Bill Text: NY A07317 | 2023-2024 | General Assembly | Amended


Bill Title: Enacts the "New York small contractor relief act"; defines terms; authorizes a small contractor captive insurance company to purchase, and the New York state insurance fund shall be authorized and directed to provide, reinsurance and retrocession reinsurance for such captive insurance company, on either a quota share arrangement or facultative arrangement at a rate to be determined by the board of the fund; provides that a small contractor captive insurance company organized pursuant to this article shall not refuse to issue, renew or cancel a policy of any qualified small construction contractor based upon geographic location or line of business engaged in by such contractor; makes related provisions.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Introduced) 2024-01-30 - print number 7317a [A07317 Detail]

Download: New_York-2023-A07317-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         7317--A

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                      May 17, 2023
                                       ___________

        Introduced  by  M.  of  A.  BRAUNSTEIN  -- read once and referred to the
          Committee on Insurance -- recommitted to the Committee on Insurance in
          accordance with Assembly Rule 3, sec. 2 -- committee discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee

        AN ACT to amend the insurance law, in relation to establishing  the  New
          York small contractor relief act; provides for the repeal upon expira-
          tion thereof; and making an appropriation therefor

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

     1    Section 1. Short title. This act shall be known and may  be  cited  as
     2  the "New York small contractor relief act".
     3    § 2. The legislature hereby declares that the market for insurance for
     4  small  construction  contractors  and certified minority and women-owned
     5  construction contractors has been  challenged  both  by  high  insurance
     6  rates  and  a  lack  of  market capacity. These challenges are acute for
     7  small   construction   contractors,   and   minority   and   women-owned
     8  construction  contractors  working  for  public  owners.  This act shall
     9  provide for a private market insurance solution for  small  construction
    10  contractors,  and  minority  and  women-owned  construction  contractors
    11  through the creation of a captive insurance company.
    12    § 3. The insurance law is amended by adding a new article 70-A to read
    13  as follows:
    14                                ARTICLE 70-A
    15                    NEW YORK SMALL CONTRACTOR RELIEF ACT
    16  Section 7013. Definitions.
    17          7014. New York small contractor captive insurance company.
    18          7015. Reinsurance and retrocession reinsurance.
    19          7016. No refusal.
    20          7017. Risk management program.
    21          7018. Prevailing wage requirement.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11264-02-4

        A. 7317--A                          2

     1    § 7013. Definitions. For the purpose of this  article,  the  following
     2  terms shall have the following meanings:
     3    (a)  "Liability insurance" shall mean personal injury liability insur-
     4  ance and property damage liability insurance, as such terms are  defined
     5  in  paragraphs  thirteen  and  fourteen of subsection (a) of section one
     6  thousand one hundred thirteen of this chapter,  and  shall  include  any
     7  type  of insurance deemed by the superintendent of financial services to
     8  be substantially similar thereto pursuant to  paragraph  thirty-four  of
     9  subsection (a) of such section.
    10    (b)  "Small  construction  contractor" shall mean any contractor which
    11  (i) is resident in this state; (ii) is independently owned and operated;
    12  (iii) is exclusively engaged in construction contracting or subcontract-
    13  ing; (iv) had less than three million dollars in gross revenues for  the
    14  calendar year prior to an application for insurance being filed pursuant
    15  to  the terms of this article, or is a certified minority or women-owned
    16  business; and (v) pays the prevailing wage.
    17    (c) "Prevailing wage" shall mean the rate of  wages  and  supplemental
    18  benefits paid in the locality to workers in the same trade or occupation
    19  and  annually  determined by the commissioner of labor or comptroller in
    20  accordance with the provisions of section  two  hundred  twenty  of  the
    21  labor law.
    22    §  7014.  New  York  small contractor captive insurance company. (a) A
    23  captive insurance company organized pursuant to this  article  shall  be
    24  formed  and  regulated  pursuant to the provisions of article seventy of
    25  this chapter. Such entity may be a  corporation,  association,  a  joint
    26  stock  company or association, or an aggregation or partnership pursuant
    27  to the laws of the state of New York.
    28    (b) A captive insurance company may  be  organized  pursuant  to  this
    29  article for the sole purpose of providing liability insurance as defined
    30  in  subsection (a) of section seven thousand thirteen of this article to
    31  small construction contractors, as that term is  defined  in  subsection
    32  (a) of section seven thousand thirteen of this article.
    33    §  7015. Reinsurance and retrocession reinsurance. A captive insurance
    34  company organized pursuant  to  this  article  shall  be  authorized  to
    35  purchase, and the New York state insurance fund (hereinafter the "fund")
    36  shall  be  authorized and directed, to provide reinsurance and retroces-
    37  sion reinsurance for such captive insurance company, on either  a  quota
    38  share  arrangement  or facultative arrangement (hereafter "reinsurance")
    39  at a rate to be determined by the board of  the  fund.  The  fund  shall
    40  provide  such reinsurance on an application for such coverage unless, in
    41  the opinion of the executive director, providing  such  coverage  on  an
    42  application will imperil the financial safety and soundness of the fund.
    43  The  executive  director  of  the fund shall provide, in writing, to the
    44  board of the fund and the  superintendent  not  less  than  quarterly  a
    45  report  on  all such applications for coverage that are denied, together
    46  with the grounds for and an analysis of the basis for such denial.
    47    § 7016. No refusal.  A  small  contractor  captive  insurance  company
    48  organized  pursuant  to this article shall not refuse to issue, renew or
    49  cancel a policy of any qualified  small  construction  contractor  based
    50  upon geographic location or line of business engaged in by such contrac-
    51  tor.
    52    § 7017. Risk management program. A captive insurance company organized
    53  pursuant  to  this article shall establish and promote a risk management
    54  program among its members to identify and reduce risks by implementation
    55  of loss control, safety programs and other methods of  risk  management,
    56  and  any  small  construction contractor accepted for coverage from such

        A. 7317--A                          3

     1  insurer shall be  responsible  for  adopting  and  following  such  risk
     2  management program.
     3    §  7018.  Prevailing wage requirement. A small construction contractor
     4  seeking to obtain liability insurance from a  small  contractor  captive
     5  insurance company authorized under this article shall establish that the
     6  small  construction  contractor's  entire  workforce  is  being paid the
     7  prevailing wage. The small  construction  contractor's  application  for
     8  insurance  shall  document  and  certify  that  the applicant meets this
     9  requirement and will meet this requirement for all construction work  on
    10  all  projects  covered  by  the liability insurance obtained pursuant to
    11  this article as a precondition to  qualifying  for  liability  insurance
    12  issued  hereunder.  Such  application  shall  also  be  submitted to the
    13  commissioner of labor who shall  notify  the  small  contractor  captive
    14  insurance  company of receipt prior to approval of such application.  As
    15  a condition of approval, at least ten  days  prior  to  commencement  of
    16  work,  the  small  construction  contractor  shall notify and update the
    17  captive insurance  company  of  any  location  where  it  is  performing
    18  construction  covered  by  a  policy associated with this article.  Such
    19  locations shall be publicly posted online within  two  days  of  receipt
    20  from  the  small  construction  contractor and maintained by the captive
    21  insurance company.  All such work performed by  the  small  construction
    22  contractor  shall  be  subject to the provisions of article eight of the
    23  labor law including, but not limited to, section two hundred twenty  and
    24  two  hundred  twenty-i  of  such  article.    In  the  event  the  small
    25  construction contractor is determined by the fiscal officer, as  defined
    26  in  section  two  hundred twenty of the labor law, to be in violation of
    27  article eight of the labor law, in  addition  to  any  penalties  to  be
    28  enforced  pursuant  to such article, the captive insurance company shall
    29  revoke such contractor's policy pursuant to this article  and  assess  a
    30  penalty  equal  to  the  costs incurred in providing liability insurance
    31  coverage since its initial application was approved.
    32    § 4. Not less than six months before the expiration  date  of  article
    33  70-A  of the insurance law, as added by this chapter, the superintendent
    34  of financial services shall issue to the governor, the  speaker  of  the
    35  assembly  and  the  temporary president of the senate, and the chairs of
    36  the insurance and labor committees  of  each  house,  a  report  on  the
    37  performance  of  the New York small contractor relief act and its impact
    38  upon the small construction contractor sector. If such act is to expire,
    39  it shall not impede such captive insurance companies created under arti-
    40  cle 70-A of  the  insurance  law  to  continue  to  operate  as  if  the
    41  provisions of such article were still in full force and effect, assuming
    42  that  such  companies are otherwise viable pursuant to the provisions of
    43  article 70 of the insurance law.
    44    § 5. The sum of fifty million dollars ($50,000,000) is  hereby  appro-
    45  priated  for  the  support  of  up to two captives under this act.  Such
    46  funds may be used for the  purpose  of  providing  paid-in  capital  and
    47  initial surplus contributions for captives organized pursuant to article
    48  70-A  of  the  insurance  law,  such  amounts  not to exceed twenty-five
    49  million dollars ($25,000,000) for any one captive insurer so  organized.
    50  The  New  York  state  insurance  fund is authorized, upon action of its
    51  board of directors, to invest other funds as may  be  appropriate  in  a
    52  captive organized pursuant to article 70-A of the insurance law.
    53    § 6. This act shall take effect on the one hundred eightieth day after
    54  it  shall have become a law and shall expire and be deemed repealed five
    55  years after such effective date.
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