Signed Into Law…
Albany, N.Y.—New legislation has been signed into law. Legislation restricting the supervision of state licensed real estate appraiser assistants has been signed into law by Governor Andrew M. Cuomo of the laws of 2013. The law became effective on July 1, 2013. “The new standards had to be adopted by state appraisal programs by July 1, 2013, at which point the Federal Appraisal Subcommittee (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 certifications they issue. If New York were to lose federal recognition of the state appraisal programs, federally regulated financial institutions would be prohibited from accepting appraisals from New York real estate appraisers. This would affect most mortgage and refinance transactions,” said Senator John DeFrancisco (R, C, ICayuga) sponsor of the bill.
“This legislation is necessary to ensure that New York meets the Federal requirements,” said Assemblywoman Patricia Fahy (D-Albany).
Legislation to provide a process by which a domestic mutual accident and health insurance company may reorganize to become a stock accident and health insurance company in New York State unlike life and property mutual insurers, no current process exists has been signed into law as Chapter 286.
“The law will add a new section to the Insurance law, which will authorize the reorganization of a domestic mutual accident and health insurer and provide a process by which such reorganization to a stock accident and health insurance may be carried out. The process allows a domestic mutual accident and health insurer to apply to the Superintendent of the Department of Financial Services for permission to reorganize as a domestic stock accident and health insurer,” said Senator Joseph Griffo (R, C, I-Oneida) cosponsor of the legislation.
“Upon application, the Superintendent will examine the mutual insurer to ensure that its proposed reorganization is in the best interests of the company’s policyholders and is in compliance with all applicable laws,” said Senator Griffo. “In addition, the Superintendent will order an appraisal and report of the company’s fair market value by qualified disinterested persons. If the results of the examination report and appraisal report are satisfactory, the superintendent may grant permission for submission of a plan for reorganization which must then be adopted by the company and submitted to the Superintendent,” explained Senator Griffo.
“The mutual insurer must give notice of the reorganization resolution to all persons becoming policyholders or holders of agreements subject to New York Insurance Law. The Superintendent will hold a public hearing, adequate notice of which shall be provided by the mutual insurer to each policyholder along with a copy of the plan of reorganization,” said Senator Griffo. “After the hearing, the Superintendent will approve the plan, refuse to approve it, or request modifications before granting approval. If the plan is approved, it must be submitted to a vote of the policyholders, with two thirds vote in the affirmative of the votes cast required to adopt the plan.” “Article 73 of the Insurance Law already provides a process for the reorganization of most types of insurance companies, including domestic mutual life insurers and domestic mutual property/casualty insurers. This law mirrors the latter section in the Insurance Law, which provides a similar process for the conversion of domestic mutual property/casualty insurers into domestic stock property/casualty insurers,” explained Assemblyman Anthony Brindisi (D-Herkimer).
“The Insurance Law does not include a process for the reorganization of domestic mutual accident and health insurers, most likely because there are very few such companies. In fact, there is currently only one domestic mutual accident and health insurer in New York State, a company that has been headquartered in Utica, New York for nearly 130 years. The company has written health insurance coverage and based in Utica since its inception.
Recently, the company has experienced increased recession-related losses, combined with expense overruns that are becoming increasingly problematic. It simply has too much fixed expense for its size and does not have the capital to invest to grow its business. The company’s AM Best rating has slipped to ‘B’ and is expected to slip further in the coming months. This will impact the company’s sustainability,” said Assemblyman Brindisi.
“This mutual accident and health insurer needs to engage in a partnership in order to access capital to stabilize its financial position. The reorganization process detailed in this new section of the Insurance Law will facilitate the company’s partnership with another insurer-a partnership that is likely essential to allow the company in, and grow its business in Utica, New York,” said Assemblyman Brindisi. Legislation allowed health care professionals to perform services at the Ironman triathlon held on July 28, 2013 in Lake Placid, New York who are healthcare professionals licensed to practice in other jurisdictions in New York was signed into law by Governor Andrew M. Cuomo as Chapter 141 on July 12, 2013. “The legislation allowed any person who is licensed to practice as a physician, physician’s assistant, massage therapist, physical therapist, chiropractor, dentist, optometrist, nurse, nurse practitioner or podiatrist in another state or territory, and who had been appointed by World Triathlon Corporation to provide professional services to competitors at the Ironman event,” said Senator Elizabeth Little (R, C, I-Clinton), co-sponsor of the legislation.
“The triathlon in Lake Placid is a one day 2A-mile swim and a 112-mile bike ride which concludes with a 26.2-mile marathon. As this event is physically taxing on the athlete, the health and safety of the participants in the days before the event and especially during and after the event are crucial. This legislation allowed licensed health care professionals from other states who volunteered and were sanctioned by World Triathlon Corporation to perform services for the athletes,” said co-sponsor Assemblyman Daniel Stec (R, C, I-Washington). Legislation in relation to extending authorization for certain exemptions from filing requirements extends the sunset date and removes certain filing requirements for the “large commercial insured” exemption with regard to the free trade zone has been signed into law. The sponsors of the bill were Senator James Seward (R, C, I-Cayuga) and Assemblyman Phil Steck (D-Albany). “The bill amends the Insurance Law to 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 such a policy,” explained Senator Seward.
Legislation enhancing regulatory efficiency and efficacy to permit the sharing of confidential and privileged materials with members of a supervisory college, as described in new Insurance Law 302 would add a new Insurance Law pertaining to supervisory colleges has been signed into law as Chapter 238. The legislation was sponsored by Senator James Seward (R, C, I-Cayuga) and Assemblyman Kevin Cahill (D, WFDutchess). “The bill amends the Insurance Law to require every person who becomes a controlled insurer to amend its registration within thirty days any material change to the information provided in the registration, and will require the registration to be in such form and to contain such matters as the Superintendent of Financial Services prescribes. It also would delete the current language in the Insurance Law, which currently requires a registrant to furnish the Superintendent with certain information regarding its holding company, and add a new subsection requiring a holding company to adopt a formal enterprise risk management function and to file an enterprise risk report with the Superintendent by April 30th of each year,” said Senator Seward.
“The existing law requires a domestic controlled insurer to notify the Superintendent of its intention to enter into sales, purchases, exchanges, loans or extensions of credit or investments with any person in its holding company system involving more than one half of one percent, but less than five percent of the insurer’s admitted assets at last year-end. That section also requires a domestic controlled insurer to notify the Superintendent at least thirty days before entering into any reinsurance treaties or agreements with any person in its holding company system,” said Senator Seward.
“This bill will amend the Insurance Law to conform to the National Association of Insurance Commissioner’s (‘NAIC’) Model Insurance Holding Company System Regulatory Act. Enactment of the amendments would provide uniformity with other states and will improve efficiency by reducing the number of certain holding company filings,” said Senator Seward.
“Specifically, the bill will amend the current requirement that all domestic insurers file with the Superintendent, for his review, all reinsurance treaties or agreements with any member of their holding, company systems. With regard to domestic property/casualty insurers, the bill only requires them to file reinsurance treaties or agreements that meet a certain threshold, unless otherwise requested by the Superintendent,” explained Seward. “The bill makes a distinction between different kinds of insurers, because property/casualty insurers typically enter into large numbers of reinsurance treaties and agreements, but many of them are for relatively small and ascertainable exposures: The dollar threshold would ensure that the Superintendent will review the material transactions that have potential for negatively impacting domestic property/casualty insurers.”
“However, reinsurance treaties and agreements entered into life insurers generally are complex, often involving offshore affiliates, captives, and securitizations, and it would not be known in advance whether a reinsurance treaty or agreement involving a life insurer would meet a certain threshold because of the nature of lie insurance. With regard to accident and health insurers, the volume of reinsurance treaties and agreements is not as great as those entered into by property/ casualty insurers. In addition, holding company arrangements involving many accident and health insurers affect entities dully regulated by the DFS and Department of Health, so it is necessary for the Superintendent to review reinsurance treaties and agreements to ensure compliance not only with the Insurance Law, but the Public Health as well,” continued Seward.
“Adoption of the amendments also may be necessary for the Department to maintain its NAIC accreditation. Accredited state insurance departments must undergo a comprehensive review every five years by an independent review team to ensure they continue to meet baseline standards,” explained Seward. “The accreditation standards require that state departments have adequate statutory and administrative authority to regulate an insurer’s corporate and financial affairs, and that they have the necessary resources to carry out that authority.”
“In addition, the bill will require a holding company or parent insurer to establish a formal risk management function and to file an annual report that would identify material risks that could pose enterprise risk to New York authorized insurers,” said Senator Seward.
“The bill will also authorizes the Superintendent to participate in a ‘supervisory college,’ which is defined by the NAIC as ‘a forum for cooperation and communication between the involved supervisors established for the fundamental purpose of facilitating the effectiveness of supervision of entities which belong to an insurance group; facilitating both supervision of the group as a whole on a groupwide basis and improving the legal entity supervision of the entities within the insurance group,” explained Senator Seward. “Further, the bill will permit the Superintendent to impose daily penalties when an insurer fails to provide a meritorious explanation as to why it could not obtain information that the Superintendent needs when the information was not in the insurer’s possession. In addition, the bill provides that, where it appears to the Superintendent that any person has committed a violation may serve as an independent basis for disapproving dividends or distributions or as grounds for rehabilitation or liquidation,” said Senator Seward.
“The bill will amend the Insurance Law to facilitate the insurance of annuities by charitable annuity societies by providing that charitable annuity societies with reserves on outstanding annuity agreements of less than $1million need not obtain a permit to issue such annuities. This amendment to the Insurance Law will save many charitable gift annuity societies from the burdens and expenses associated with having to obtain a permit to issue charitable gift annuities, while retaining the authority of the Superintendent to examine such societies as needed to protect the interests of consumers,” said Assemblyman Cahill. “In addition, the Department no longer requires foreign insurers to file hard copies of the annual statements, since they are available to the Department of electronically on the NAIC’s website,” explained Assemblyman Cahill. “However, the Department must collect hard copies of the jurat pages (i.e. the annual statement signature page), which Department staff logs in and files. When insurers do not file the jurat pages, the staff must contact insurers and try to get them to file the pages. Staff also must send these documents to the State Archives after three years. This bill will amend the Insurance Law to permit the Superintendent to accept an electronic filing of a foreign insurers annual statement that does not contain the signature or verification of the officers provided that the foreign insurer had filed, in its state of domicile, an annual statement verified by the oath of at least two of its principal officers. In such a situation, the officers of the foreign insurer shall be deemed to have given their oath in that state. This amendment would result in increased efficiency and efficacy, which should result in savings for the Department.”
“The current $2,500 cap on the value of assets disposable without court approval, adopted thirty-three years ago, prevents the Superintendent, as receiver, from efficiently disposing of low-value assets and increases administrative expenses. The Insurer Receivership Model Act sets a higher threshold (the lesser of $1 million or ten percent of the general assets of the estate), which has been adopted in state such as Texas,” explained Assemblyman Cahill. “Other states have adopted various other thresholds on the value of the sale of assets by receivers that do not require court approval. For example, Illinois, California, and Kentucky have maximums of $25,000, $20,000, and $10,000, respectively. A $25,000 threshold for court approval properly balances the desire to streamline the sales process and reduce the related selling costs with the need for active judicial oversight for asset sales of a significant size.”
“Furthermore, the administrative costs of drafting and processing the requisite court orders on all eligible security fund claims are significant. The proposed amendment would increase the speed of and lower the administrative cost associated with payments out of the security funds, but without impacting the courts in supervising estates. The amendment would set a reasonable dollar threshold at which judicial allowance of individual claims is required, and below which it is not. This amendment has the potential to greatly reduce the administrative costs associated with the payment of security fund claims. In each of the past three years 70-80% of all paid Property/Casualty Security Fund claims payments were for $25,000 or less (70% in 2010, 75% in 2011, and 82% from 2012 to date),” said Assemblyman Cahill.
There are no fiscal implications to the State from this bill.
Legislation to amend the driving while intoxicated and ignition interlock devices has been signed into law as Chapter 196 of the laws of 2013. “The bill provides that a person operating a vehicle with a conditional license while intoxicated or impaired would be subject to a charge of first degree aggravated unlicensed operation (AUO) of a motor vehicle, which is a class E felony,” explained Senator Charles Fuschillo (R, C, I-Nassau) co-sponsor of the bill. “The bill clarifies that youthful offenders are subject to ignition interlock requirements, and provides that the minimum period of interlock installation would be increased to twelve months, but reduced to six months upon submission of proof that the defendant installed and maintained an interlock device for at least six months,” said Senator Fuschillo. “It also provides that the interlock period would commence from the earlier of the date sentencing, or the date that an interlock device was installed in advance of sentencing.” “The bill also clarifies that a finding by a court of good cause for the lack of installation of an interlock device may include a finding that the person is not the owner of a motor vehicle if the person asserts, under oath, that he or she is not a vehicle owner and will not operate a vehicle during the period of interlock restriction except as may be otherwise authorized by law,” said Senator Fuschillo. “This bill is a necessity to properly implement New York’s stated public policy on impaired driving,” said Assemblyman Harvey Weisenberg (D, WF-Nassau). Legislation signed into law as Chapter 203 of the laws of 2013 allows the previously authorized and extended freelancers demonstration program to run to its expiration date of December 31, 2014.
“This bill allows for the continuation of the freelancers demonstration program and permit 25,000 currently insured independent workers to maintain their health benefits through December 2014. This bill was modeled on previously enacted legislation for student health plans sponsored by New York State independent universities and would safeguard members’ health coverage by allowing them to move their coverage from Freelancers Insurance Company (FIC), an article 42 licensed insurance company, to a newly created selfinsured health fund called Freelancers Health Plan, which would continue to offer eligible Freelancers Union members affordable health benefit plans,” said Senator Kemp Hannon (R, C, I-Nassau). “Freelancers Health Plan will be regulated by the Department of Financial Services and will be required to follow most of the same rules and regulations as a nonprofit health insurer, including complying with stringent consumer protection provisions, minimum reserve requirements and financial reporting,” said co-sponsor Assembly Speaker Sheldon Silver (D, WFNew York). “At least one plan that complies with the ACA metal tier requirements and, upon approval from CMS, its offerings will be considered Minimum Essential Coverage. In addition, the legislation will subject Freelancers Union to the penalties should they violate the provisions of the law. The legislation would maintain the existing demonstration program’s current sunset date of December 31, 2014.” “In 2009, New York State authorized a demonstration program through 2013 providing health insurance coverage to independent workers, a constituency which historically has had limited access to affordable, comprehensive health benefits. Freelancers Insurance Company (FIC) was created to serve independent workers who, unlike the majority of workers, are unable to access health benefits from a traditional employer,” said Senator Hannon.
“In 2012, two years after the ACA was enacted, the legislature extended the sunset date to December 31, 2014 to allow FIC members one full year to acclimate to the new landscape created by the ACA. Today, more than 25,000 Freelancers Union members and their dependents receive affordable health insurance from FIC, a health insurance company wholly owned by Freelancers Union. FIC premiums are on average 40% less than plans available in the individual and group markets in New York City and last year FIC had a 0% premium increase across all plans, well below the 9.6% average increase for small group plans in New York State. Additionally, as of November 2012, FIC members can access free primary care and preventative services through a state of the art medical home located in Downtown Brooklyn,” said Senator Hannon. “FIC is currently licensed as an Article 42 insurance company and as such is regulated by the Department of Financial Services. Effective January 1, 2014, the ACA, as specified in recently promulgated CMS rules, will require health insurance to all individuals or groups in the state, to offer coverage that fits within narrow actuarial value ranges and to participate in various risk sharing pools,” said Assembly Speaker Silver. “The ACA failed to incorporate any exceptions to these requirements for existing insurance demonstration programs such as FIC that were designed to make affordable coverage available to independent workers with middle incomes. The obligations imposed under ACA will impose severe hardship on FTC members, jeopardizing their ability to continue to obtain affordable coverage. Most importantly, FIC’s actuaries estimate that application of ACA would force FIC to raise premiums an average of $178 per member per month.” “FTC members are a unique class of New Yorkers who historically have faced difficulty obtaining affordable health coverage. The majority of FIC members are middle class (annual incomes of -$50,000 to $100,000 for a family of four) and all members have no positioned favorably to purchase insurance through the exchanges since, as middle income earners, most of them will not be eligible for tax subsidies under the ACA and they have no employer relationship to fall back on,” said Assembly Speaker Silver. “As such, FIC provides a needed service to middle class working New Yorkers that cannot be easily replicated. The new law will allow members of FIC to continue to receive their existing benefits for one year after implementation of the ACA reforms, as originally contemplated by the Legislature.”
