A04718 Summary:

COSPNSRBronson, Stirpe, Skoufis, Crouch, Lavine, Simotas, Bichotte, Brindisi, Walker, Miller, Ortiz, Schimel, Hyndman, Rozic, Sepulveda, Lifton, Markey
MLTSPNSRBraunstein, Ceretto, DenDekker, Peoples-Stokes
Add §343, Ins L
Enacts the "construction insurance transparency act" to require insurers providing coverage for liability under the scaffold law to report, on an annual basis, to the superintendent of financial services relating to its finances and claims paid thereunder.
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A04718 Actions:

02/05/2015referred to insurance
03/19/2015reported referred to codes
01/06/2016referred to insurance
01/21/2016amend (t) and recommit to insurance
01/21/2016print number 4718a
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A04718 Text:

                STATE OF NEW YORK
                               2015-2016 Regular Sessions
                   IN ASSEMBLY
                                    February 5, 2015
        Introduced  by  M. of A. MOYA, BRONSON, STIRPE, SKOUFIS, CROUCH, LAVINE,
          Multi-Sponsored  by  --  M.  of  A.  BRAUNSTEIN,  CERETTO,  DenDEKKER,
          PEOPLES-STOKES -- read once and referred to the Committee on Insurance
          -- recommitted to the Committee on Insurance in accordance with Assem-
          bly Rule 3, sec. 2 --  committee  discharged,  bill  amended,  ordered
          reprinted as amended and recommitted to said committee
        AN  ACT  to  amend  the  insurance  law,  in  relation  to  enacting the
          "construction insurance transparency act of 2016" requiring all insur-
          ers which issue  policies  of  liability  insurance  insuring  against
          claims made in reliance upon the duty imposed by the "scaffold law" to
          file  annual  financial  statements  and  detailed claim data with the
          superintendent of financial services
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  This  act  shall  be  known  and  may  be  cited  as  the
     2  "construction insurance transparency act of 2016".
     3    § 2. Declarations of  legislative  findings.  The  legislature  hereby
     4  finds  and  declares  that  persons, corporations, associations or other
     5  business entities which issue policies of liability  insurance  insuring
     6  an  owner  of  real  property or a contractor who is performing work and
     7  services on real property against  claims  made  in  reliance  upon  the
     8  duties  imposed  upon  such  parties  by  section  240 of the labor law,
     9  commonly referred to as the "scaffold law", owe  an  obligation  to  the
    10  public,  to  those  they  insure  and  to those who may in the future be
    11  insured by them, to fully disclose in a public  and  transparent  manner
    12  all elements relating to the premiums paid for such insurance, the meth-
    13  od  and  manner  in  which such premiums are determined and imposed upon
    14  insureds, and claims made by injured persons  who  rely  on  owners  and
    15  contractors  to  provide  a safe and secure worksite as required in such
    16  section of such law. It is essential that the public be  made  aware  of
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 4718--A                          2
     1  such  an  insurer's  responsibility  to  inform  them of their financial
     2  condition and solvency, and the details and specifics of the factors and
     3  circumstances behind its financial solvency as well as the basis for the
     4  rates they charge to owners and contractors to obtain such coverage. The
     5  determination  of  premiums  for such liability insurance policy in this
     6  state has, unfortunately, gone on too long in obscurity, with even those
     7  who bear the cost of premiums unable to learn why prices are set as they
     8  are. As a matter of public trust, liability insurers should be  required
     9  to make the public aware of the pertinent facts related to their premium
    10  determinations  and  financial  solvency by disclosing all the pertinent
    11  facts as provided for in this section. It is the further  sense  of  the
    12  legislature  that  this  data  should be disclosed in an open and public
    13  manner, and should be made available without undue cost and delay.
    14    § 3. The insurance law is amended by adding a new section 343 to  read
    15  as follows:
    16    §  343.  Financial  statement and detailed claim data to be filed with
    17  the superintendent. (a) For purposes of this section, the term "insurer"
    18  shall mean any person, corporation, association or other business entity
    19  which issues a policy of liability insurance insuring  a  contractor  or
    20  owner  of  real property located in this state against claims made by an
    21  injured worker, the claim for which is made in reliance  upon  the  duty
    22  owed  to  such  worker pursuant to the provisions of section two hundred
    23  forty of the labor law.
    24    (b) On or before April first of each year, every insurer shall for the
    25  prior calendar year provide the superintendent and  the  public  with  a
    26  detailed  financial  statement  to  supplement and expand upon any other
    27  information otherwise provided to the department as it relates an insur-
    28  er's provision of liability insurance coverage to owners of real proper-
    29  ty or contractors performing services to owners  of  real  property  for
    30  claims  made  by  an  injured  person  in reliance upon the duty owed by
    31  section two hundred forty of the labor law; provided, however, that  the
    32  initial  financial  statement so filed by an insurer after the effective
    33  date of this section shall include  the  information  required  in  this
    34  subdivision  not  only  for  such  prior  calendar year but also for the
    35  previous nine calendar years prior to such report.  The financial state-
    36  ment shall, in depth, separate the cost of providing section two hundred
    37  forty of the labor law based coverage from the cost of providing general
    38  liability insurance insuring the same owner or contractor  with  respect
    39  to  the  same property and shall contain at least the following informa-
    40  tion relating to coverage pursuant to such section:  (1) that portion of
    41  premiums assessed and attributable to providing such coverage; (2)  paid
    42  judgments,  settlements or losses resulting from such coverage; (3) case
    43  reserves for losses which may be attributable to coverage; (4)  incurred
    44  but  not  reported loss estimates which may be attributable to coverage;
    45  (5) paid defense and  cost  containment  expenses  attributable  to  any
    46  claims  made based upon such coverage; (6) case reserves for defense and
    47  cost containment experience attributable to any claims made  based  upon
    48  such  coverage;  (7) incurred but not reported defense and cost contain-
    49  ment estimates based upon such coverage; (8) premium and loss experience
    50  identified by policy limits and deductibles; (9) number of claims initi-
    51  ated and closed; (10) number of claims closed with loss  payments;  (11)
    52  number of open claims at the time such statement is prepared; (12) other
    53  expenses  by category as determined by the superintendent to reflect the
    54  cost to the insurer to provide such coverage  as  part  of  a  liability
    55  insurance  policy;  (13) investment income realized from that portion of
    56  the premium paid for a policy providing such coverage; (14)  the  amount

        A. 4718--A                          3
     1  of exposure to the insurer resulting from the provision of such coverage
     2  and  whether  the  insurer  has  limited the amount of coverage provided
     3  together with an estimate of the amount which might be required  of  the
     4  insured  to  purchase further coverage from an out of state excess lines
     5  provider, based upon current data available to such  in-state  provider,
     6  especially  where  such  in-state  provider  operates  as an excess line
     7  insurer for risks in another state; (15) amounts spent  by  insurer  for
     8  risk  management  programs,  or  required to be spent by insureds at the
     9  behest of the insurer, which  programs  are  designed  and  intended  to
    10  promote  worksite  safety,  more  particularly  as  it relates to height
    11  related accidents covered by section two hundred forty of the labor law;
    12  and (16) the aforegoing experience and information further subdivided by
    13  quality of risk as measured by prior loss experience, contractor payroll
    14  ranges, contractor number of employee ranges,  risk  management  partic-
    15  ipation,  and  other  relevant  identifiable  differences in exposure to
    16  insurance loss. The data provided by insurers shall be separated out  so
    17  that  a  determination  can  be  made that a claim made or paid is based
    18  partially or totally upon section two hundred forty of  the  labor  law;
    19  coverage,  and not any other provision of statutory or common law impos-
    20  ing another or different or separate standard of  care  or  duty  to  an
    21  injured  party.   Such financial statement shall include the entirety of
    22  such insurer's business activities insuring against risks  occurring  in
    23  this  state and shall be in a form determined by the superintendent. The
    24  form shall be sufficiently itemized in a manner that allows for an actu-
    25  arially sound analysis of the income realized by the  insurer  from  all
    26  sources during such year, including but not limited to premiums, invest-
    27  ment  income,  and  any other category or categories of income as deter-
    28  mined by the superintendent to reflect the full disclosure  requirements
    29  of  this  section  and that portion which may be specifically related to
    30  such coverage. At a minimum, such information shall consist of the items
    31  set forth in the statement of income, excluding the capital and  surplus
    32  account  section of the property/casualty statutory annual statement, as
    33  applicable to the insurer's New York state  business,  as  well  as  the
    34  other  information  delineated in this subsection. Such financial state-
    35  ment shall also contain a comprehensive and detailed disclosure  of  the
    36  insurer's expenses actually incurred and paid during such calendar year,
    37  to  include  normal business expenses, salaries, commissions, consulting
    38  fees, legal expenses, advertising costs and any  other  category  deemed
    39  pertinent  to  the  intent  of  this  section. At a minimum, the expense
    40  information required shall consist of the items set forth in the  under-
    41  writing   and   investment   exhibit   -   part  3  -  expenses  of  the
    42  property/casualty statutory  annual  statement,  as  applicable  to  the
    43  insurer's  New  York state business. With respect to salaries (including
    44  all other forms of compensation), each insurer shall itemize the  salary
    45  of  the  twenty most highly compensated employees of such insurer during
    46  such year, provided that  the  names  of  such  employees  need  not  be
    47  disclosed.   Such financial statement shall also provide the public with
    48  a synopsis of claims or settlements paid for section two  hundred  forty
    49  of  the labor law coverage pursuant to such policies or contracts, list-
    50  ing the total of such claims and settlements attributable to such cover-
    51  age. At a minimum, the claim information required shall consist  of  the
    52  items   set  forth  in  the  exhibit  of  premiums  and  losses  of  the
    53  property/casualty statutory  annual  statement,  as  applicable  to  the
    54  insurer's  New  York state business and identified and categorized sepa-
    55  rately for each zip code in this state. Such financial  statement  shall
    56  be signed and attested as full, complete and accurate by the chief exec-

        A. 4718--A                          4
     1  utive  officer  of  the  insurer, and he or she shall be held personally
     2  responsible with respect to the accuracy of the content of  such  state-
     3  ment.  The superintendent shall provide insurers with a method to submit
     4  their financial statements electronically via the internet, which method
     5  shall  include  instructions relating to the use of an electronic signa-
     6  ture which shall be subject to, and submitted in accordance with section
     7  three hundred sixteen of this article; provided, however, that no excep-
     8  tion authorized in such section may be requested or granted.
     9    (c) On or before April first of each year, every insurer shall provide
    10  the superintendent with detailed closed claim information for  the  same
    11  insurance coverage as provided for in subsection (b) of this section for
    12  the  most  recently  concluded  calendar  year. Until the superintendent
    13  promulgates data collection forms and  procedures  for  the  itemization
    14  requirements,  data  shall  be  collected  using, at a minimum, the most
    15  recent publicly available forms required by law, or commonly used in the
    16  insurance industry. The superintendent may require  additional  informa-
    17  tion  beyond that which may otherwise be currently required if he or she
    18  deems it necessary and warranted without the need to  formally  adopt  a
    19  rule  or  regulation  provided  such  requirement is consistent with the
    20  intent of this section. Such detailed claim data  shall  be  signed  and
    21  attested  as  full, complete and accurate by the chief executive officer
    22  of the insurer, and he or she shall be held personally responsible  with
    23  respect  to  the  accuracy of the data. The detailed claim data shall be
    24  submitted in the same manner as provided for in subsection (b)  of  this
    25  section.
    26    (d)  The superintendent shall, in both written form and as part of the
    27  department web site, make such financial statements and  detailed  claim
    28  information  available  to  the  public.  The detailed claim information
    29  shall be provided in aggregate form for all insurers  and  separated  by
    30  specific  insurer,  combined  without  any  identification of a specific
    31  claim to a specific insurer.  None of the  publicly  available  detailed
    32  claim  information  shall  identify the individual insurer, defendant or
    33  plaintiff, or representative of the same,  associated  with  the  claim.
    34  Such financial statements and detailed claim information shall be deemed
    35  a  public document and no person shall be required to file a request for
    36  such financial statements pursuant to article six of the public officers
    37  law in order to receive a copy thereof, but upon request and payment  of
    38  the  fee for copying such document, it shall be provided forthwith. With
    39  respect to the electronic copy of such financial statements and detailed
    40  claim information, which shall be accessible  on  the  department's  web
    41  site,  the  department shall highlight the availability of such informa-
    42  tion to the public on such web site, and  the  link  to  each  insurer's
    43  financial  statement and the aggregated detailed claim information shall
    44  be accessible in a simple and easy manner. Both the financial  statement
    45  and  aggregated  detailed claim information on the department's web site
    46  shall be available in spreadsheet  format,  in  addition  to  any  other
    47  format the superintendent determines is appropriate. Where summaries are
    48  included,  they shall be written in plain and simple English so that the
    49  public at large can easily comprehend the data provided.
    50    (e) On or before July first of each  year,  the  superintendent  shall
    51  issue  reports summarizing and explaining the information collected from
    52  the financial statements and the detailed claim information  and  summa-
    53  rizing  the  cost  and  other  essential  elements relevant to providing
    54  section two hundred forty of the labor law coverage. Such  report  shall
    55  further  contain such recommendations the superintendent deems advisable
    56  to encourage the utilization of risk management programs to be regularly

        A. 4718--A                          5

     1  conducted by contractors to reduce premiums and provide workers  with  a
     2  safer work environment, and any other steps contractors or real property
     3  owners should utilize in furtherance of the same. The superintendent may
     4  seek,  and  shall  be entitled to receive, the aid and assistance of the
     5  commissioner of labor and any other state or local governmental official
     6  charged with responsibility for work site safety in preparing such anal-
     7  ysis and recommendations.  Copies of such reports shall be forwarded  to
     8  the  temporary  president of the senate, the speaker of the assembly and
     9  the chairs of the senate and assembly insurance committees. Such reports
    10  shall be public documents and shall be accessible both in paper copy and
    11  on the department's web site in a similar fashion  as  provided  for  in
    12  subsection (d) of this section.
    13    (f)  Where  an  insurer fails or refuses to provide the superintendent
    14  with a full and complete disclosure as required  by  this  section,  the
    15  superintendent shall take such action he or she deems necessary to bring
    16  the  insurer into full compliance. Such action may include imposition of
    17  a civil penalty of up to fifty thousand  dollars  assessed  against  the
    18  insurer  for  each violation, temporary suspension of any right to issue
    19  additional policies or contracts until the insurer  brings  itself  into
    20  full  compliance, an audit of the insurer's records by the department or
    21  its designated representative to obtain the information and which  audit
    22  shall  be  paid for by the insurer, or any other civil remedy the super-
    23  intendent  deems  warranted  or  necessary  until  such  insurer   fully
    24  complies.  In  addition  the  officer whose signature is affixed to such
    25  statement may be personally penalized to the same extent.
    26    (g) The superintendent may promulgate such rules and regulations he or
    27  she deems necessary for the proper administration of the  provisions  of
    28  this  section,  and  such rules and regulations may be promulgated on an
    29  emergency basis if the superintendent warrants such action to be  neces-
    30  sary.
    31    § 4. Severability. If any item, clause, sentence, subparagraph, subdi-
    32  vision  or  other  part  of  this act, or the application thereof to any
    33  person or circumstances shall be held to be invalid, such holding  shall
    34  not  affect, impair or invalidate the remainder of this act but it shall
    35  be confined in its operation to the  item,  clause,  sentence,  subpara-
    36  graph,  subdivision  or other part of this act directly involved in such
    37  holding, or to the person and circumstances therein involved.
    38    § 5. This act shall take effect on the first of January next  succeed-
    39  ing the date upon which it shall have become a law.
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