NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A9088
SPONSOR: Hunter
 
TITLE OF BILL:
An act to amend the insurance law, in relation to simplifying the excess
line insurance placement affidavit requirements
 
PURPOSE OR GENERAL IDEA OF BILL:
This legislation would streamline the excess line affidavit regarding
declinations that are filed by both retail and wholesale insurance
brokers when placing excess line transactions. The bill would reduce
excessive reporting requirements that provide no benefit to insureds and
allow brokers to focus on providing services that consumers need and
value.
 
SUMMARY OF PROVISIONS:
Section one - Amends subparagraph (C) of paragraph 3 of subsection (b)
of section 2118 of the insurance law, as amended by chapter 684 of the
laws of 1993, to simplify excess line insurance placement affidavit
requirements.
Section two - establishes the effective date.
 
JUSTIFICATION:
The excess line market exists as a matter of public policy to insure
risks which New York admitted insurers choose not to underwrite because
the risks are distressed, unique, volatile, or involve new businesses or
coverages without loss history. The legislature reasoned that New York
businesses could not operate without a secondary market to insure risks
that are rejected by licensed insurers. The excess line market is of
vital importance to New York and nimble processing is essential to
effectively serve consumer needs.
The bill would reduce the number of data elements that a broker is
required to collect and report for each of three declining licensed
insurers from seven to three. The insurer name, NAIC number and the
reason the broker believed the licensed insurer would consider under-
writing the risk would still be recorded in an affidavit. The name of
the insurer representative who declined the risk and their affiliation
with the insurer, and the date and reason the risk was declined would no
longer be recorded in the affidavit.
Insurance brokers would still be required to file insurance coverage
documents and affidavits with the Excess Line Association of New York
(ELANY).
The current affidavit forms are unduly complex, burdensome and time-con-
suming to complete. As a result, mistakes are frequently made and time
spent correcting the affidavits results in unnecessary delays to the
detriment of consumers. Many submissions to insurers are made through
web portals which generate either an electronic quote or a declination
to insure the risk. A web portal declination does not contain the name
of an individual or their affiliation (company employee, agent, other).
The current affidavit requires this information, placing brokers in an
untenable situation.
Fewer than 20% of New York-licensed retail brokers place excess line
business through wholesale brokers, averaging twenty-five annual trans-
actions each. Of those retail brokers, 70% place less than 10 trans-
actions with wholesale excess line brokers. This is a powerful indicator
that retailers only go to wholesalers when the retailers' licensed
markets refuse to insure a risk and that most retail brokers have little
experience in completing the excess line placement affidavit.
New York is among a minority of states that require the filing of decli-
nation information for each policy and the only state that requires
twenty-one elements in total for three separate declinations. An excess
line broker that is required to file declinations and also allocate tax
liability for non-U.S. risk exposures must currently submit seventy-one
affidavit data elements. The bill would reduce declination data elements
from twenty-one to nine.
 
PRIOR LEGISLATIVE HISTORY:
New Bill.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
 
EFFECTIVE DATE:
Immediately.
STATE OF NEW YORK
________________________________________________________________________
9088
IN ASSEMBLY
January 31, 2022
___________
Introduced by M. of A. HUNTER -- read once and referred to the Committee
on Insurance
AN ACT to amend the insurance law, in relation to simplifying the excess
line insurance placement affidavit requirements
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subparagraph (C) of paragraph 3 of subsection (b) of
2 section 2118 of the insurance law, as amended by chapter 684 of the laws
3 of 1993, is amended to read as follows:
4 (C) Every licensee, or affirming broker, in connection with the place-
5 ment of each risk pursuant to this section not otherwise exempt from the
6 diligent effort requirement, shall record on the affidavit required
7 pursuant to subparagraph (A) of this paragraph the name and national
8 association of insurance commissioners code of each authorized insurer
9 declining a risk and information relied upon that formed the basis of
10 such licensee's or affirming broker's reason to believe that the author-
11 ized insurer might consider writing the type of coverage or class of
12 insurance involved. No additional diligent effort information shall be
13 reported on the affidavit.
14 § 2. This act shall take effect immediately, provided, however, that
15 the amendments to subparagraph (C) of paragraph 3 of subsection (b) of
16 section 2118 of the insurance law made by section one of this act shall
17 not affect the expiration of such subsection and shall be deemed to
18 expire therewith.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14285-01-2