NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7110
SPONSOR: Gunther
 
TITLE OF BILL: An act to amend the insurance law, in relation to the
organization of assessment corporations
 
PURPOSE OR GENERAL IDEA OF BILL:
To clarify that assessment cooperative property and casualty insurance
companies are authorized to write umbrella insurance policies and stand-
alone liability coverage.
 
SUMMARY OF PROVISIONS:
Sections 1, 2 and 3: Amend section 6605 of the Insurance Law to clarify
that assessment cooperative property and casualty insurance companies
can write both personal and commercial umbrella liability coverage and
standalone liability insurance policies.
Section 4: Effective date.
 
JUSTIFICATION:
Assessment cooperatives are property and casualty insurance companies
that have been covering thousands of homeowners, renters, small busi-
nesses and farms in Upstate New York for decades and, in many cases, for
over a century. These companies have been writing liability policies for
over 50 years.
Unfortunately, the current law restricts assessment cooperative insur-
ance companies from writing umbrella insurance policies for their poli-
cyholders who have an underlying policy with the assessment corporation.
As a result, assessment cooperatives are at an unfair disadvantage in
the insurance markets they serve, primarily rural and underserved areas
of Upstate New York. This fact is also needlessly causing a tremendous
disservice to the policyholders who rely on smaller insurance companies
to fill this market need. Failing to correct this unnecessary
restriction in current state law would result in the market options
shrinking considerably with the policy holders very possibly facing
price increases due to the lack of options.
For example, thousands of tenant and homeowner policies would be nega-
tively impacted without any corresponding benefit. Similarly, small
businesses who rely on the assessment cooperatives to write coverage in
Manufacturers & Contractors policies would also be harmed, again without
any corresponding benefit. In fact, assessment cooperatives and advance
premium cooperatives in New York cove over 71,000 New York small busi-
nesses.
As a result, this bill is needed to ensure a stable, competitive and
vibrant property and casualty insurance market in New York, a market
that will benefit New Yorkers and especially those individuals and busi-
nesses residing in Upstate New York.
 
LEGISLATIVE HISTORY:
2017-18: A8361 referred to Insurance/S4010A committed to Rules
 
FISCAL IMPLICATIONS:
None
 
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
7110
2019-2020 Regular Sessions
IN ASSEMBLY
April 8, 2019
___________
Introduced by M. of A. GUNTHER -- read once and referred to the Commit-
tee on Insurance
AN ACT to amend the insurance law, in relation to the organization of
assessment corporations
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The opening paragraph of subsection (a) of section 6605 of
2 the insurance law, as added by chapter 137 of the laws of 1986, is
3 amended to read as follows:
4 An assessment corporation may be organized and licensed in the manner
5 prescribed in section six thousand six hundred three of this article and
6 may do, in addition to the kind of insurance specified in paragraph four
7 of subsection (a) of section one thousand one hundred thirteen of this
8 chapter, any one or more of the kinds of insurance specified in para-
9 graphs five, six, seven and eight of such subsection [solely in conjunc-
10 tion with fire insurance written under the same policy and covering the
11 same premises] and insurance against loss or damage to property caused
12 by aircraft or vehicles in compliance with the following prerequisites:
13 § 2. Subsection (b) of section 6605 of the insurance law, as amended
14 by chapter 379 of the laws of 2001, is amended to read as follows:
15 (b) Any licensed assessment corporation may amend its charter and be
16 licensed to do the kinds of insurance specified in paragraphs nine,
17 thirteen, fourteen and fifteen (except workers' compensation insurance)
18 of subsection (a) of section one thousand one hundred thirteen of this
19 chapter [solely in conjunction with fire insurance written under the
20 same policy and covering the same premises] and may be licensed to do
21 the kinds of insurance specified in paragraphs twelve, nineteen (exclud-
22 ing aircraft physical damage insurance) and twenty (inland marine only)
23 of such subsection. An assessment corporation licensed to write the
24 kinds of insurance specified in paragraphs thirteen and fourteen of
25 subsection (a) of section one thousand one hundred thirteen of this
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06612-01-9
A. 7110 2
1 chapter is authorized to write personal or commercial umbrella liability
2 insurance or any other type of standalone liability insurance, excluding
3 automobile insurance.
4 § 3. Section 6605 of the insurance law is amended by adding a new
5 subsection (d) to read as follows:
6 (d) An assessment corporation licensed to write the kinds of insurance
7 specified in paragraphs thirteen and fourteen of subsection (a) of
8 section one thousand one hundred thirteen of this chapter is authorized
9 to write personal or commercial umbrella liability insurance or any
10 other type of standalone liability insurance, excluding automobile
11 insurance. Except as herein provided, the corporation must maintain an
12 additional surplus or fifty thousand dollars if the corporation writes
13 umbrella liability insurance. The additional surplus is not necessary if
14 the whole risk for this peril is reinsured in an insurance company
15 authorized to do business in this state, or in an accredited reinsurer,
16 as defined in subsection (a) of section one hundred seven of this chap-
17 ter.
18 § 4. This act shall take effect immediately.