Session Round Up
ALBANY, N.Y.—Seventy nine insurance bills were introduced during the New York State Legislative Session. Only four of those bills were passed by both the Assembly and the Senate and sent to the Governor for his approval.
Those four bills are: Senator James Seward (R, C, I-Cayuga) (S4327) and Assemblyman Phil Steck (D, Albany) (A6918) sponsored the first bill that is being sent to Governor Cuomo for his consideration. The legislation extends the sunset date and removes certain filing requirements for the “large commercial insured” exemption with regard to the free trade zone. The bill will extend until June 30, 2015, the exemption from rate and form filing requirements for certain property/casualty policies written in the free trade zone and to repeal the requirement that insurers file a certificate of insurance with the Department of Financial Services within one business day of writing the policy.
“The predecessor to Article 63 of the Insurance Law was enacted in 1978 to encourage insurance producers to place their large and unusual risks in the authorized New York market. At that time, overseas and out-of-state companies, such as Lloyd’s of London, wrote the great majority of these risks. Article 63 was intended to allow New York authorized insurers to compete more effectively with the London and out-of-state markets,” explained Senator Seward.
“The 2011 Law, amended the insurance law to add a new exemption from rate and form filing requirements until June 30, 2013 for certain property/casualty polices (other than medical malpractice insurance policies, workers’ compensation insurance policies, and certain other kinds of insurance policies) issued to a ‘large commercial insured’ (as that term is defined in the statute) that employs or retains a special risk manager to assist in the negotiation and purchase of a policy exempted under Article 63 of the Insurance Law,” continued Seward. Assemblyman Phil Steck said, “This exemption was added to expand the ability New York authorized insurers to compete more effectively with the London and outof- state markets, by permitting them to apply this exemption, so long as the special risk manager meets certain qualifications and the insurer makes certain informational filings. At the same time, the bill provides safeguards by allowing the Superintendent to re-impose filing and approval requirements where and to the extent that the Superintendent deems it in the interest of the policy holders.
This bill would extend the sunset date of this exemption to June 30, 2015 and amend the filing requirements to continue the expanded ability of New York authorized insurers to compete more effectively with the London and out-of-state markets.” The second bill pertaining to the insurance industry being sent to the Governor for his signature is a bill that extends from July 1, 2013 to July 1, 2018 the statutory clarification that the Medical Malpractice Insurance Pool (‘MMIP’) is not required to offer a second layer of excess medical malpractice insurance coverage. The legislation was sponsored by Senator James Seward (R, C, I-Cayuga) (S5704) and Assemblyman Steven Cymbrowitz (D, WF-Kings) (A7388).
“In 1999, legislation was passed to dissolve the Medical Malpractice Insurance Association (‘MMIA’), the market of the last resort for medical malpractice insurance. Upon MMIA’s dissolution, the MMIP was established as a source of medical malpractice insurance for health care providers who were unable to procure such insurance in the voluntary market,” said Senator Seward. “Upon initial distribution, i.e., the July 1, 2000 through June 30, 2001 policy year, MMIA insureds were to receive policies with provisions and at rates which were at least as favorable to the insureds as what they would have received upon renewal had MMIA not been dissolved, including a second layer of excess coverage.”
“Currently, no authorized medical malpractice insurer offers a second excess layer of coverage to its insured physicians, dentists or podiatrists. It is both unfair and illogical to require MMIP to bear the financial burden associated with providing a second layer of excess malpractice insurance to the health care providers where industry practice does not make such insurance available,” said Assemblyman Cymbrowitz. “Without this extension MMIP will be required to provide a second layer of excess medical malpractice insurance in the involuntary market despite the fact that no MMIP member insurer will provide the voluntary market such coverage to its own policyholders. This bill will continue to correct this inequity by clarifying that MMIP is not required to offer a second layer of excess medical malpractice insurance.” The third piece of legislation will amend the local finance law, in relation to the sale of bonds and notes of the City of New York. The bill will allow the refunding of bonds, the down payment for projects financed by bonds, variable rate debt, and interest rate exchange agreements of the City of New York. The bill amends the New York State Financial Emergency Act for the City of New York, in relation to a pledge and agreement of the state, to amend the local finance law relating to interest rate exchange agreements of the City of New York and refunding bonds of the city in relation to the effectiveness thereof. The legislation was sponsored by Senator Martin Golden (R, C, I-Kings) (S4655) and Assemblyman Herman Farrell (D-Bronx) (A7175). “This bill includes several elements that will be instrumental in ensuring that the City of New York has efficient and cost-efficient access to the capital markets, which have been experiencing unprecedented turmoil over the past few years,” said Senator Golden. “In 1978, the Legislature enacted various provisions of the Local Finance Law (‘LFL’) and the Emergency Act for the City of New York (‘FEA’) to respond to the financial emergency existing in the City and to improve marketability of City obligations by authorizing their sale on terms consistent with current market practices.” “Certain provisions contained sunset provisions, and in 1982, the Legislature extended certain sunset provisions and introduced other changes necessary for the continued successful marketing of City obligations, some of which were applicable to other municipal issuers as well,” said Senator Golden. “Since 1985, the Legislature has extended these sunset provisions annually.”
“This network of legislation has enabled the City to continue to sell its obligations in the public credit markets during these difficult times. Indeed, the size of the City’s capital program and the current market environment, in which competitive sales of debt have, on occasion, failed to attract any bidders, makes the ability to sell debt through negotiated sales crucial to the City,” explained Golden. “If the City is to continue to undertake necessary capital projects, it is essential to the City’s fiscal health, especially in light of the current economic downturn.”
“By extending through July 15, 2013 the authorization of the City to enter into interest rate exchange agreements or ‘swaps,’ whether or not relating to variable- rate bonds, the Legislature would be confirming the utility of these agreements that it recognized when it created this swap authorization in the Laws of 2002,” explained Assemblyman Farrell.
“With respect to interest on variable rate bonds used in a refunding, by extending through July 15, 2013 the amendment made to the LFL, the City would continue to be able to demonstrate present value savings by permitting the rate variable rate bonds to be fixed rate payable in a related interest rate exchange agreement or as found by the Finance Board,” said Assemblyman Farrell. “Furthermore, this would extend the City’s ability to refund variable rate bonds with other variable rate bonds without reference to the present value savings test. The extension of these provisions and the enhanced flexibility in entering into exchange agreements are essential if the City is to efficiently access the public credit markets.”
Mayor Michael Bloomberg urged the earliest possible favorable consideration of this proposal by the Legislature. The fourth bill that was sent to the Governor for his approval is a bill that will amend the executive law, in relation to restricting the supervision of state licensed real estate appraiser assistants.
“The Federal Appraisal Subcommittee (‘ASC’) established the minimum qualification criteria (e.g. education, experience, and examination) for state licensing, certification, and re-certification of real property appraisers,” said Senator John DeFrancisco (R, C, ICayuga) (S4281). “It also issues guidance and reviews state programs for compliance. A state’s qualification standards must be no less stringent than those issued by the ASC for the state’s program to be recognized by the subcommittee and for appraisals performed by persons licensed and/or certified by that state to be used in federally related transactions.”
Senator DeFrancisco said, “The Dodd-Frank amendments to FIRREA include provisions related to minimum qualifications for assistant and supervisor appraisers, such that only certified appraisers may supervise appraiser assistants. Current law permits both certified and licensed appraisers to supervise appraisal assistants.”
“The new standards must be adopted by state appraisal programs by July 1, 2013, at which point ASC will begin compliance review. States that fail to revise their licensing statutes and regulations to meet the new standards will be subject to sanctions and endanger the validity of the licenses and certification they issue,” said Assemblywoman Patricia Fahy (D-Albany) (A6901). “If New York were to lose federal recognition of the state appraisal program, federally regulated financial institutions would be prohibited from accepting appraisals from New York real estate appraisers. This would affect most mortgages and refinance transactions. This legislation is necessary to ensure that New York meets the Federal requirements.”
