Bill Text: NY A05980 | 2019-2020 | General Assembly | Introduced


Bill Title: 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.

Spectrum: Moderate Partisan Bill (Democrat 26-5)

Status: (Introduced - Dead) 2020-01-08 - referred to insurance [A05980 Detail]

Download: New_York-2019-A05980-Introduced.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                          5980
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    February 22, 2019
                                       ___________
        Introduced  by M. of A. BRONSON -- read once and referred to the Commit-
          tee on Insurance
        AN ACT  to  amend  the  insurance  law,  in  relation  to  enacting  the
          "construction insurance transparency act of 2019" 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 2019".
     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
    17  such an insurer's responsibility  to  inform  them  of  their  financial
    18  condition and solvency, and the details and specifics of the factors and
    19  circumstances behind its financial solvency as well as the basis for the
    20  rates they charge to owners and contractors to obtain such coverage. The
    21  determination  of  premiums  for such liability insurance policy in this
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD04322-01-9

        A. 5980                             2
     1  state has, unfortunately, gone on too long in obscurity, with even those
     2  who bear the cost of premiums unable to learn why prices are set as they
     3  are. As a matter of public trust, liability insurers should be  required
     4  to make the public aware of the pertinent facts related to their premium
     5  determinations  and  financial  solvency by disclosing all the pertinent
     6  facts as provided for in this section. It is the further  sense  of  the
     7  legislature  that  this  data  should be disclosed in an open and public
     8  manner, and should be made available without undue cost and delay.
     9    § 3. The insurance law is amended by adding a new section 343 to  read
    10  as follows:
    11    §  343.  Financial  statement and detailed claim data to be filed with
    12  the superintendent. (a) For purposes of this section, the term "insurer"
    13  shall mean any person, corporation, association or other business entity
    14  which issues a policy of liability insurance insuring  a  contractor  or
    15  owner  of  real property located in this state against claims made by an
    16  injured worker, the claim for which is made in reliance  upon  the  duty
    17  owed  to  such  worker pursuant to the provisions of section two hundred
    18  forty of the labor law.
    19    (b) On or before April first of each year, every insurer shall for the
    20  prior calendar year provide the superintendent and  the  public  with  a
    21  detailed  financial  statement  to  supplement and expand upon any other
    22  information otherwise provided to the department as it relates an insur-
    23  er's provision of liability insurance coverage to owners of real proper-
    24  ty or contractors performing services to owners  of  real  property  for
    25  claims  made  by  an  injured  person  in reliance upon the duty owed by
    26  section two hundred forty of the labor law; provided, however, that  the
    27  initial  financial  statement so filed by an insurer after the effective
    28  date of this section shall include  the  information  required  in  this
    29  subdivision  not  only  for  such  prior  calendar year but also for the
    30  previous nine calendar years prior to such report.  The financial state-
    31  ment shall, in depth, separate the cost of providing section two hundred
    32  forty of the labor law based coverage from the cost of providing general
    33  liability insurance insuring the same owner or contractor  with  respect
    34  to  the  same property and shall contain at least the following informa-
    35  tion relating to coverage pursuant to such section:  (1) that portion of
    36  premiums assessed and attributable to providing such coverage; (2)  paid
    37  judgments,  settlements or losses resulting from such coverage; (3) case
    38  reserves for losses which may be attributable to coverage; (4)  incurred
    39  but  not  reported loss estimates which may be attributable to coverage;
    40  (5) paid defense and  cost  containment  expenses  attributable  to  any
    41  claims  made based upon such coverage; (6) case reserves for defense and
    42  cost containment experience attributable to any claims made  based  upon
    43  such  coverage;  (7) incurred but not reported defense and cost contain-
    44  ment estimates based upon such coverage; (8) premium and loss experience
    45  identified by policy limits and deductibles; (9) number of claims initi-
    46  ated and closed; (10) number of claims closed with loss  payments;  (11)
    47  number of open claims at the time such statement is prepared; (12) other
    48  expenses  by category as determined by the superintendent to reflect the
    49  cost to the insurer to provide such coverage  as  part  of  a  liability
    50  insurance  policy;  (13) investment income realized from that portion of
    51  the premium paid for a policy providing such coverage; (14)  the  amount
    52  of exposure to the insurer resulting from the provision of such coverage
    53  and  whether  the  insurer  has  limited the amount of coverage provided
    54  together with an estimate of the amount which might be required  of  the
    55  insured  to  purchase further coverage from an out of state excess lines
    56  provider, based upon current data available to such  in-state  provider,

        A. 5980                             3
     1  especially  where  such  in-state  provider  operates  as an excess line
     2  insurer for risks in another state; (15) amounts spent  by  insurer  for
     3  risk  management  programs,  or  required to be spent by insureds at the
     4  behest  of  the  insurer,  which  programs  are designed and intended to
     5  promote worksite safety, more  particularly  as  it  relates  to  height
     6  related accidents covered by section two hundred forty of the labor law;
     7  and (16) the aforegoing experience and information further subdivided by
     8  quality of risk as measured by prior loss experience, contractor payroll
     9  ranges,  contractor  number  of employee ranges, risk management partic-
    10  ipation, and other relevant  identifiable  differences  in  exposure  to
    11  insurance  loss. The data provided by insurers shall be separated out so
    12  that a determination can be made that a claim  made  or  paid  is  based
    13  partially  or  totally  upon section two hundred forty of the labor law;
    14  coverage, and not any other provision of statutory or common law  impos-
    15  ing  another  or  different  or  separate standard of care or duty to an
    16  injured party.  Such financial statement shall include the  entirety  of
    17  such  insurer's  business activities insuring against risks occurring in
    18  this state and shall be in a form determined by the superintendent.  The
    19  form shall be sufficiently itemized in a manner that allows for an actu-
    20  arially  sound  analysis  of the income realized by the insurer from all
    21  sources during such year, including but not limited to premiums, invest-
    22  ment income, and any other category or categories of  income  as  deter-
    23  mined  by the superintendent to reflect the full disclosure requirements
    24  of this section and that portion which may be  specifically  related  to
    25  such coverage. At a minimum, such information shall consist of the items
    26  set  forth in the statement of income, excluding the capital and surplus
    27  account section of the property/casualty statutory annual statement,  as
    28  applicable  to  the  insurer's  New  York state business, as well as the
    29  other information delineated in this subsection. Such  financial  state-
    30  ment  shall  also contain a comprehensive and detailed disclosure of the
    31  insurer's expenses actually incurred and paid during such calendar year,
    32  to include normal business expenses, salaries,  commissions,  consulting
    33  fees,  legal  expenses,  advertising costs and any other category deemed
    34  pertinent to the intent of this  section.  At  a  minimum,  the  expense
    35  information  required shall consist of the items set forth in the under-
    36  writing  and  investment  exhibit  -  part   3   -   expenses   of   the
    37  property/casualty  statutory  annual  statement,  as  applicable  to the
    38  insurer's New York state business. With respect to  salaries  (including
    39  all  other forms of compensation), each insurer shall itemize the salary
    40  of the twenty most highly compensated employees of such  insurer  during
    41  such  year,  provided  that  the  names  of  such  employees need not be
    42  disclosed.  Such financial statement shall also provide the public  with
    43  a  synopsis  of claims or settlements paid for section two hundred forty
    44  of the labor law coverage pursuant to such policies or contracts,  list-
    45  ing the total of such claims and settlements attributable to such cover-
    46  age.  At  a minimum, the claim information required shall consist of the
    47  items  set  forth  in  the  exhibit  of  premiums  and  losses  of   the
    48  property/casualty  statutory  annual  statement,  as  applicable  to the
    49  insurer's New York state business and identified and  categorized  sepa-
    50  rately  for  each zip code in this state. Such financial statement shall
    51  be signed and attested as full, complete and accurate by the chief exec-
    52  utive officer of the insurer, and he or she  shall  be  held  personally
    53  responsible  with  respect to the accuracy of the content of such state-
    54  ment. The superintendent shall provide insurers with a method to  submit
    55  their financial statements electronically via the internet, which method
    56  shall  include  instructions relating to the use of an electronic signa-

        A. 5980                             4
     1  ture which shall be subject to, and submitted in accordance with section
     2  three hundred sixteen of this article; provided, however, that no excep-
     3  tion authorized in such section may be requested or granted.
     4    (c) On or before April first of each year, every insurer shall provide
     5  the  superintendent  with detailed closed claim information for the same
     6  insurance coverage as provided for in subsection (b) of this section for
     7  the most recently concluded  calendar  year.  Until  the  superintendent
     8  promulgates  data  collection  forms  and procedures for the itemization
     9  requirements, data shall be collected using,  at  a  minimum,  the  most
    10  recent publicly available forms required by law, or commonly used in the
    11  insurance  industry.  The superintendent may require additional informa-
    12  tion beyond that which may otherwise be currently required if he or  she
    13  deems  it  necessary  and warranted without the need to formally adopt a
    14  rule or regulation provided such  requirement  is  consistent  with  the
    15  intent  of  this  section.  Such detailed claim data shall be signed and
    16  attested as full, complete and accurate by the chief  executive  officer
    17  of  the insurer, and he or she shall be held personally responsible with
    18  respect to the accuracy of the data. The detailed claim  data  shall  be
    19  submitted  in  the same manner as provided for in subsection (b) of this
    20  section.
    21    (d) The superintendent shall, in both written form and as part of  the
    22  department  web  site, make such financial statements and detailed claim
    23  information available to the  public.  The  detailed  claim  information
    24  shall  be  provided  in aggregate form for all insurers and separated by
    25  specific insurer, combined without  any  identification  of  a  specific
    26  claim  to  a specific insurer.   None of the publicly available detailed
    27  claim information shall identify the individual  insurer,  defendant  or
    28  plaintiff,  or  representative  of  the same, associated with the claim.
    29  Such financial statements and detailed claim information shall be deemed
    30  a public document and no person shall be required to file a request  for
    31  such financial statements pursuant to article six of the public officers
    32  law  in order to receive a copy thereof, but upon request and payment of
    33  the fee for copying such document, it shall be provided forthwith.  With
    34  respect to the electronic copy of such financial statements and detailed
    35  claim  information,  which  shall  be accessible on the department's web
    36  site, the department shall highlight the availability of  such  informa-
    37  tion  to  the  public  on  such web site, and the link to each insurer's
    38  financial statement and the aggregated detailed claim information  shall
    39  be  accessible in a simple and easy manner. Both the financial statement
    40  and aggregated detailed claim information on the department's  web  site
    41  shall  be  available  in  spreadsheet  format,  in addition to any other
    42  format the superintendent determines is appropriate. Where summaries are
    43  included, they shall be written in plain and simple English so that  the
    44  public at large can easily comprehend the data provided.
    45    (e)  On  or  before  July first of each year, the superintendent shall
    46  issue reports summarizing and explaining the information collected  from
    47  the  financial  statements and the detailed claim information and summa-
    48  rizing the cost and  other  essential  elements  relevant  to  providing
    49  section  two  hundred forty of the labor law coverage. Such report shall
    50  further contain such recommendations the superintendent deems  advisable
    51  to encourage the utilization of risk management programs to be regularly
    52  conducted  by  contractors to reduce premiums and provide workers with a
    53  safer work environment, and any other steps contractors or real property
    54  owners should utilize in furtherance of the same. The superintendent may
    55  seek, and shall be entitled to receive, the aid and  assistance  of  the
    56  commissioner of labor and any other state or local governmental official

        A. 5980                             5
     1  charged with responsibility for work site safety in preparing such anal-
     2  ysis  and recommendations.  Copies of such reports shall be forwarded to
     3  the temporary president of the senate, the speaker of the  assembly  and
     4  the chairs of the senate and assembly insurance committees. Such reports
     5  shall be public documents and shall be accessible both in paper copy and
     6  on  the  department's  web  site in a similar fashion as provided for in
     7  subsection (d) of this section.
     8    (f) Where an insurer fails or refuses to  provide  the  superintendent
     9  with  a  full  and  complete disclosure as required by this section, the
    10  superintendent shall take such action he or she deems necessary to bring
    11  the insurer into full compliance. Such action may include imposition  of
    12  a  civil  penalty  of  up to fifty thousand dollars assessed against the
    13  insurer for each violation, temporary suspension of any right  to  issue
    14  additional  policies  or  contracts until the insurer brings itself into
    15  full compliance, an audit of the insurer's records by the department  or
    16  its  designated representative to obtain the information and which audit
    17  shall be paid for by the insurer, or any other civil remedy  the  super-
    18  intendent   deems  warranted  or  necessary  until  such  insurer  fully
    19  complies. In addition the officer whose signature  is  affixed  to  such
    20  statement may be personally penalized to the same extent.
    21    (g) The superintendent may promulgate such rules and regulations he or
    22  she  deems  necessary for the proper administration of the provisions of
    23  this section, and such rules and regulations may be  promulgated  on  an
    24  emergency  basis if the superintendent warrants such action to be neces-
    25  sary.
    26    § 4. Severability. If any item, clause, sentence, subparagraph, subdi-
    27  vision or other part of this act, or  the  application  thereof  to  any
    28  person  or circumstances shall be held to be invalid, such holding shall
    29  not affect, impair or invalidate the remainder of this act but it  shall
    30  be  confined  in  its  operation to the item, clause, sentence, subpara-
    31  graph, subdivision or other part of this act directly involved  in  such
    32  holding, or to the person and circumstances therein involved.
    33    §  5. This act shall take effect on the first of January next succeed-
    34  ing the date upon which it shall have become a law.
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