PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of Part 16 (Regulation 86) of Title 11
Statutory authority:
Financial Services Law, sections 202 and 302; and Insurance Law, sections 301, 307 and 308 and art. 63
Subject:
Special Risk Insurance.
Purpose:
To revise the parameters established for writing risks in the "free trade zone."
Substance of final rule:
Insurance Regulation 86 (11 NYCRR Part 16) addresses the regulation of special risk insurance.
Section 16.1 is amended by reducing the Class 1 risk minimum billed annual premium from $200,000 to $150,000 for more than one kind of insurance where the premium for any one kind of insurance does not exceed $100,000.
Section 16.2 is amended by simplifying certain of the calculations set forth in the current rule and reducing the number of compliance calculations from four times each year to annually. This section is also amended by permitting an insurer writing in the free trade zone to request an exemption to exceed the rule's specified limitations if the insurer demonstrates to the Superintendent that it is financially able to write more free trade zone business.
Section 16.3 is amended by revising the circumstances under which the disclosure notice is required and revising the manner of measuring the minimum size of the disclosure notice from a minimum height requirement to a minimum font size (fourteen point).
Section 16.6 is amended to specify the timeframe for submission of free trade zone renewal applications. The free trade zone licenses expire on August 31 of each year. The revision requires insurers to submit their renewal applications at least 30 days prior to the expiration of the license.
Section 16.9 is amended to include electronic access to the underwriting files.
Section 16.12 is updated by adding the definitions of various risks and exposures that have previously been added to the Class 2 risk list by public notice, pursuant to section 16.8 of the regulation.
Final rule as compared with last published rule:
Nonsubstantive changes were made in section 16.12(e) - Code 2-50003.
Text of rule and any required statements and analyses may be obtained from:
David Neustadt, New York State Department of Financial Services, One State Street, New York, NY 10004, (212) 709-1690, email: david.neustadt@dfs.ny.gov
Revised Regulatory Impact Statement, Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement
The Department of Financial Services is making a non-substantive change to section 16.12(e) by correcting the Class Code 2-50003 (Directors and Officers Liability Insurance) minimum limit to read $5,000,000 in order to be written as special risk insurance. The Department had inadvertently specified a limit of $2,000,000 in the proposed regulation, published in the State Register for comment on June 20, 2012. However, the correct minimum limit that the Department intended is $5,000,000, as set forth in the Public Notice to Add Several Class 2 Risks to Regulation 86 and Revise the Definitions of Several Class Codes ("Public Notice"), which was published in the State Register on May 9, 2012. The Public Notice has been posted on the Department's website since that time, and the industry is aware that the $5,000,000 limit is the minimum threshold the Department had intended. Because this change has no effect upon the last published Regulatory Impact Statement, Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement, it is not necessary to revise the previously published Regulatory Impact Statement, Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement.
