INS-40-10-00009-A Excess Line Placements Governing Standards

5/4/11 N.Y. St. Reg. INS-40-10-00009-A

NEW YORK STATE REGISTER

VOLUME XXXIII, ISSUE 18

May 04, 2011

RULE MAKING ACTIVITIES

INSURANCE DEPARTMENT

NOTICE OF ADOPTION

 

I.D No. INS-40-10-00009-A

Filing No. 357

Filing Date. Apr. 18, 2011

Effective Date. May. 04, 2011

Excess Line Placements Governing Standards

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

Action taken:

Amendment of Part 27 (Regulation 41) of Title 11 NYCRR.

Statutory authority:

Insurance Law, sections 201, 301, 2105, 2118 and art. 21

Subject:

Excess Line Placements Governing Standards.

Purpose:

This will increase the minimum surplus to policyholders required to be maintained by new and current excess line insurers.

Text of final rule:

Section 27.1 is amended by adding a new subdivision (s), to read as follows:

(s) Eligible means that an insurer not authorized in this state has satisfied the requirements of this Part, including establishing the requisite trust fund and maintaining the minimum surplus.

Section 27.13(b) and (c) are amended to read as follows:

(b) No excess line broker shall place coverage with an unauthorized insurer, unless [its] the insurer's financial statements or other evidence demonstrate that [such] the insurer:

(1) is solvent and otherwise substantially complies with solvency requirements for authorized insurers;

(2) has surplus to policyholders sufficient to support its writings, reasonable in relation to its outstanding liabilities, adequate to its financial needs and[, in no event, less than]:

(i) [in the case of individual incorporated insurers, US$15,000,000;] for an individual incorporated excess line insurer that:

(a) is eligible prior to January 1, 2011, the insurer maintains surplus to policyholders of not less than US$25,000,000 as of July 1, 2011, US$35,000,000 as of January 1, 2012, and US$45,000,000 as of January 1, 2013; or

(b) becomes eligible on or after January 1, 2011, the insurer maintains surplus to policyholders of not less than US$45,000,000;

(ii) [in the case of an] for an association of insurance underwriters consisting of individual incorporated excess line insurers located outside the United States, each insurer maintains surplus to policyholders of not less than [US$25,000,000]US$45,000,000 and the association maintains an aggregate surplus to policyholders of not less than US$10,000,000,000; or

(iii) [in the case of a] for a partnership of unlicensed insurers, each licensed in its domicile and which partnership is duly authorized by its domiciliary jurisdiction to insure risks on a joint and several basis[,] that:

(a) is eligible prior to January 1, 2011, each insurer maintains surplus to policyholders of not less than [US$15,000,000; and] US$25,000,000 as July 1, 2011, US$35,000,000 as of January 1, 2012, US$45,000,000 as of January 1, 2013; or

(b) becomes eligible on or after January 1, 2011; each insurer maintains surplus to policyholders of not less than US$45,000,000;

(3) as of January 1, 2016 and every three years thereafter, the minimum surplus to policyholders requirements in subparagraphs (i), (ii), and (iii) of paragraph (2) of this subdivision shall be increased by US$1,000,000; and

(4) maintains a trust fund in compliance with section 27.14 of this Part.

(c) For purposes of subdivision (b) of this section, in the case of an insurance exchange created by the laws of a state other than this State, no excess line broker shall procure coverage from that exchange or any of its syndicates, unless:

(1) the insurance exchange maintains funds in trust or custodial accounts, under terms acceptable to the superintendent, in an amount no less than US$75,000,000, in the aggregate, provided that an amount at least equal to the greater of US$30,000,000 or one-third of the aggregate, is maintained on a joint and several basis for the protection of all insurance exchange policyholders;

(2) the syndicates of such insurance exchange maintain total capital and surplus, or their substantial equivalent, not less than US$100,000,000 in the aggregate; and

(3) each syndicate with which excess line insurance is placed [maintains] has surplus to policyholders sufficient to support its writings, reasonable in relation to its outstanding liabilities, adequate to its financial needs; and if the syndicate:

(i) is eligible prior to January 1, 2011, the syndicate maintain minimum capital and surplus, or their substantial equivalent, of not less than [US$15,000,000] US$25,000,000 as of July 1, 2011, US$35,000,000 as of January 1, 2012, US$45,000,000 as of January 1, 2013, or

(ii) becomes eligible on or after January 1, 2011 and the syndicate maintains minimum capital and surplus, or their substantial equivalent, of not less than US$45,000,000; and

(4) as of January 1, 2016 and every three years thereafter, the minimum capital and surplus requirements in subparagraphs (i) and (ii) of paragraph (3) of this subdivision shall be increased by US $1,000,000.

Section 27.13(l)(3) is amended to read as follows:

(l)(3) In no event shall the superintendent make an affirmative finding of acceptability when the unauthorized insurer's surplus to policyholders is less than [US$4,500,000] US$25,000,000; provided, that as of January 1, 2016, and every three years thereafter, the minimum surplus to policyholders requirement amount shall be increased by US$1,000,000.

Final rule as compared with last published rule:

Nonsubstantive changes were made in section 27.13(b)(2), (3), (c)(3), (4) and (l)(3).

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

David Neustadt, NYS Insurance Department, 25 Beaver Street, New York, NY 10004, [phone], email: [e-mail]

Revised Regulatory Impact Statement, Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement

Although changes were made to the proposed 11 NYCRR 27 (Regulation No. 41), they do not necessitate changes to the Regulatory Flexibility Statement, Regulatory Flexibility Analysis for Small Business and Local Government, Rural Area Flexibility Analysis, or Job Impact Statement.

Assessment of Public Comment

The proposed rule was published in the State Register on October 6, 2010, and the 45-day public comment period expired on November 22, 2010. The Department received comments from 5 entities.

The Department conducted extensive outreach to entities representing authorized ceding insurers, and to assuming insurers both authorized and unauthorized to do business in New York. A complete review of the comments submitted can be found at the Department's website (http://www.ins.state.ny.us).