITING PROTOCOLS
8 THAT:
9 (A) CLEARLY IDENTIFY THE TYPES OF FUNCTIONS TO BE SUBJECT TO OUTSOURC-
10 ING;
11 (B) PROVIDE SPECIFIC TIMELINES FOR COMPLETION OF THE OUTSOURCED
12 REVIEW;
13 (C) REQUIRE DISCLOSURE OF CONTRACT EXAMINERS' RECOMMENDATIONS;
14 (D) ESTABLISH AND UTILIZE A DISPUTE RESOLUTION OR ARBITRATION MECH-
15 ANISM TO RESOLVE CONFLICTS WITH INSURERS REGARDING EXAMINATION FEES; AND
16 (E) REQUIRE DISCLOSURE OF THE TERMS OF THE CONTRACTS WITH THE OUTSIDE
17 CONSULTANTS THAT WILL BE USED, SPECIFICALLY THE FEES AND/OR HOURLY RATES
18 THAT CAN BE CHARGED.
19 (3) THE SUPERINTENDENT SHALL REVIEW AND AFFIRMATIVELY ENDORSE DETAILED
20 BILLINGS FROM THE QUALIFIED CONTRACT EXAMINER BEFORE THE DETAILED BILL-
21 INGS ARE SENT TO THE INSURER.
22 S 366. CONFIDENTIALITY REQUIREMENTS. (A) EXCEPT AS OTHERWISE PROVIDED
23 BY LAW, MARKET CONDUCT SURVEILLANCE PERSONNEL SHALL HAVE FREE AND FULL
24 ACCESS TO ALL BOOKS AND RECORDS, EMPLOYEES, OFFICERS AND DIRECTORS, AS
25 PRACTICABLE, OF THE INSURER DURING REGULAR BUSINESS HOURS. AN INSURER
26 UTILIZING A THIRD-PARTY MODEL OR PRODUCT FOR ANY OF THE ACTIVITIES UNDER
27 EXAMINATION SHALL CAUSE, UPON THE REQUEST OF MARKET CONDUCT SURVEILLANCE
28 PERSONNEL, THE DETAILS OF SUCH MODELS OR PRODUCTS TO BE MADE AVAILABLE
29 TO SUCH PERSONNEL. ALL DOCUMENTS, INCLUDING BUT NOT LIMITED TO WORKING
30 PAPERS, THIRD PARTY MODELS OR PRODUCTS, COMPLAINT LOGS, AND COPIES THER-
31 EOF, CREATED, PRODUCED OR OBTAINED BY OR DISCLOSED TO THE SUPERINTENDENT
32 OR ANY OTHER PERSON IN THE COURSE OF ANY MARKET CONDUCT ACTIONS MADE
33 PURSUANT TO THIS ARTICLE, OR IN THE COURSE OF MARKET ANALYSIS BY THE
34 SUPERINTENDENT OF THE MARKET CONDITIONS OF AN INSURER, OR OBTAINED BY
35 THE NAIC AS A RESULT OF ANY OF THE PROVISIONS OF THIS ARTICLE, SHALL BE
36 CONFIDENTIAL BY LAW AND PRIVILEGED, SHALL NOT BE SUBJECT TO SUBPOENA AND
37 SHALL NOT BE SUBJECT TO DISCOVERY OR ADMISSIBLE IN EVIDENCE IN ANY
38 PRIVATE CIVIL ACTION.
39 (B) NO WAIVER OF ANY APPLICABLE PRIVILEGE OR CLAIM OF CONFIDENTIALITY
40 IN THE DOCUMENTS, MATERIALS, OR INFORMATION SHALL OCCUR AS A RESULT OF
41 DISCLOSURE TO THE SUPERINTENDENT UNDER THIS SECTION.
42 (C) MARKET CONDUCT SURVEILLANCE PERSONNEL SHALL BE VESTED WITH THE
43 POWER TO ISSUE SUBPOENAS AND EXAMINE INSURANCE COMPANY PERSONNEL UNDER
44 OATH WHEN SUCH ACTION IS ORDERED BY THE SUPERINTENDENT PURSUANT TO THIS
45 ARTICLE.
46 (D) NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (A) OF THIS SECTION,
47 IN ORDER TO ASSIST IN THE PERFORMANCE OF THE SUPERINTENDENT'S DUTIES,
48 THE SUPERINTENDENT MAY:
49 (1) SHARE DOCUMENTS, MATERIALS OR OTHER INFORMATION, INCLUDING THE
50 CONFIDENTIAL AND PRIVILEGED DOCUMENTS, MATERIALS OR INFORMATION SUBJECT
51 TO SUBSECTION (A) OF THIS SECTION, WITH OTHER STATE, FEDERAL AND INTER-
52 NATIONAL REGULATORY AGENCIES AND LAW ENFORCEMENT AUTHORITIES AND THE
53 NAIC AND ITS AFFILIATES AND SUBSIDIARIES, PROVIDED THAT THE RECIPIENT
54 AGREES TO AND HAS THE LEGAL AUTHORITY TO MAINTAIN THE CONFIDENTIALITY
55 AND PRIVILEGED STATUS OF THE DOCUMENT, MATERIAL, COMMUNICATION OR OTHER
56 INFORMATION;
A. 1651 7
1 (2) RECEIVE DOCUMENTS, MATERIALS, COMMUNICATIONS OR INFORMATION,
2 INCLUDING OTHERWISE CONFIDENTIAL AND PRIVILEGED DOCUMENTS, MATERIALS OR
3 INFORMATION, FROM THE NAIC AND ITS AFFILIATES OR SUBSIDIARIES, AND FROM
4 REGULATORY AND LAW ENFORCEMENT OFFICIALS OF OTHER FOREIGN OR DOMESTIC
5 JURISDICTIONS, AND SHALL MAINTAIN AS CONFIDENTIAL OR PRIVILEGED ANY
6 DOCUMENT, MATERIAL OR INFORMATION RECEIVED WITH NOTICE OR THE UNDER-
7 STANDING THAT IT IS CONFIDENTIAL OR PRIVILEGED UNDER THE LAWS OF THE
8 JURISDICTION THAT IS THE SOURCE OF THE DOCUMENT, MATERIAL OR INFORMA-
9 TION; AND
10 (3) ENTER INTO AGREEMENTS GOVERNING THE SHARING AND USE OF INFORMATION
11 CONSISTENT WITH THIS SECTION.
12 S 367. MARKET CONDUCT SURVEILLANCE PERSONNEL. (A) MARKET CONDUCT
13 SURVEILLANCE PERSONNEL SHALL BE QUALIFIED BY EDUCATION, EXPERIENCE AND,
14 WHERE APPLICABLE, PROFESSIONAL DESIGNATIONS. THE SUPERINTENDENT MAY
15 SUPPLEMENT THE IN-HOUSE MARKET CONDUCT SURVEILLANCE STAFF WITH QUALIFIED
16 OUTSIDE PROFESSIONAL ASSISTANCE IF HE OR SHE DETERMINES THAT SUCH
17 ASSISTANCE IS NECESSARY.
18 (B) MARKET CONDUCT SURVEILLANCE PERSONNEL HAVE A CONFLICT OF INTEREST,
19 EITHER DIRECTLY OR INDIRECTLY, IF THEY ARE AFFILIATED WITH THE MANAGE-
20 MENT, HAVE BEEN EMPLOYED BY, OR OWN A PECUNIARY INTEREST IN THE INSURER
21 SUBJECT TO ANY EXAMINATION UNDER THIS ARTICLE. THIS SECTION SHALL NOT
22 BE CONSTRUED TO AUTOMATICALLY PRECLUDE AN INDIVIDUAL FROM BEING:
23 (1) A POLICYHOLDER OR CLAIMANT UNDER AN INSURANCE POLICY;
24 (2) A GRANTEE OF A MORTGAGE OR SIMILAR INSTRUMENT ON THE INDIVIDUAL'S
25 RESIDENCE FROM A REGULATED ENTITY IF DONE UNDER CUSTOMARY TERMS AND IN
26 THE ORDINARY COURSE OF BUSINESS;
27 (3) AN INVESTMENT OWNER IN SHARES OF REGULATED DIVERSIFIED INVESTMENT
28 COMPANIES; OR
29 (4) A SETTLOR OR BENEFICIARY OF A "BLIND TRUST" INTO WHICH ANY OTHER-
30 WISE PERMISSIBLE HOLDINGS HAVE BEEN PLACED.
31 S 368. IMMUNITY FOR MARKET CONDUCT SURVEILLANCE PERSONNEL. (A) NO
32 CAUSE OF ACTION SHALL ARISE NOR SHALL ANY LIABILITY BE IMPOSED AGAINST
33 THE SUPERINTENDENT, THE SUPERINTENDENT'S AUTHORIZED REPRESENTATIVES OR
34 AN EXAMINER APPOINTED BY THE SUPERINTENDENT FOR ANY STATEMENTS MADE OR
35 CONDUCT PERFORMED IN GOOD FAITH WHILE CARRYING OUT THE PROVISIONS OF
36 THIS ARTICLE.
37 (B) NO CAUSE OF ACTION SHALL ARISE, NOR SHALL ANY LIABILITY BE IMPOSED
38 AGAINST ANY PERSON FOR THE ACT OF COMMUNICATING OR DELIVERING INFORMA-
39 TION OR DATA TO THE SUPERINTENDENT OR THE SUPERINTENDENT'S AUTHORIZED
40 REPRESENTATIVE OR EXAMINER PURSUANT TO AN EXAMINATION MADE UNDER THIS
41 ARTICLE, IF THE ACT OF COMMUNICATION OR DELIVERY WAS PERFORMED IN GOOD
42 FAITH AND WITHOUT FRAUDULENT INTENT OR THE INTENT TO DECEIVE.
43 (C) A PERSON IDENTIFIED IN SUBSECTION (A) OF THIS SECTION SHALL BE
44 ENTITLED TO AN AWARD OF ATTORNEY'S FEES AND COSTS IF HE OR SHE IS THE
45 PREVAILING PARTY IN A CIVIL CAUSE OF ACTION FOR LIBEL, SLANDER OR ANY
46 OTHER RELEVANT TORT ARISING OUT OF ACTIVITIES IN CARRYING OUT THE
47 PROVISIONS OF THIS ARTICLE AND THE PARTY BRINGING THE ACTION WAS NOT
48 SUBSTANTIALLY JUSTIFIED IN DOING SO. FOR PURPOSES OF THIS SECTION A
49 PROCEEDING IS "SUBSTANTIALLY JUSTIFIED" IF IT HAD A REASONABLE BASIS IN
50 LAW OR FACT AT THE TIME THAT IT WAS INITIATED.
51 (D) THIS SECTION DOES NOT ABROGATE OR MODIFY IN ANY WAY ANY COMMON LAW
52 OR STATUTORY PRIVILEGE OR IMMUNITY HERETOFORE ENJOYED BY ANY PERSON
53 IDENTIFIED IN SUBSECTION (A) OF THIS SECTION.
54 S 369. FINES AND PENALTIES. (A) FINES AND PENALTIES LEVIED PURSUANT
55 TO THIS ARTICLE OR OTHER PROVISIONS OF THIS CHAPTER SHALL BE CONSISTENT,
56 REASONABLE AND JUSTIFIED.
A. 1651 8
1 (B) THE SUPERINTENDENT SHALL TAKE INTO CONSIDERATION ACTIONS TAKEN BY
2 INSURERS THAT MAINTAIN MEMBERSHIP IN BEST-PRACTICE ORGANIZATIONS THAT
3 EXIST TO PROMOTE HIGH ETHICAL STANDARDS OF CONDUCT IN THE MARKETPLACE,
4 AND INSURERS THAT SELF ASSESS, SELF-REPORT AND REMEDIATE PROBLEMS
5 DETECTED TO MITIGATE FINES LEVIED PURSUANT TO THIS ARTICLE.
6 S 370. PARTICIPATION IN NATIONAL MARKET CONDUCT DATABASES. (A) THE
7 SUPERINTENDENT SHALL COLLECT AND REPORT MARKET DATA TO THE NAIC'S MARKET
8 INFORMATION SYSTEMS, INCLUDING THE COMPLAINT DATABASE SYSTEM, THE EXAM-
9 INATION TRACKING SYSTEM, AND THE REGULATORY INFORMATION RETRIEVAL
10 SYSTEM, OR OTHER COMPARABLE SUCCESSOR NAIC PRODUCTS AS DETERMINED BY THE
11 SUPERINTENDENT. COMPLAINTS REPORTED TO THE COMPLAINT DATABASE SYSTEM
12 SHALL BE JUSTIFIED COMPLAINTS THAT HAVE BEEN SUBSTANTIATED BY THE
13 DEPARTMENT CONSUMER SERVICE OR OTHER APPROPRIATE PERSONNEL.
14 (B) INFORMATION COLLECTED AND MAINTAINED BY THE DEPARTMENT SHALL BE
15 COMPILED IN A MANNER THAT MEETS THE REQUIREMENTS OF THE NAIC.
16 S 371. COORDINATION WITH OTHER STATES THROUGH THE NAIC. THE SUPER-
17 INTENDENT SHALL SHARE INFORMATION AND COORDINATE THE DEPARTMENT'S MARKET
18 ANALYSIS AND EXAMINATION EFFORTS WITH OTHER STATES THROUGH THE NAIC.
19 S 372. ADDITIONAL DUTIES OF THE SUPERINTENDENT. (A) AT LEAST ONCE PER
20 YEAR, OR MORE FREQUENTLY IF DEEMED NECESSARY, THE SUPERINTENDENT SHALL
21 PROVIDE IN AN APPROPRIATE MANNER TO INSURERS AND OTHER ENTITIES SUBJECT
22 TO THE SCOPE OF THIS ARTICLE INFORMATION ON NEW LAWS AND REGULATIONS,
23 ENFORCEMENT ACTIONS AND OTHER INFORMATION THE SUPERINTENDENT DEEMS
24 PERTINENT TO ENSURE COMPLIANCE WITH MARKET CONDUCT REQUIREMENTS.
25 (B) THE SUPERINTENDENT SHALL DESIGNATE A SPECIFIC PERSON OR PERSONS
26 WITHIN THE DEPARTMENT WHOSE RESPONSIBILITIES SHALL INCLUDE THE RECEIPT
27 OF INFORMATION FROM EMPLOYEES OF INSURERS AND LICENSED ENTITIES CONCERN-
28 ING VIOLATIONS OF LAWS, RULES OR REGULATIONS BY EMPLOYERS. SUCH PERSON
29 OR PERSONS SHALL BE PROVIDED WITH PROPER TRAINING ON THE HANDLING OF
30 SUCH INFORMATION, WHICH SHALL BE DEEMED A CONFIDENTIAL COMMUNICATION FOR
31 THE PURPOSES OF THIS SECTION.
32 S 2. Sections 309, 310, 311, 312 and 313 of the insurance law are
33 REPEALED.
34 S 3. This act shall take effect on the one hundred eightieth day after
35 it shall have become a law.
