Bill Text: NY A10442 | 2015-2016 | General Assembly | Introduced
Bill Title: Grants the superintendent of financial services additional powers to take action against insurers which are in a hazardous financial condition.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2016-06-15 - REFERRED TO RULES [A10442 Detail]
Download: New_York-2015-A10442-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 10442 IN ASSEMBLY May 27, 2016 ___________ Introduced by M. of A. CAHILL -- (at request of the Department of Finan- cial Services) -- read once and referred to the Committee on Insurance AN ACT to amend the insurance law, in relation to insurers deemed to be in a hazardous financial condition The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 1104 of the insurance law, the section heading as 2 amended and subsections (c) and (d) as added by chapter 235 of the laws 3 of 1989, and the opening paragraph of subsection (c) as amended by chap- 4 ter 598 of the laws of 2000, is amended to read as follows: 5 § 1104. Revocation or suspension of license; restriction of license 6 authority or limitation on premiums written. (a) The superintendent may 7 revoke any license, certificate of authority, or registration issued to 8 any foreign or alien insurer to do an insurance business in this state 9 if, after notice to and hearing, [he] the superintendent finds that such 10 insurer has failed to comply with any requirement imposed upon it by the 11 provisions of this chapter and if in [his] the superintendent's judgment 12 such revocation is reasonably necessary to protect the interests of the 13 people of this state. The superintendent may, in his or her discretion, 14 reinstate any such license, certificate of authority, or registration if 15 [he] the superintendent finds that a ground for such revocation no long- 16 er exists. 17 (b) The superintendent shall revoke the certificate of authority of 18 any corporation or agent convicted of violating section two thousand six 19 hundred three of this chapter. 20 (c) [The] (1) Notwithstanding any other provision of this chapter, the 21 superintendent may [suspend the license, restrict the license authority,22or limit the amount of premiums written in this state of any accident23and health insurance company, property/casualty insurance company,24co-operative property/casualty insurance company, title insurance compa-25ny, mortgage guaranty insurance company, reciprocal insurer, Lloyds26underwriters or nonprofit property/casualty insurance company] take one 27 or more of the actions specified in subparagraph (B) of paragraph four 28 of this subsection against an insurer, except those insurers subject to EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD14173-02-6A. 10442 2 1 the provisions of subsection (c) of section two thousand three hundred 2 forty-three of this chapter, if after a hearing on a record, unless 3 waived by the affected insurer, the superintendent determines that such 4 insurer's surplus to policyholders is not adequate in relation to the 5 insurer's outstanding liabilities or to its financial needs or if the 6 superintendent otherwise determines that the continued operation of the 7 insurer might be deemed to be hazardous to the insurer's policyholders, 8 creditors, or to the general public. 9 (2) All matters pertaining to a proceeding or determination pursuant 10 to this subsection shall be confidential and not subject to subpoena or 11 public inspection under article six of the public officers law or any 12 other statute, except to the extent that the superintendent finds 13 release of information necessary to protect the public. The hearing 14 shall be initiated within twenty days after written notice to the insur- 15 er. Any determination pursuant to this subsection shall contain findings 16 specifying the factors deemed significant in regard to the particular 17 insurer, and shall set forth the reasons supporting the suspension, 18 restriction or limitation ordered by the superintendent. 19 (3) The superintendent may consider the following factors [shall be20considered by the superintendent] in making [such] a determination as to 21 whether an insurer's surplus to policyholders is adequate in relation to 22 the insurer's outstanding liabilities or to its financial needs: 23 [(1)] (A) the size of the insurer as measured by its admitted assets, 24 capital and surplus to policyholders, reserves, premium writings, insur- 25 ance in force and other appropriate criteria, with such surplus to poli- 26 cyholders for foreign insurers adjusted in accordance with section one 27 thousand four hundred thirteen of this chapter; 28 [(2)] (B) the extent to which the insurer's business is diversified 29 among the several kinds of insurance; 30 [(3)] (C) the number and size of risks insured in each kind of insur- 31 ance and the insurer's loss experience in regard to such risks; 32 [(4)] (D) the extent of geographical dispersion of the insurer's 33 risks; 34 [(5)] (E) the nature and extent of the insurer's reinsurance program; 35 [(6)] (F) the quality, diversification and liquidity of the insurer's 36 investment portfolio; 37 [(7)] (G) the recent past and projected future trends in regard to the 38 insurer's loss experience and in the size of the insurer's surplus to 39 policyholders; 40 [(8)] (H) the surplus to policyholders maintained by other comparable 41 insurers; 42 [(9)] (I) the adequacy of the insurer's reserves; and 43 [(10)] (J) the quality and liquidity of investments in subsidiaries 44 made pursuant to this chapter. 45 (4)(A) The superintendent may consider the following standards, either 46 singly or a combination of two or more, to determine whether the contin- 47 ued operation of any insurer might be deemed to be hazardous to its 48 policyholders, creditors, or to the general public: 49 (i) adverse findings reported in financial condition and market 50 conduct examination reports, audit reports, actuarial opinions, reports, 51 or summaries, or other reports; 52 (ii) the national association of insurance commissioners insurance 53 regulatory information system and its other financial analysis solvency 54 tools and reports; 55 (iii) whether the insurer has made adequate provision, according to 56 presently accepted actuarial standards of practice, for the anticipatedA. 10442 3 1 cash flows required by the contractual obligations and related expenses 2 of the insurer, when considered in light of the assets held by the 3 insurer with respect to such reserves and related actuarial items, 4 including the investment earnings on such assets, and the considerations 5 anticipated to be received and retained under such policies and 6 contracts; 7 (iv) the ability of an assuming reinsurer to perform and whether the 8 insurer's reinsurance program provides sufficient protection for the 9 insurer's remaining surplus after taking into account the insurer's cash 10 flow and the classes of business written as well as the financial condi- 11 tion of the assuming reinsurer; 12 (v) whether the insurer's operating loss in the last twelve-month 13 period or any shorter period of time, including net capital gain or 14 loss, change in non-admitted assets, and cash dividends paid to share- 15 holders, is greater than fifty percent of the insurer's remaining 16 surplus to policyholders in excess of the minimum required; 17 (vi) whether the insurer's operating loss in the last twelve-month 18 period or any shorter period of time, excluding net capital gains, is 19 greater than twenty percent of the insurer's remaining surplus to poli- 20 cyholders in excess of the minimum required; 21 (vii) whether a reinsurer, an obligor, any entity in the insurer's 22 holding company system, as defined in paragraph six of subsection (a) of 23 section one thousand five hundred one of this chapter, or any subsidiary 24 of an insurer, is insolvent, threatened with insolvency, or delinquent 25 in payment of its monetary or other obligations, and which in the opin- 26 ion of the superintendent may affect the solvency of the insurer; 27 (viii) contingent liabilities, pledges, or guarantees that either 28 individually or collectively involve a total amount that in the super- 29 intendent's opinion may affect the insurer's solvency; 30 (ix) whether any person who controls an insurer, as defined in para- 31 graph two of subsection (a) of section one thousand five hundred one of 32 this chapter, is delinquent in the transmitting to, or payment of, net 33 premiums to the insurer; 34 (x) the age and collectability of receivables; 35 (xi) whether the management of an insurer, including officers, direc- 36 tors, or any other person who directly or indirectly controls the opera- 37 tion of the insurer, fails to possess and demonstrate the competence, 38 fitness, and reputation deemed necessary to serve the insurer in such 39 position; 40 (xii) whether the insurer's management has failed to respond to an 41 inquiry of the superintendent relative to the insurer's condition or has 42 furnished false and misleading information concerning such an inquiry; 43 (xiii) whether the insurer has failed to meet financial filing 44 requirements or filing requirements pursuant to articles fifteen, 45 sixteen, or seventeen of this chapter, or regulations promulgated there- 46 under, in the absence of a reason satisfactory to the superintendent; 47 (xiv) whether the insurer's management either has filed any false or 48 misleading sworn financial statement, or has released false or mislead- 49 ing financial statements to lending institutions or to the general 50 public, or has made a false or misleading entry, or has omitted an entry 51 of material amount in the insurer's books; 52 (xv) whether the insurer has grown so rapidly and to such an extent 53 that it lacks adequate financial and administrative capacity to meet its 54 obligations in a timely manner; 55 (xvi) whether the insurer has experienced or is expected to experience 56 in the foreseeable future cash flow or liquidity problems;A. 10442 4 1 (xvii) whether management has established reserves that do not comply 2 with minimum standards established by this chapter or regulations 3 promulgated thereunder, statutory accounting standards, as adopted by 4 the superintendent, sound actuarial principles and standards of prac- 5 tice; 6 (xviii) whether management persistently engages in material under 7 reserving that results in adverse development; 8 (xix) whether any transaction with an affiliate, a subsidiary, or a 9 parent for which the insurer receives assets or capital gains, or both, 10 do not provide sufficient value, liquidity, or diversity to assure the 11 insurer's ability to meet its outstanding obligations as they mature; 12 and 13 (xx) any other finding determined by the superintendent to be hazard- 14 ous to the insurer's policyholders, creditors, or to the general public. 15 (B) If the superintendent determines that the insurer's surplus to 16 policyholders is not adequate in relation to the insurer's outstanding 17 liabilities or to its financial needs or if the superintendent otherwise 18 determines that the continued operation of the insurer may be hazardous 19 to its policyholders, creditors, or to the general public, then the 20 superintendent may, upon a determination, suspend the insurer's license, 21 certificate of authority, or registration, restrict the insurer's 22 license, certificate of authority, or registration, or issue an order 23 requiring the insurer to do one or more of the following: 24 (i) reduce the total amount of present and potential liability for 25 policy benefits by reinsurance; 26 (ii) reduce, suspend, or limit the volume of business being accepted 27 or renewed, or limit the amount of premiums written in this state; 28 (iii) reduce general insurance and commission expenses by specified 29 methods; 30 (iv) increase the insurer's capital and surplus; 31 (v) suspend or limit the declaration and payment of dividends by an 32 insurer to its stockholders or policyholders; 33 (vi) file reports on a form and in a manner acceptable to the super- 34 intendent concerning the market value of an insurer's assets; 35 (vii) limit or withdraw from certain investments or discontinue 36 certain investment practices to the extent the superintendent deems 37 necessary; 38 (viii) document the adequacy of premium rates in relation to the risks 39 insured; 40 (ix) file, in addition to regular annual statements, interim financial 41 reports on a form and in a manner prescribed by the superintendent, 42 which may include a form adopted by the national association of insur- 43 ance commissioners; 44 (x) correct corporate governance practice deficiencies, and adopt and 45 utilize governance practices acceptable to the superintendent; 46 (xi) provide a business plan to the superintendent in order to contin- 47 ue to transact business in this state; or 48 (xii) notwithstanding any other provision of law, adjust rates for any 49 non-life insurance policy or contract written by the insurer that the 50 superintendent considers necessary to improve the insurer's financial 51 condition. 52 (d) [The superintendent shall identify and review those licensed53property/casualty insurers needing immediate or targeted regulatory54attention, and shall include the number of insurers so identified in the55report required by section three hundred thirty-four of this chapter.56Such report shall also include the name of each licensedA. 10442 5 1property/casualty insurer placed in formal conservatorship, rehabili-2tation or liquidation during the preceding year. Nothing herein shall be3construed to restrict or diminish any right or power of the superinten-4dent under any other provision of this chapter] For the purposes of this 5 section, "insurer" shall mean any person, firm, association, corpo- 6 ration, or joint-stock company authorized to do an insurance business in 7 this state by a license in force pursuant to the provisions of this 8 chapter or exempted by the provisions of this chapter from such licens- 9 ing. 10 § 2. This act shall take effect immediately.
