Bill Text: NY S07540 | 2017-2018 | General Assembly | Introduced

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Bill Title: Enhances the financial condition of domestic mutual property and casualty insurance companies.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2018-06-20 - COMMITTED TO RULES [S07540 Detail]

Download: New_York-2017-S07540-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                          7540
                    IN SENATE
                                    January 22, 2018
                                       ___________
        Introduced  by  Sen.  SEWARD -- 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 enhancing  the  finan-
          cial  condition  of  domestic  mutual  property and casualty insurance
          companies
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  Subsection  (a)  of section 4110 of the insurance law, as
     2  amended by chapter 1 of the laws of 2015, is amended to read as follows:
     3    (a) No domestic mutual property/casualty insurance company licensed to
     4  write a kind of insurance specified in  paragraph  seven,  eight,  nine,
     5  ten,  eleven,  thirteen,  fourteen,  fifteen,  sixteen  or  seventeen of
     6  subsection (a) of section one thousand  one  hundred  thirteen  of  this
     7  chapter  shall expend in any one calendar year for management expenses a
     8  greater amount than thirty percent of the sum of its net premium  income
     9  and  seventy-five  percent  of  its  investment  income  for  such year;
    10  provided that any insurer whose principal line of  business  is  medical
    11  malpractice  liability  insurance or any insurer who is the subject of a
    12  proceeding pursuant to article seventy-four of this  chapter  shall  not
    13  expend  in  any  one  calendar  year  for management expenses, a greater
    14  amount than thirty percent of its net  premium  income  for  such  year.
    15  Management expenses shall be held to include all expenses of the company
    16  except expenses incurred in the investigation, adjustment and settlement
    17  of claims, taxes, fees and expenses of examination, expenses incurred in
    18  complying  with  subsection  (b)  of section three hundred seven of this
    19  chapter, subsection (g) of section four thousand one  hundred  seventeen
    20  of  this  article and part five hundred of title twenty-three of the New
    21  York Codes,  Rules and Regulations, and taxes, repairs and  expenses  on
    22  real  estate. In applying the provisions of this section the net premium
    23  income of, and expenses of, boiler and machinery insurance  or  elevator
    24  insurance  shall  not  be  included.  In  the event expenses incurred in
    25  making a new system  upgrade  result  in  this  subsection's  management
    26  expenses  limit being exceeded, then the insurer shall inform the super-
    27  intendent sixty days in advance of the  expense  limit  being  exceeded.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14038-02-8
        S. 7540                             2
     1  Subject  to approval by the superintendent, the limit shall be temporar-
     2  ily raised to the amount necessary  to  encompass  the  aforestated  new
     3  system upgrade, provided that in no event shall the limit be raised more
     4  than  five  percentage  points  and shall not be in effect for more than
     5  three years, and provided further that an  insurer  may  submit  to  the
     6  superintendent,  for  the  superintendent's  prior  approval,  a written
     7  request to temporarily raise the limit for up  to  an  additional  three
     8  years,  for  a  total of no more than six years. An insurer shall submit
     9  such written request to the superintendent at least sixty days  but  not
    10  more  than  one hundred twenty days before the expiration of the initial
    11  period during which the limit was raised. The insurer shall not increase
    12  premiums solely as a result of the management expenses cap  limit  being
    13  exceeded.  For  purposes  of  this  subsection,  a new system upgrade is
    14  defined as the acquisition of electronic data processing  apparatus  and
    15  related  equipment  constituting  a  data  processing, record keeping or
    16  accounting system and operating and non-operating software.
    17    § 2. Subsection (b) of section 6613 of the insurance law,  as  amended
    18  by chapter 284 of the laws of 1989, is amended to read as follows:
    19    (b)  Management expenses shall include all the expenses of such compa-
    20  ny, except  expenses  incurred  in  the  investigation,  adjustment  and
    21  settlement  of  claims,  taxes,  fees, expenses of examination, expenses
    22  incurred in complying with subsection (b) of section three hundred seven
    23  of this chapter, subsection (g) of section  four  thousand  one  hundred
    24  seventeen of this chapter and part five hundred of title twenty-three of
    25  the  New  York  Codes,  Rules  and  Regulations, and taxes, repairs, and
    26  expenses on real estate.
    27    § 3. This act shall take effect immediately.