Bill Text: NY S05896 | 2023-2024 | General Assembly | Introduced

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Bill Title: Permits a waiver of the diligent effort requirement in limited circumstances for certain insurance coverage to be placed by licensed excess line brokers with unauthorized insurers where a retail producing insurance broker seeks to procure or place commercial lines insurance through an unaffiliated wholesale excess line insurance broker.

Spectrum: Bipartisan Bill

Status: (Engrossed) 2024-04-17 - ADVANCED TO THIRD READING [S05896 Detail]

Download: New_York-2023-S05896-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          5896

                               2023-2024 Regular Sessions

                    IN SENATE

                                     March 22, 2023
                                       ___________

        Introduced  by  Sen. BRESLIN -- read twice and ordered printed, and when
          printed to be committed to the Committee on Insurance

        AN ACT to amend the insurance law, in relation to permitting a waiver of
          the diligent effort requirement in limited circumstances  for  certain
          insurance  coverage  to be placed by licensed excess line brokers with
          unauthorized insurers

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  Subparagraph  (A)  of  paragraph  3  of subsection (b) of
     2  section 2118 of the insurance law, as amended by section 12 of part I of
     3  chapter 61 of the laws of 2011, is amended to read as follows:
     4    (A) Except as provided in  subparagraph  (F)  of  this  paragraph  and
     5  subject  to  subparagraph (C) of this paragraph, submission of insurance
     6  documents to the excess line  association  shall  be  accompanied  by  a
     7  statement subscribed to, and affirmed by, the licensee or sublicensee as
     8  true  under  the  penalties  of perjury that, after diligent effort, the
     9  full amount of insurance required could not be procured, from authorized
    10  insurers, each of which is authorized to write  insurance  of  the  kind
    11  requested  and  which  the licensee has reason to believe might consider
    12  writing the type of coverage or class of insurance involved, and further
    13  showing that the amount  of  insurance  procured  from  an  unauthorized
    14  insurer is only the excess over the amount procurable from an authorized
    15  insurer.  The  licensee, however, shall be excused from affirming that a
    16  diligent effort, as defined above, was made to procure the coverage from
    17  authorized insurers if the licensee's affidavit is  accompanied  by  the
    18  affidavit  of another broker involved in the placement affirming as true
    19  under the penalties of  perjury  that,  after  diligent  effort  by  the
    20  affirming  broker,  the required insurance could not be procured from an
    21  authorized insurer which the affirming  broker  had  reason  to  believe
    22  might  consider  writing  the  type  of  coverage  or class of insurance
    23  involved. The licensee and the affirming broker shall  be  excused  from

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05708-01-3
        S. 5896                             2

     1  affirming  that  a diligent effort was made if the superintendent deter-
     2  mines, pursuant to paragraph four of this subsection, that  no  declina-
     3  tions  are  required.  Notwithstanding  any  provision  to  the contrary
     4  contained  in    this  chapter,   where   a retail   producing insurance
     5  broker  seeks  to procure  or place commercial lines insurance   through
     6  an    unaffiliated wholesale  excess  line  insurance broker,  both  the
     7  retail producing insurance broker and the wholesale excess  line  insur-
     8  ance  broker  shall be excused from making any diligent effort otherwise
     9  required by this article.
    10    § 2. Section 2118 of the insurance law is  amended  by  adding  a  new
    11  subsection (g) to read as follows:
    12    (g) (1) As used in this section:
    13    (A)  "retail  producing  insurance  broker"  means an insurance broker
    14  licensee who directly deals with an insured;
    15    (B) "wholesale excess line insurance broker" means the licensed excess
    16  line insurance broker from whom or through  whom  the  retail  insurance
    17  broker has procured excess line coverage on behalf of the insured; and
    18    (C)  "commercial  lines  insurance"  means any policy of insurance not
    19  defined as a "covered policy" in subsection (a) of section  three  thou-
    20  sand four hundred twenty-five of this chapter.
    21    (2)  A  retail  producing insurance broker and a wholesale excess line
    22  insurance broker are unaffiliated if such broker does  not  control,  is
    23  not  controlled  by,  or  is  not under common control with the other. A
    24  retail producing insurance broker or a wholesale excess  line  insurance
    25  broker  has  control over the other if the broker: (A) directly or indi-
    26  rectly or acting through one or more other persons  owns,  controls,  or
    27  has the power to vote twenty-five percent or more of any class of voting
    28  securities of the other, or (B) controls in any manner the election of a
    29  majority of the directors or trustees of the other.
    30    §  3.  This act shall take effect immediately, provided, however, that
    31  the amendments to subparagraph (A) of paragraph 3 of subsection  (b)  of
    32  section  2118 of the insurance law made by section one of this act shall
    33  not affect the expiration of such subsection  and  shall  be  deemed  to
    34  expire therewith.