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A10344 Summary:

A10344 Actions:

A10344 Committee Votes:

Committee:INSURANCE   Chair:Weprin      
DATE:05/22/2024AYE/NAY:25/0  Action: Favorable refer to committee Codes        
Weprin
Aye
Blankenbush
Aye
Cook
Aye
Hawley
Aye
Pretlow
Aye
Palmesano
Aye
Lavine
Aye
Gandolfo
Aye
Steck
Aye
Curran
Aye
Dilan
Aye
Jensen
Aye
Hunter
Aye
Blumencranz
Aye
Stern
Aye
Bendett
Aye
Jacobson
Aye
Meeks
Aye
Forrest
Aye
Anderson
Aye
Cruz
Aye
Bores
Aye
Lunsford
Aye
Berger
Aye
Eichenstein
Aye

Committee:CODES   Chair:Dinowitz      
DATE:05/28/2024AYE/NAY:21/0  Action: Favorable refer to committee Rules        
Dinowitz
Aye
Morinello
Aye
Pretlow
Aye
Reilly
Aye
Cook
Aye
Mikulin
Aye
Lavine
Aye
Tannousis
Aye
Weprin
Aye
Curran
Excused
Hevesi
Aye
Angelino
Aye
Seawright
Aye
Flood
Aye
Rosenthal
Aye
Walker
Aye
Vanel
Aye
Cruz
Aye
Carroll
Aye
Simon
Aye
Epstein
Aye
Bores
Aye

Committee:RULES   Chair:Pretlow      
DATE:05/28/2024AYE/NAY:28/0  Action: Favorable         
Heastie
Excused
Barclay
Aye
Weinstein
Aye
Hawley
Aye
Pretlow
Aye
Giglio
Aye
Cook
Aye
Blankenbush
Aye
Glick
Aye
Norris
Aye
Aubry
Excused
Ra
Aye
Dinowitz
Aye
Brabenec
Aye
Colton
Aye
Palmesano
Aye
Magnarelli
Aye
Reilly
Aye
Paulin
Aye
Peoples-Stokes
Aye
Benedetto
Aye
Lavine
Aye
Lupardo
Aye
Zebrowski
Aye
Thiele
Aye
Braunstein
Aye
Dickens
Excused
Davila
Aye
Hyndman
Aye
Rozic
Aye
Bronson
Aye

A10344 Floor Votes:

A10344 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
 submitted in accordance with Assembly Rule III, Sec 1(f)



 
BILL NUMBER: A10344
 
SPONSOR: Rules (Sillitti)

 
TITLE OF BILL:
 
An act to amend the insurance law, in relation to parametric insurance
 
 
PURPOSE OF THE BILL:
 
This bill would amend the Insurance Law to authorize parametric insur-
ance. Summary of provisions:
 
Section 1 would renumber Insurance Law § 1113(a)(34) as (35) and add a
new paragraph (34) to authorize parametric insurance.
 
Section 2 would amend Insurance Law § 2I05(a) to permit an excess line
broker to procure parametric insurance.
 
Section 3 would add a new Insurance Law § 3416 entitled "parametric
insurance", which would require certain consumer disclosures.
 
Section 4 would amend Insurance Law § 3425(a)(2) to make parametric
insurance subject to this section, including the cancellation and non-
renewal requirements set forth therein.
 
Section 5 would amend Insurance Law § 4101(b) to make parametric insur-
ance a "non-basic kind of insurance."
 
Section 6 would amend Insurance Law § 4102(b)(2) to provide that an
insurer may write parametric insurance if it writes fire insurance.
 
Sections 7, 8, and 9 would amend Note 3 to Table One, as set forth in
Insurance Law § 4103(a)(1), Note 1 to Table Two, as set forth in Insur-
ance Law § 4107(a)(1), and Note 3 to Table Three, as set forth in Insur-
ance Law § 4107(b), to state that no additional paid-in capital and
surplus is required for a license to write parametric insurance if the
insurer is licensed to write fire insurance.
 
Section 10 would provide that the bill takes effect 30 days after it is
signed into law.
 
 
JUSTIFICATION:
 
A parametric insurance product is a contract that insures a person
against the occurrence of a nearby event by paying a set amount based on
the magnitude of the event, rather than the actual amount of the loss or
damage. An example is a contract that pays an insured $5,000 if there is
a category 3 hurricane where the person lives regardless of whether the
insured suffered a loss or damage.
 
Since these contracts pay a set amount based upon the magnitude of an
event rather than the actual loss or damage, they may be less expensive.
Tying payment to the magnitude of an event also allows an insurer to pay
claims faster because it eliminates the claims adjustment process.
However, because indemnification is not based on an insured's actual
loss or damage, a parametric insurance product is not a replacement for
traditional homeowners' or commercial property coverage as it likely
will not be as comprehensive. In addition, an insured could suffer
 
damage or a loss but because the magnitude of the event did not meet the
trigger for coverage, the insured will not receive a payout.
 
As a result, this bill adds parametric insurance as a permissible kind
of insurance. However, it also requires an insurer and an excess line
broker to disclose in the application for an insurance policy and in a
prominent writing upon policy issuance and renewal that: (1) the policy
is pot a' substitute for property insurance or flood insurance, as rele-
vant, which generally provide more comprehensive coverage in the event
of a loss; and (2) a mortgagee or loss payee may not accept a parametric
insurance policy. The bill would also subject parametric insurance to
the consumer protections set forth in Insurance Law § 3425, such as
cancellation and non-renewal requirements.
 
 
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.

A10344 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          10344
 
                   IN ASSEMBLY
 
                                      May 17, 2024
                                       ___________
 
        Introduced by COMMITTEE ON RULES -- (at request of M. of A. Sillitti) --
          (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 parametric 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 is renumbered paragraph 35 and a new paragraph 34 is added
     3  to read as follows:
     4    (34) "Parametric insurance" means insurance against the occurrence  of
     5  a  weather-related  event,  such  as  windstorm,  flood, snow, wildfire,
     6  tornado, cyclone, or earthquake, where the indemnification is  based  on
     7  the  proximity  and magnitude of the event as measured and reported by a
     8  state or federal government agency.
     9    § 2. Subsection (a) of section 2105 of the insurance law,  as  amended
    10  by chapter 359 of the laws of 2021, is amended to read as follows:
    11    (a)  The  superintendent  may issue an excess line broker's license to
    12  any person, firm, association or corporation who or which is licensed as
    13  an insurance broker under section two thousand one hundred four of  this
    14  article,  or  who  or  which is licensed as an excess line broker in the
    15  licensee's home state, provided,  however,  that  the  applicant's  home
    16  state  grants  non-resident  licenses  to residents of this state on the
    17  same basis, except that reciprocity is not required  in  regard  to  the
    18  placement  of liability insurance on behalf of a purchasing group or any
    19  of its members; authorizing such person,  firm,  association  or  corpo-
    20  ration to procure, subject to the restrictions herein provided, policies
    21  of  insurance  from insurers [which] that are not authorized to transact
    22  business in this state of the kind or kinds of  insurance  specified  in
    23  paragraphs  four through fourteen, sixteen, seventeen, nineteen, twenty,
    24  twenty-two, twenty-seven, twenty-eight,  thirty-one,  thirty-two  [and],
    25  thirty-three,  and thirty-four of subsection (a) of section one thousand
    26  one hundred thirteen of this chapter  and  in  subsection  (h)  of  this
    27  section,  provided,  however,  that  the  provisions of this section and
    28  section two thousand one hundred eighteen  of  this  article  shall  not
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14183-02-4
        A. 10344                            2
 
     1  apply to ocean marine insurance and other contracts of insurance enumer-
     2  ated  in  subsections  (b)  and  (c) of section two thousand one hundred
     3  seventeen of this article. Such license may be suspended or  revoked  by
     4  the  superintendent  whenever in [his or her] the superintendent's judg-
     5  ment such suspension or revocation will best promote  the  interests  of
     6  the people of this state.
     7    § 3. The insurance law is amended by adding a new section 3416 to read
     8  as follows:
     9    § 3416. Parametric insurance. (a) Except as provided in subsection (b)
    10  of  this  section,  an insurer that issues a parametric insurance policy
    11  shall disclose the following information  in  the  application  for  the
    12  insurance  policy  and  in  a prominent writing upon policy issuance and
    13  renewal:
    14    (1) the policy is not a substitute for  property  insurance  or  flood
    15  insurance,  as  relevant,  which  generally  provide  more comprehensive
    16  coverage in the event of a loss; and
    17    (2) a mortgagee or loss payee may not accept  a  parametric  insurance
    18  policy.
    19    (b)  An  excess line broker who procures a parametric insurance policy
    20  pursuant to section two thousand one hundred five of this chapter  shall
    21  provide  the  disclosures  required by subsection (a) of this section on
    22  behalf of the insurer.
    23    § 4. Paragraph 2 of subsection (a) of section 3425  of  the  insurance
    24  law,  as  amended by chapter 235 of the laws of 1989, is amended to read
    25  as follows:
    26    (2) "Covered policy" also means a contract of insurance,  referred  to
    27  in  this section as "personal lines insurance", other than a contract of
    28  insurance defined in paragraph one hereof, issued or issued for delivery
    29  in this state, on a risk located or resident in this state, insuring any
    30  of the following contingencies:
    31    (A) loss of or damage to real property used predominantly for residen-
    32  tial purposes and [which] that consists of not more than  four  dwelling
    33  units, other than hotels and motels;
    34    (B)  loss  of  or damage to personal property in which natural persons
    35  have an insurable interest, except personal property used in the conduct
    36  of a business; [and]
    37    (C) other liabilities for loss of, damage to, or injury to persons  or
    38  property,  not  arising  from  the conduct of a business, when a natural
    39  person is the named insured under the policy; and
    40    (D) parametric insurance,  as  defined  in  paragraph  thirty-four  of
    41  subsection  (a)  of  section  one  thousand one hundred thirteen of this
    42  chapter.
    43    § 5. Subsection (b) of section 4101 of the insurance law,  as  amended
    44  by chapter 359 of the laws of 2021, is amended to read as follows:
    45    (b)  "Non-basic  kinds  of  insurance"  means  the  kinds of insurance
    46  described in the following paragraphs of subsection (a) of  section  one
    47  thousand  one  hundred  thirteen of this chapter numbered therein as set
    48  forth in parentheses below:
    49    accident and health (item (i) of (3));
    50    non-cancellable disability (item (ii) of (3));
    51    miscellaneous property (5);
    52    water damage (6);
    53    collision (12);
    54    property damage liability (14) -  non-basic  as  to  mutual  companies
    55  only;
    56    motor vehicle and aircraft physical damage (19);
        A. 10344                            3
 
     1    inland marine as specified in marine and inland marine (20);
     2    marine protection and indemnity (21) - non-basic as to stock companies
     3  only;
     4    residual value (22);
     5    credit unemployment (24);
     6    gap (26);
     7    prize indemnification (27);
     8    service contract reimbursement (28);
     9    legal services insurance (29);
    10    involuntary unemployment insurance (30);
    11    salary protection insurance (31);
    12    donor medical expense insurance (32);
    13    excess business disability insurance (33);
    14    parametric insurance (34).
    15    §  6.  Paragraph  2 of subsection (b) of section 4102 of the insurance
    16  law is amended to read as follows:
    17    (2) If licensed to write fire (4), it may be licensed to write miscel-
    18  laneous property (5), water damage (6), collision  (12),  motor  vehicle
    19  and  aircraft  physical damage (19) [and], inland marine as specified in
    20  marine and inland marine (20) and parametric (34);
    21    § 7. Note 3 of table one of paragraph 1 of subsection (a)  of  section
    22  4103  of  the  insurance  law,  as amended by chapter 293 of the laws of
    23  1986, is amended to read as follows:
    24    {3}  If licensed to write paragraph 4, no additional  paid-in  capital
    25  and  surplus  is required for a license to write paragraphs 5, 6, 12, 19
    26  [and], 20, (inland marine only) and 34.
    27    § 8. Note 1 of table two of paragraph 1 of subsection (a)  of  section
    28  4107  of  the  insurance  law,  as amended by chapter 805 of the laws of
    29  1984, is amended to read as follows:
    30    {1} If licensed  to  write  paragraph  4,  no  additional  surplus  is
    31  required  for  a  license  to  write [pargraphs] paragraphs 5, 6, 12, 19
    32  [and], 20, (inland marine only) and 34.
    33    § 9. Note 3 of table three of subsection (b) of section  4107  of  the
    34  insurance law, as amended by chapter 293 of the laws of 1986, is amended
    35  to read as follows:
    36    {3}  If  licensed  to  write  paragraph  4,  no  additional surplus is
    37  required for a license to write paragraphs  5,  6,  12,  19  [and],  20,
    38  (inland marine only) and 34.
    39    §  10.  This act shall take effect on the thirtieth day after it shall
    40  have become a law.

A10344 LFIN:

 
NO LFIN

A10344 Chamber Video/Transcript: