S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         2348
                              2015-2016 Regular Sessions
                                   I N  S E N A T E
                                   January 22, 2015
                                      ___________
       Introduced  by  Sen.  SEWARD -- 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 the duties  of  excess
         line brokers
         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section 1. Paragraph 1 of subsection (a) of section 2118 of the insur-
    2  ance law, as amended by chapter 220 of the laws of 1986, is  amended  to
    3  read as follows:
    4    (1)  (A)  Every licensee licensed pursuant to section two thousand one
    5  hundred five of this article shall  be  required  to  use  due  care  in
    6  selecting the unauthorized insurer from whom policies are procured under
    7  his license.
    8    (B)  A LICENSEE IS PRESUMED TO HAVE EXERCISED DUE CARE IN SELECTING AN
    9  UNAUTHORIZED INSURER IF AT THE TIME OF PLACEMENT, THE EXCESS LINE  ASSO-
   10  CIATION  ESTABLISHED PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED THIRTY
   11  OF THIS ARTICLE HAS PUBLISHED THE NAME OF SUCH  INSURER  ON  A  LIST  OF
   12  ELIGIBLE UNAUTHORIZED INSURERS. THE EXCESS LINE ASSOCIATION WILL LIST NO
   13  INSURER  UNLESS  IT HAS CONDUCTED AN ANALYSIS OF SUCH INSURER UPDATED NO
   14  LESS THAN ANNUALLY AND DETERMINED SUCH INSURER,
   15    (I) IS FINANCIALLY SOLVENT AND STABLE;
   16    (II) MAINTAINS ADEQUATE CAPACITY AND POLICYHOLDER'S  SURPLUS  TO  MEET
   17  ITS OBLIGATIONS TO POLICYHOLDERS, AND ALL OTHER LIABILITIES;
   18    (III) IS MANAGED BY INDIVIDUALS WHO ARE TRUSTWORTHY AND COMPETENT; AND
   19    (IV) MAINTAINS CLAIMS PRACTICES IN A SATISFACTORY MANNER.
   20    S 2. Subparagraph (C) of paragraph 3 of subsection (b) of section 2118
   21  of  the insurance law, as amended by chapter 684 of the laws of 1993, is
   22  amended to read as follows:
   23    (C) Every licensee, or affirming broker, in connection with the place-
   24  ment of each risk pursuant to this section, shall record on the  affida-
   25  vit  required pursuant to subparagraph (A) of this paragraph [the infor-
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD06935-01-5
       S. 2348                             2
    1  mation]  THE  NAME  OF  THE  INSURER  DECLINING   SUCH   RISK   AND   AN
    2  IDENTIFICATION  NUMBER  FOR  SUCH INSURER ISSUED BY THE NATIONAL ASSOCI-
    3  ATION OF INSURANCE COMMISSIONERS OR DEPARTMENT  OF  FINANCIAL  SERVICES.
    4  INFORMATION relied upon [that] WHICH formed the basis of such licensee's
    5  or  affirming  broker's  reason  to  believe that the authorized insurer
    6  might consider writing the  type  of  coverage  or  class  of  insurance
    7  involved  SHALL  BE  MAINTAINED  BY SUCH LICENSEE OR AFFIRMING BROKER IN
    8  WRITING FOR A PERIOD OF THREE YEARS FROM THE EXPIRATION OF SUCH POLICY.
    9    S 3. Paragraph 4 of subsection (b) of section 2118  of  the  insurance
   10  law,  as  amended by chapter 630 of the laws of 1988, is amended to read
   11  as follows:
   12    (4) (A) The number of declinations  constituting  diligent  effort  in
   13  regard to placement of coverage with authorized insurers for purposes of
   14  paragraph  three  of  this  subsection shall be three, unless the super-
   15  intendent after a hearing, on a record, upon findings  and  conclusions,
   16  determines  that  another  number of such declinations is appropriate in
   17  regard to particular  coverages.  In  making  such  determinations,  the
   18  superintendent  shall  consider  relevant  market  conditions, including
   19  unavailability of particular coverages from authorized insurers, and may
   20  conduct market surveys. Any such  determination  shall  be  reviewed  at
   21  least annually by the superintendent.
   22    (B) THE DILIGENT EFFORT MADE BY A LICENSEE OR AFFIRMING BROKER FOR ANY
   23  POLICY  THAT  PROVIDES COVERAGE FOR A ONE YEAR PERIOD, SHALL BE DEEMED A
   24  VALID DILIGENT EFFORT FOR THE FIRST AND SECOND  ANNUAL  RENEWAL  THEREOF
   25  WHEN THE SAME INSURER PROVIDES SUCH RENEWAL COVERAGE.
   26    S  4.  This  act shall take effect on the ninetieth day after it shall
   27  have become a law and apply to insurance policies placed or procured  on
   28  and   after  such  date,  provided,  however,  that  the  amendments  to
   29  subsection (b) of section 2118 of the insurance law made by sections two
   30  and three of this act shall not affect the expiration and  reversion  of
   31  such subsection and shall be deemed to expire therewith.