DFS-13-14-00005-P Repeal of Parts 175 and 177 and Sections 178.8 and 178.10 of 11 NYCRR, and Renumbering of 11 NYCRR Section 178.9 to 178.8

4/2/14 N.Y. St. Reg. DFS-13-14-00005-P

NEW YORK STATE REGISTER

VOLUME XXXVI, ISSUE 13

April 02, 2014

RULE MAKING ACTIVITIES

DEPARTMENT OF FINANCIAL SERVICES

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. DFS-13-14-00005-P

Repeal of Parts 175 and 177 and Sections 178.8 and 178.10 of 11 NYCRR, and Renumbering of 11 NYCRR Section 178.9 to 178.8

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

This is a consensus rule making to repeal Parts 175, 177 and sections 178.8 and 178.10; and renumber section 178.9 to 178.8 of Title 11 NYCRR.

Statutory authority:

Financial Services Law, sections 202 and 302; Insurance Law, sections 301, 1401, 1403, 1405, 1407, 1410 and 1413; and L. 2008, ch. 71

Subject:

Repeal of Parts 175 and 177 and sections 178.8 and 178.10 of 11 NYCRR, and renumbering of 11 NYCRR section 178.9 to 178.8.

Purpose:

To repeal Parts and sections of 11 NYCRR made obsolete by enactment of statutory provisions that supersede and replace them.

Text of proposed rule:

Part 175 is hereby repealed.

Part 177 is hereby repealed.

Section 178.8 is hereby repealed.

Section 178.9 is hereby renumbered as section 178.8.

Section 178.10 is hereby repealed.

Text of proposed rule and any required statements and analyses may be obtained from:

Michael Campanelli, New York State Department of Financial Services, One State Street, New York, NY 10004, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Consensus Rule Making Determination

Part 175 (applicable to domestic life insurers) and Part 177 (applicable to property/casualty insurers) were promulgated to permit insurers to engage in hedging and the use of derivatives in limited circumstances. However, the enactment of Insurance Law section 1410 in 1998 (effective July 1, 1999) made Parts 175 and 177 obsolete by establishing statutory provisions allowing insurers to engage in hedging and derivative use transactions. Because Insurance Law section 1410 was made subject to sunset provisions that allowed the statute to expire if not extended by the Legislature, the Department did not at that time repeal Parts 175 and 177, but suspended those Parts until such time as Insurance Law section 1410 was allowed to expire. By Chapter 71 of the Laws of 2008, the Legislature permanently eliminated the sunset provisions of Insurance Law section 1410, making 11 NYCRR Parts 175 and 177 forever obsolete.

Part 178 of 11 NYCRR was promulgated in furtherance of Insurance Law section 1410, and is the only remaining regulatory provision governing derivative transactions by insurers. Chapter 398 of the Laws of 2012 revised Insurance Law section 1410(f) by, among other things, adding a definition for “qualified counterparty,” thus superseding the definition of “qualified counterparty” provided by 11 NYCRR section 178.8.

Section 178.10 of 11 NYCRR provides that should Insurance Law section 1410 expire, Parts 175 and 177 would again become effective and the provisions of Part 178 would be suspended. Because the sunset provisions of Insurance Law section 1410 have been permanently eliminated, 11 NYCRR section 178.10 is also obsolete.

Therefore, this rulemaking repeals Parts 175 and 177 and sections 178.8 and 178.10 of 11 NYCRR, and amends 11 NYCRR Part 178 by renumbering section 178.9 to 178.8.

This rulemaking is determined by the agency to be a consensus rulemaking, as defined in State Administrative Procedure Act § 102(11) (“SAPA”), and is proposed pursuant to subparagraph (i) of paragraph (b) of subdivision one of section two hundred two of SAPA. Accordingly, it is exempt from the requirement to file a Regulatory Impact Statement, Regulatory Flexibility Analysis for Small Businesses and Local Governments or a Rural Area Flexibility Analysis.

Job Impact Statement

The repeal of Parts 175 and 177 and sections 178.8 and 178.10 of 11 NYCRR, and the amendment to 11 NYCRR Part 178, which merely renumbers section 178.9 to 178.8, should not adversely impact job or employment opportunities in New York. This rulemaking repeals Parts and sections of 11 NYCRR that have been made obsolete by the enactment of statutory provisions that supersede and replace those regulatory provisions.

The Department of Financial Services has no reason to believe that the rules will result in any adverse impacts on job or employment opportunities in New York.