NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10342
SPONSOR: Rules (Burgos) TITLE OF BILL:
An act to amend the insurance law, in relation to authorizing stand-al-
one business interruption insurance
PURPOSE OF THE BILL:
This bill would amend the Insurance Law to authorize stand-alone busi-
ness interruption insurance.
SUMMARY OF PROVISIONS:
Section 1 would renumber Insurance Law § 1113(a)(34) as (35) and add a
new paragraph (34) to authorize stand-alone business interruption insur-
ance.
Section 2 would amend Insurance Law § 2105(a) to permit an excess line
broker to procure business interruption insurance.
Section 3 would amend Insurance Law § 4101(a) to make business inter-
ruption insurance a "basic kind of insurance."
Section 4 would amend Group A of Table One, as set forth in Insurance
Law § 4103(a)(1), to establish minimum paid-in capital and paid-in
surplus requirements for stock insurers that write business interruption
insurance.
Section 5 would amend Table Two, as set forth in Insurance Law §
4107(a)(1), to establish certain minimum requirements, including minimum
initial surplus and minimum surplus to be maintained requirements, for
mutual insurers that write business interruption insurance.
Section 6 would provide that the bill takes effect 30 days after it is
signed into law.
JUSTIFICATION:
Currently, business interruption insurance typically covers loss of net
profits when a covered peril, such as a fire, causes "direct physical
loss of or damage to" insured property resulting in a closure or a
reduction in business. Businesses may purchase additional coverage that
applies if the business closes by order of a civil authority. Although
this coverage extends business interruption insurance to cover loss of
net profits when access to an insured's property is prohibited by an
order of civil authority, the business must close because of physical
damage to a neighboring property that makes it unsafe for the business
to open. As demonstrated with the coronavirus disease 2019 ("COVED-19")
pandemic, a business may be forced to close without the insured property
or neighboring property suffering physical damage. Also, insurers,
particularly in the excess line market, wish to write business inter-
ruption insurance that is not tied to physical damage as part of active
shooter policies. This bill would amend Insurance Law § 1113(a) to make
business interruption insurance an authorized kind of insurance that
does not need to be tied to physical damage and would amend Insurance
Law § 2105 to permit this insurance to be written in t he excess line
market if it is unavailable from authorized insurers. As a result, the
bill would allow insurers to sell business interruption insurance that
is not tied to physical damage, which businesses could purchase in the
event of future pandemics or other events where there may not be phys-
ical damage to the property, such as an active shooter threat.
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
FISCAL IMPLICATIONS:
This bill will increase revenue in New York in the form of additional
premium taxes if insurers can write this additional kind of insurance.
EFFECTIVE DATE:
Thirty days after it is signed into law.
STATE OF NEW YORK
________________________________________________________________________
10342
IN ASSEMBLY
May 17, 2024
___________
Introduced by COMMITTEE ON RULES -- (at request of M. of A. Burgos) --
(at request of the Department of Financial Services) -- read once and
referred to the Committee on Insurance
AN ACT to amend the insurance law, in relation to authorizing stand-al-
one business interruption insurance
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 34 of subsection (a) of section 1113 of the
2 insurance law, as renumbered by chapter 359 of the laws of 2021, is
3 renumbered paragraph 35 and a new paragraph 34 is added to read as
4 follows:
5 (34) "Business interruption insurance" means insurance against loss of
6 use and occupancy, rents, and profits resulting from a business closure
7 due to: (A) loss of or damage to insured or neighboring property; (B) an
8 act or threatened act of violence while the perpetrator is on the busi-
9 ness premises; or (C) a government order.
10 § 2. Subsection (a) of section 2105 of the insurance law, as amended
11 by chapter 359 of the laws of 2021, is amended to read as follows:
12 (a) The superintendent may issue an excess line broker's license to
13 any person, firm, association or corporation who or which is licensed as
14 an insurance broker under section two thousand one hundred four of this
15 article, or who or which is licensed as an excess line broker in the
16 licensee's home state, provided, however, that the applicant's home
17 state grants non-resident licenses to residents of this state on the
18 same basis, except that reciprocity is not required in regard to the
19 placement of liability insurance on behalf of a purchasing group or any
20 of its members; authorizing such person, firm, association or corpo-
21 ration to procure, subject to the restrictions herein provided, policies
22 of insurance from insurers [which] that are not authorized to transact
23 business in this state of the kind or kinds of insurance specified in
24 paragraphs four through fourteen, sixteen, seventeen, nineteen, twenty,
25 twenty-two, twenty-seven, twenty-eight, thirty-one, thirty-two [and],
26 thirty-three and thirty-four of subsection (a) of section one thousand
27 one hundred thirteen of this chapter and in subsection (h) of this
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14188-01-4
A. 10342 2
1 section, provided, however, that the provisions of this section and
2 section two thousand one hundred eighteen of this article shall not
3 apply to ocean marine insurance and other contracts of insurance enumer-
4 ated in subsections (b) and (c) of section two thousand one hundred
5 seventeen of this article. Such license may be suspended or revoked by
6 the superintendent whenever in [his or her] the superintendent's judg-
7 ment such suspension or revocation will best promote the interests of
8 the people of this state.
9 § 3. Subsection (a) of section 4101 of the insurance law is amended to
10 read as follows:
11 § 4101. Definitions. In this article: (a) "Basic kinds of insurance"
12 means the kinds of insurance described in the following paragraphs of
13 subsection (a) of section one thousand one hundred thirteen of this
14 chapter numbered therein as set forth in parentheses below:
15 fire (4);
16 burglary and theft (7);
17 glass (8);
18 boiler and machinery (9);
19 elevator (10);
20 animal (11);
21 personal injury liability (13);
22 property damage liability (14) - basic as to stock companies only;
23 workers' compensation and employers' liability (15);
24 fidelity and surety (16);
25 credit (17);
26 marine and inland marine (20);
27 marine protection and indemnity (21) - basic as to mutual companies
28 only;
29 business interruption insurance (34).
30 § 4. Group A of table one of paragraph 1 of subsection (a) of section
31 4103 of the insurance law, as amended by chapter 359 of the laws of
32 2021, is amended to read as follows:
33 Group A:
34 7 $300,000 $150,000
35 8, 9, 10, 11, or 14 - for each such kind $100,000 $ 50,000
36 13 or 15 - for each such kind $500,000 $250,000
37 16 $900,000 $450,000
38 17 $400,000 $200,000
39 Basic additional amount
40 required for any one
41 or more of the above
42 kinds of insurance $100,000 $ 50,000
43 3(i), 3(ii), 6{1} or 12{2} - for each
44 such kind $100,000 $ 50,000
45 22 $2,000,000 $1,000,000
46 24 $400,000 $200,000
47 26(B) $200,000 $100,000
48 26(A), 26(C) or 26(D) -
49 for each such kind $600,000 $300,000
50 27 $300,000 $150,000
51 28 $2,000,000 $1,000,000
52 30 $400,000 $200,000
53 31 $100,000 $ 50,000
A. 10342 3
1 32 $100,000 $ 50,000
2 33 $100,000 $ 50,000
3 34$2,000,000$1,000,0000
4 § 5. Table two of paragraph 1 of subsection (a) of section 4107 of the
5 insurance law, as amended by chapter 805 of the laws of 1984, is amended
6 to read as follows:
7 TABLE TWO
8 Kind of
9 insurance
10 specified
11 in the
12 following Num- Number
13 numbered Num- ber of
14 paragraphs ber Number of Insur- Minimum
15 of subsec- of of Sep- ance Surplus
16 tion (a) Mem- Appli- arate Poli- Initial to be Other
17 of § 1113 bers cations Risks cies Surplus Maintained Requirements
18 --------- ----- ------ ----- ---- ------- ---------- ------------
19 4 50 300 300 -- $ 300,000{1}$ 200,000{1}see note{2}
20 7 20 20 200 20 $ 300,000 $ 200,000 see note{3}
21 8 20 20 300 20 $ 150,000 $ 100,000 see note{3}
22 9 20 20 200 20 $ 300,000 $ 200,000 see note{3}
23 10 20 20 300 20 $ 150,000 $ 100,000 see note{3}
24 11 20 20 300 20 $ 150,000 $ 100,000 see note{3}
25 13 100 100 500{4} -- $ 500,000{5}$ 400,000{5}see note{6}
26 15 40{7} 40 2,500{7} -- $ 500,000 $ 400,000 see note{6}
27 30{7} 30 5,000{7} -- $ 500,000 $ 400,000 see note{6}
28 20{7} 20 7,500{7} -- $ 500,000 $ 400,000 see note{6}
29 10{7} 10 10,000{7} -- $ 500,000 $ 400,000 see note{6}
30 16 -- -- --- -- $1,500,000 $1,000,000
31 17 20 20 2,000 20 $ 750,000 $ 500,000 see note{3}
32 20 50 300 300 -- $1,000,000{8}$ 500,000{8}see note{9}
33 21 20 20{10} 200{11}-- $ 500,000 $ 500,000 see note{12}
34 34202020020$2,000,000$1,000,000see note {3}
35 § 6. This act shall take effect on the thirtieth day after it shall have
36 become a law.
