INS-24-09-00002-P Excess Line Placements Governing Standards

6/17/09 N.Y. St. Reg. INS-24-09-00002-P

NEW YORK STATE REGISTER

VOLUME XXXI, ISSUE 24

June 17, 2009

RULE MAKING ACTIVITIES

INSURANCE DEPARTMENT

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. INS-24-09-00002-P

Excess Line Placements Governing Standards

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

Proposed Action:

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

Statutory authority:

Insurance Law, sections 201, 301, 2101, 2104, 2105, 2110, 2116, 2117, 2118, 2121, 2130, 3103 and 9102; and art. 59

Subject:

Excess Line Placements Governing Standards.

Purpose:

Add additional coverages to the “export” list and reduce the requisite declinations for several other coverages.

Text of proposed rule:

Section 27.3(a) is hereby amended to read as follows:

(a) [No] Except as provided in subsection (g), no excess line broker shall place coverage for a risk with any unauthorized insurer, unless the risk has been declined by at least three authorized insurers, each of which is authorized in this State to write insurance of the kind requested and is an insurer that the excess line broker has reason to believe might consider writing the type of coverage or class of insurance involved. An excess line broker shall be considered to have reason to believe that an authorized insurer might consider writing the type of coverage or class of insurance if the decision to offer the risk to such authorized insurer was based on any of the following:

Section 27.3 (g) is hereby amended to read as follows:

(g)(1)(i) Pursuant to the provisions of Section 2118(b)(4) of the Insurance Law, the superintendent has determined that an excess line [brokers] broker shall not be required to comply with the provisions of subdivisions (a), (b) and (c) of this section with regard to the placement of any of the following coverages:

Coverage

Amusement Parks and Carnivals

Property and/or liability coverage for the owners/operators of amusement parks, theme parks and carnivals.

Amusement Rides and Devices

Property and/or liability coverage for the owners/operators of amusement rides and devices including bumper cars, go-carts and go-cart[s] tracks, giant slides, skateboard tracks, roller-blade tracks, etc.

Animal Mortality

Coverage against the death of any domesticated or wild animal from any cause.

Armored Car, Couriers or Check Cashing Operations

Crime coverage for armored car services, couriers transporting valuable documents and securities, and check cashing operations.

Auto Racing and Automobile Race Track Liability

Coverage for claims of spectators, participants or other third parties in connection with the operation of an automobile race track or drag strip, or the staging or conduct of an automobile race.

Automobile Personal Injury Protection (PIP) Excess of $150,000

First party, New York No-Fault PIP benefits, excess of $150,000.

Blood Banks; Blood and Organ Facilities Liability

Liability coverage for facilities that primarily deal with the collection, storage and distribution of blood, blood products and human organs.

Boats and Yachts

1. High Speed Boats - Property and liability coverage for the owners and operators of boats capable of attaining speeds in excess of 40 miles per hour[; or].

2. Boat Rentals - Property and liability coverage for the owners and operators of boat rental facilities.

Commercial Excess and Umbrella Liability

1. Coverage for commercial excess liability where the underlying policy limits or self insured retention is at least $10,000,000 per occurrence.

2. Coverage for commercial umbrella liability where the underlying automobile and general liability policies or self-insured retentions contain limits of at least $10,000,000 per occurrence.

Commercial Property

1. Coverage for commercial excess property insurance where the policy provides in excess of $50,000,000 in underlying coverage.

2. Primary or excess property insurance coverage for property used for business purposes when the total insured values exceed $200,000,000.

Contract Frustration

Coverage as defined in section 1113(a)(17)(E) of the Insurance Law.

Employed Lawyers Liability

Employed lawyer's liability insurance for lawyers who are employed as lawyers by a business entity and not a law firm.

Environmental Impairment/Pollution Liability

Liability coverage and/or pollution clean-up expense [coverage] risks or coverages for the following:

Asbestos Abatement Contractors;

General Pollution Liability;

Environmental Impairment;

Lead Abatement Contractors;

Hazardous Waste Disposal Sites;

Hazardous Waste Haulers and Shippers;

Hazardous Waste Site Mitigation Contractors;

Radon Mitigation Contractors;

Radon Testing Firms;

Underground Storage Tanks - Marketers; and

Underground Storage Tanks - Non-Marketers.

Explosives, Munitions or Fireworks - Manufacturing or Display

Property and/or liability coverage for the manufacturer of explosives, munitions or fireworks and firms [which] that produce fireworks displays and exhibitions.

Fine Arts Dealers

All-risk or named perils coverage for property held for sale by fine arts dealers.

Flood Insurance

1. Flood Insurance Excess of Maximum Limits available from the Federal Flood Program[; or].

2. Primary Coverage on Property not eligible for Federal Flood Program.

General Liability, Owners, Landlords and Tenants and/or Manufacturers and Contractors

1. Primary or excess liability coverage for general contractors, subcontractors, and all construction trades for damages that arise out of the construction, building, demolition or renovation of any building or structure.

2. Owners Contractors Protective - primary or excess liability coverage purchased by a contractor to protect the interests of the property owner relating to a specific construction project.

Golf Driving Range Liability

Personal injury or property damage liability coverage associated with the operation of a driving range, e.g., flying golf balls, improperly wielded golf clubs, etc.

Horseback Riding Establishments

Coverage for riding academies and pony rides.

House Movers and Building Demolition Contractors

Coverage for liability arising out of the moving of a house or the demolition of a building. For example, injury caused by falling brick, flying debris, etc., and structural or other damage to a house being moved.

Lead Liability Insurance

Coverage for personal injury resulting from the ingestion or inhalation of lead or lead dust.

Liquor Law Liability Coverage

Monoline liquor law liability coverage for taverns and restaurants only where liquor sales exceed 75% of total sales revenue.

Prize Indemnification

Coverage as defined in section 1113(a)(27) of the Insurance Law.

Product Liability Insurance

Product Liability Coverage for the following classes of [risk] risks or coverages only:

Aircraft Parts Manufacturers;

Automobile Parts Manufacturers;

Bioengineered Products;

Farm Equipment Parts Manufacturers;

Firearms Manufacturers;

Helmet Manufacturers; and

Pharmaceutical Products Manufacturers.

Product Recapture or Recall Insurance

Coverage for damages associated with the withdrawal, inspection, repair, replacement or loss of use of the insured's products or work, if such products, work or property are withdrawn from the market or use due to known or suspected defect or deficiency.

Recreational Guide Services

Coverage for outfitters and guides for camping, hiking, rafting and similar recreational activities.

Security Guards - Armed and/or Using Dogs

Professional Liability coverage for security guard firms which provide guards using firearms or dogs.

Skating Rinks

Liability coverage for injury to participants and spectators in ice and roller skating rinks.

Ski Area Liability

Liability coverage for owners and operators of ski resorts, ski lifts, ski equipment sales and rental, ski lessons, ski trail maintenance, snow-making operations, etc.

Special Events

Primary or excess liability coverage for unique exposures of limited duration, which require varied and specialized terms, conditions and coverages generally issued to sponsors, organizers, performers and participants of trade shows, parades, flea markets, concerts, fairs and other similar events.

Special Multi Peril Coverage

Primary or excess liability coverage for general contractors, subcontractors, and all construction trades for damages that arise out of the construction, building, demolition or renovation of any building or structure when the coverage is packaged along with property coverage.

Tractor Pulls/Mud Bogs

Liability coverage for claims of spectators, participants or other third parties in connection with the operation of organized exhibitions, races or demonstrations primarily involving "Monster" trucks, tractors and similar off-road vehicles.

Vacant Commercial Property

Primary or excess property insurance for vacant or unoccupied buildings used for commercial purposes.

Warehouseman's Liability

Coverage for the liability of a warehouse owner [and/or] or operator for loss or damage to the lawful goods of others in [their] owner's or operator's care, custody or control.

(ii) Pursuant to the provisions of Section 2118(b)(4) of the Insurance Law, the superintendent has determined that an excess line broker need only obtain two declinations from authorized insurers for the following risks or exposures:

Primary or excess Errors and Omissions/Miscellaneous Professional Liability Coverage (other than Medical Malpractice Insurance as described in subsection (e)(1)(ii) of this section), including general liability coverage (if included in the same policy) with respect to the following risks or coverages:

Alcohol and/or drug rehabilitation centers;

Alcohol and/or drug rehabilitation programs;

Residential facilities including convalescent centers, nursing homes, and assisted care facilities;

Day care centers for adults, children or the physically or mentally disabled;

Group homes for adults, children or the physically or mentally disabled;

Halfway houses for adults, children and/or the physically or mentally disabled;

Hospices care service providers;

Social services agencies;

Foster care service providers; and

Home health care providers.

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

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

Data, views or arguments may be submitted to:

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

Public comment will be received until:

45 days after publication of this notice.

Summary of Regulatory Impact Statement

1. Statutory authority: Sections 201, 301, 2101, 2104, 2105, 2110, 2116, 2117, 2118, 2121, 2130, 3103, 9102 and Article 59 of the Insurance Law.

A complete discussion of the statutory references can be found on the Department's website (http://www. ins.state.ny.us).

2. Legislative objectives: Generally, unauthorized insurers may not do an insurance business in this state. In permitting a limited exception for licensed excess line brokers to procure insurance policies in New York from unauthorized insurers, the Legislature established statutory requirements to protect persons seeking insurance in this state. An excess line broker must exercise due care and make a diligent effort to obtain insurance from authorized insurers before utilizing an unauthorized insurer. Generally, an excess line broker must obtain declinations from three authorized insurers before placing business with an unauthorized insurer. The regulation sets forth an "export" list of coverages, which are not readily available in the authorized market, and which may be placed through an excess line broker without obtaining the requisite three declinations.

The Legislature has recognized that in some cases a different number of declinations may be appropriate and thus has permitted the Superintendent, after a public hearing, to change the number of necessary declinations. The proposed rule adds a number of additional coverages to the "export" list that will not require declinations, and also reduces the requisite number of declinations necessary for placement of several other coverages.

3. Needs and benefits: Regulation 41 governs the placement of excess lines insurance. The purpose of the excess line law is to enable consumers who are unable to obtain insurance from licensed insurers to obtain coverage from eligible excess line insurers. By adding to the "export" list coverages that are hard to place and whose declinations become pro forma (since New York authorized companies are not writing adequate coverage) the proposed rule will facilitate placement by excess line brokers of coverage with an eligible excess line insurer.

4. Costs: The rule should impose no additional compliance costs on excess line brokers. In fact, the proposed rule should produce a cost savings for excess line brokers, because it eases the requirements of obtaining declinations from authorized insurers for certain types of coverages before procuring a policy from an unauthorized insurer. The proposed rule also should benefit New York insurance consumers, who will be able to obtain coverages not readily available in New York all the more quickly.

5. Local government mandates: The proposed rule does not impose any program, service, duty or responsibility upon a city, town or village, or school or fire district.

6. Paperwork: There is no additional paperwork required. In fact, the proposed rule should reduce paperwork, because the excess line brokers will not have to complete the declination sections of the affidavit for the coverages on the "export" list or will need only to complete fewer declinations for the other coverages added by the rule.

7. Duplication: The proposed rule will not duplicate any existing state or federal rule.

8. Alternatives: Pursuant to Section 2118(b)(4), the Department is to review the "export" list annually. In its review of the state of markets for difficult-to-place insurance coverages, the Department considers, among other things, the following: 1) complaints received regarding availability of coverages; 2) supporting documentation of requests to add additional coverages to the "export" list; and 3) responses to the Department's availability survey conducted every year pursuant to Section 308 of the Insurance Law.

The availability survey is sent to all authorized property/casualty insurance companies annually. The primary purpose of the survey is to ascertain the existence of markets for difficult-to-place insurance coverages.

In 2007, ELANY, an association representing excess line brokers, submitted a request to the Department to add certain coverages to the "export" list. Subsequent to publishing a notice in the State Register, the Department held a public hearing on June 13, 2008 at its New York City offices. All interested parties, including authorized property/casualty insurance companies, were invited to testify orally or submit written comments.

After careful consideration of the written comments and oral testimonies from the public hearing and discussions with the association representing excess line brokers, the Superintendent has determined that certain coverages should be added to the "export" list. The review of ELANY's requested additions to the "export" list started with the fundamental position that the authorized market is the preferred market. The excess line market exists specifically to meet the needs of New York residents only as a last resort. The Department's review of the proposal included an analysis of the annual availability survey, consultations with Department staff responsible for the particular lines of business, analysis of the Department's experience in processing inquiries from the public with respect to availability concerns, and a thorough review of all testimony, both oral and written, which was provided by interested parties. The Department now proposes to add to the export list a great number of the coverages requested by ELANY. If the proposed rule is adopted, it will add a number of additional coverages to the "export" list that will not require declinations, and will also reduce the requisite number of declinations necessary for placement of several other coverages. ELANY will provide the Department with data regarding the effect of the amendments to the Export List on the availability of coverage(s) in New York.

At that time, the Department will consider amendment of 11 NYCRR 16 (Department Regulation No. 86), which governs special risks, to add these additional coverages as "Class 2" risks. Class 2 risks are coverages that are of an unusual nature, a high loss hazard or difficult to place. Theses are risks placed through the admitted market but filing of forms and rates are not required, although the forms and rates must still satisfy governing standards set forth in the Insurance Law and regulations.

The proposed additional coverages are as follows:

• Commercial Excess and Umbrella Liability: Coverage for commercial excess liability where the underlying policy limits or self insured retention is at least $10,000,000 per occurrence. Also, coverage for commercial umbrella liability where the underlying automobile and general liability policies or self-insured retentions contain limits of at least $10,000,000 per occurrence.

This coverage was added based on the Department's analysis of information and after consultation with Property Bureau staff. The Department concluded that the availability of this coverage through admitted channels is limited and that addition to the export list is appropriate.

• Commercial Property: Coverage for commercial excess property insurance where the policy provides in excess of $50,000,000 in underlying coverage. Also, primary or excess property insurance coverage for property used for business purposes when the total insured values exceed $200,000,000.

This coverage was added based on the Department's analysis of information and after consultation with Property Bureau staff. The Department concluded that the availability of this coverage through admitted channels is limited and that addition to the export list is appropriate.

• Contract Frustration: Coverage as defined in section 1113 (a)(17)(E) of the Insurance Law.

Based on review of its records, the Department found that this coverage is not available through admitted channels. The characteristics of this type of coverage are unique and generally need to be customized or manuscripted to the features of the specific exposure. For these reasons, the Department favors adding this coverage to the export list.

• Employed Lawyers Liability: Employed lawyer's liability insurance for lawyers who are employed as lawyers by a business entity and not a law firm.

The Department, based on information provided at the hearing, and in consultation with experienced Property Bureau staff, concluded that the availability of this coverage through admitted channels is limited. The Department further concluded that the characteristics of this type of coverage are unique and generally need to be customized or manuscripted to the features of the specific exposure. For these reasons, the Department favors adding this coverage to the export list.

• General Liability, Owners, Landlords and Tenants and/or Manufacturers and Contractors: Primary or excess liability coverage for general contractors, subcontractors, and all construction trades for damages that arise out of the construction, building, demolition or renovation of any building or structure. Also, Owners Contractors Protective, which is primary or excess liability coverage purchased by a contractor to protect the interests of the property owner relating to a specific construction project.

The Department added this coverage based on its analysis of information provided at the public hearing and its analysis of information regarding the various types of contractors that would be affected by offering this coverage through the export list. The Department determined that it is preferable to list a single comprehensive class for all contractors rather than listing all of the various subclasses, which may, in any event, not be exhaustive. Based on the testimony at the hearing, this class continues to be adversely affected by sections 240 and 241 of the New York Labor Law and the inherently dangerous nature of construction. Sections 240 and 241 of the New York Labor Law impose strict and absolute liability on employers for construction scaffolding and falling accidents. Claims alleging violations of these statutes often result in large judgments against the contractors' employers, and due to the severity of these claims, authorized insurers frequently decline to offer coverage to construction risks. For these reasons, the Department favors adding this coverage to the export list.

• Prize Indemnification: Coverage as defined in section 1113 (a)(27) of the Insurance Law.

This line of business was first authorized in New York in 1997. The Department, based on information provided at the hearing, and in consultation with experienced Property Bureau staff, concluded that the availability of this coverage through admitted channels is limited. Further, characteristics of this type of coverage are unique and generally need to be customized or manuscripted to the features of the specific exposure. For these reasons, the Department favors adding this coverage to the export list.

• Special Events: Primary or excess liability coverage for unique exposures of limited duration, which require varied and specialized terms, conditions and coverages generally issued to sponsors, organizers, performers and participants of trade shows, parades, flea markets, concerts, fairs and other similar events.

The coverage provided by this insurance varies widely, including coverage to sponsors, organizers, performers and participants of trade shows, parades, flea markets, concerts, fairs and other similar events. The characteristics of this type of coverage are unique and generally need to be customized or manuscripted to the features of the specific exposure. The Department also has received a number of inquiries from insureds and brokers expressing difficulty in obtaining this coverage through admitted channels. For these reasons, the Department favors adding this coverage to the export list.

• Special Multi Peril Coverage: Primary or excess liability coverage for general contractors, subcontractors, and all construction trades for damages that arise out of the construction, building, demolition or renovation of any building or structure when the coverage is packaged along with property coverage.

The Department proposes to add this coverage to the export list based on its analysis of information provided at the public hearing and its analysis of information regarding the various types of contractors that would be affected by offering this coverage thru the export list. The Department determined that it is preferable to list a single comprehensive class for all contractors rather than listing all of the various subclasses which may, in any event, not be exhaustive. Based on the testimony at the hearing, this class continues to be adversely affected by sections 240 and 241 of the New York Labor Law and the inherently dangerous nature of construction. Sections 240 and 241 of the New York Labor Law impose strict and absolute liability on employers for construction scaffolding and falling accidents. Claims alleging violations of these statutes often result in large judgments against the contractors' employers, and due to the severity of these claims, authorized insurers frequently decline to offer coverage to construction risks. For these reasons, the Department favors adding this coverage to the export list.

• Vacant Commercial Property: Primary or excess property insurance for vacant or unoccupied buildings used for commercial purposes.

The Department proposes adding this coverage to the export list based on its analysis of information provided at the public hearing and after consultation with experienced Property Bureau staff. The Department concluded that the availability of the coverage through admitted channels is extremely limited. For this reason, the Department favors adding this coverage to the export list.

Other Coverages

The Department opted not to expand the export list with regard to other coverages requested by ELANY, and to limit expansion in ways not proposed by ELANY.

• Primary Or Excess Errors And Omissions /Miscellaneous Professional Liability Coverage (Other than Medical Malpractice Insurance as described in subsection (e) of this Section): Primary or excess Errors and Omissions/Miscellaneous Professional Liability Coverage (other than Medical Malpractice Insurance as described in section 27.3(e)(1)(ii) of the regulation), including general liability coverage (if included in the same policy) with respect to the following risks or coverages:

Alcohol and/or drug rehabilitation centers;

Alcohol and/or drug rehabilitation programs;

Residential facilities including convalescent centers, nursing homes, and assisted care facilities;

Day care centers for adults, children or the physically or mentally disabled;

Group homes for adults, children or the physically or mentally disabled;

Halfway houses for adults, children and/or the physically or mentally disabled;

Hospices care service providers;

Social services agencies;

Foster care service providers; and

Home health care providers.

The Department proposes to add the coverage -- primary or excess errors and omissions /miscellaneous professional liability coverage (other than medical malpractice insurance as described in subsection (e)(1)(ii) of this section), including general liability coverage if included in the same policy -- to the export list, by reducing the number of requisite declinations from three to two. Those testifying at the hearing regarding this coverage, both oral and in writing, provided limited documentation for this risk category. After research by experienced Property Bureau staff, the Department concluded that the availability of this coverage through admitted channels is somewhat limited, but not to the same extent as the coverages noted above that the Department proposes to add to the export list. Moreover, the Department has not received a significant number of inquiries from insureds reporting they cannot obtain this type of coverage. Accordingly, the Department proposes to reduce from three to two the number of declinations necessary before an excess line broker can place such coverage with an unauthorized insurer. The Department will consider revisiting this category of coverage if more empirical evidence about the lack of availability is developed.

With regard to medical malpractice insurance described in section 27.3(e)(1)(ii), the insurance is available from a residual market facility (i.e., the Medical Malpractice Insurance Plan) and therefore the Department determined that the number of declinations required for this coverage should remain at three.

• Homeowners Insurance In Nassau And Suffolk Counties: Homeowners coverage means liability and property insurance for residential property which consists of not more than four dwelling units where one or more natural persons are the named insureds who occupy on a full or part time basis residential dwellings in Nassau County or Suffolk County, New York.

The proposed rule does not add homeowners insurance in Nassau and Suffolk counties to the "export" list for several reasons.

The Department fields many inquiries from consumers regarding availability and affordability of coverage in coastal areas. The cost of homeowners insurance depends on a number of factors including location; age and type of building; the use of the building; local fire protection; choice of deductibles; application of discounts; and the scope and amount of insurance coverage purchased. Although homeowners may in some instances have to pay more for coverage then they would like, the Department is reluctant to add this proposed coverage to the export list in the absence of empirical evidence demonstrating that coverage is unavailable from authorized insurers or other market mechanisms. Indeed, recent statutory changes expand the scope and quality of coverage options provided by the New York Property Insurance Underwriting Association and the Coastal Market Assistance Program (CMAP), which should provide more choices and enhanced coverage to consumers seeking appropriate coverage via admitted channels.

• Primary And/Or Excess Property Insurance Coverage For Properties Used For Business Purposes Located Within One Mile of the Ocean or a Navigable Waterway: Primary and/or excess property insurance coverage for properties located within one mile of the ocean or a navigable waterway used for business purposes.

The Department does not propose to add to the export list primary and/or excess property insurance coverage for properties used for business purposes located within one mile of the ocean or a navigable waterway in the absence of empirical evidence demonstrating a lack of availability. Further, while the Department has received some inquiries involving availability of personal lines insurance coverage near the shore, there have only been a small number of such inquiries involving commercial property. In addition, in considering this proposal, the Department struggled to develop an appropriate and narrowly tailored delineation of the geographical areas where such a category should apply.

9. Federal standards: There are no minimum standards of the federal government for the same or similar subject areas.

10. Compliance schedule: It is expected that excess line brokers will be able to comply with this rule as soon as it is promulgated.

Regulatory Flexibility Analysis

1. Effect of rule:

Most excess line brokers are considered to be small businesses as defined in section 102(8) of the State Administrative Procedure Act. The proposed rule is not expected to have an adverse impact on these small businesses because it liberalizes the requirements of obtaining declinations from authorized insurers for certain types of coverages before procuring a policy from an unauthorized insurer. The present rule requires excess line brokers to obtain three declinations from authorized insurers before procuring a policy from an unauthorized insurer, except for those coverages set forth on the "export" list, which do not require declinations. The proposed rule adds additional coverages to the "export" list that will not require declinations, and in some instances reduces the requisite number of declinations required for other added coverages.

The proposed rule will facilitate and streamline the process for difficult-to-place risks in the excess line market because the excess line brokers will not have to complete the declination sections of the affidavit for the coverages on the "export" list or will need only to complete fewer declinations for the other coverages added by the rule.

The proposed rule does not impose any impacts, including any adverse impacts, or reporting, recordkeeping, or other compliance requirements on any local governments.

2. Compliance requirements: None.

3. Professional services: No additional professional services are anticipated to be needed to comply with the proposed rule.

4. Compliance costs: This rule would impose no additional compliance costs on excess line brokers. In fact, the proposed rule should produce a cost savings for excess line brokers inasmuch as they no longer will have to obtain declinations for the additional coverages on the "export" list, or obtain as many declinations several other added coverages.

5. Economic and technological feasibility: Compliance with the rule is economically and technologically feasible as the rule merely eases the requirements of obtaining declinations from authorized insurers for certain types of coverages before procuring a policy from an unauthorized insurer.

6. Minimizing adverse impact: There is no adverse impact and, in fact, the rule should produce a cost savings for excess line brokers because the rule eases the requirements of obtaining declinations from authorized insurers for certain types of coverages before procuring a policy from an unauthorized insurer.

7. Small business and local government participation: In 2007, the Excess Line Association of New York (ELANY), provided a list of coverages to the Department on behalf of excess line brokers for consideration as additions to the "export" list. The Department held a public hearing on June 13, 2008 at its NYC offices regarding the list of coverages provided by ELANY. Prior notice of the hearing was published in the State Register on May 7, 2008. The public was invited to submit written comments, and numerous witnesses from around the state (and even some doing business outside the state) testified at the hearing.

Rural Area Flexibility Analysis

1. Types and estimated numbers of rural areas: Excess line brokers licensed in New York State and subject to the provisions of the proposed rule do business in most if not all counties in this state, including rural areas as defined under SAPA 102(13). Some or all of these licensees may have offices that lie within these rural areas.

2. Reporting, recordkeeping and other compliance requirements, and professional services: The present rule requires that excess line brokers obtain three declinations from authorized insurers before procuring a policy from an unauthorized insurer, except for those coverages set forth on the "export" list, which do not require declinations. The proposed rule adds additional coverages to the "export" list that will not require declinations and also reduces the requisite number of declinations required for several other added coverages.

There are no additional reporting, recordkeeping, or other compliance requirements.

3. Costs: There is no cost to the excess line brokers for the implementation of the proposed rule. In fact, the proposed rule should produce a cost savings for excess line brokers, because it eases the requirements of obtaining declinations from authorized insurers for certain types of coverages before procuring a policy from an unauthorized insurer.

4. Minimizing adverse impact: The proposed rule applies to excess line brokers that do business in New York State, which includes both rural and non-rural areas. The proposed rule does not impose any adverse impact, because it eases the requirements of obtaining declinations from authorized insurers for certain types of coverages before procuring a policy from an unauthorized insurer.

5. Rural area participation: In 2007, the Excess Line Association of New York (ELANY), provided a list of coverages to the Department on behalf of excess line brokers for consideration as additions to the "export" list. The Department held a public hearing on June 13, 2008 at its NYC offices regarding the list of coverages provided by ELANY. Prior notice of the hearing was published in the State Register on May 7, 2008. The public was invited to submit written comments, and numerous witnesses from around the state (and even some doing business outside the state) testified at the hearing.

Job Impact Statement

The Insurance Department finds that this rule should have no impact on jobs and employment opportunities, as it merely adds additional coverages to the "export" list that will not require declinations, and in some instances reduces the requisite number of declinations required for several other added coverages.