Current through Register Vol. 46, No. 39, September 25, 2024
(a) Prior to placing business with an
unauthorized insurer, an excess line broker shall make inquiry sufficient to
ascertain the insurer's financial stability and capacity adequate to its
business and, in order to support such inquiry, shall except as provided by
subdivision (g) of this section obtain, review and retain at least the
following:
(1) if a foreign insurer, then a
copy of the insurer's most recent annual financial statement as of a date in no
event earlier than 18 months prior to placement, in the form filed with its
home jurisdiction;
(2) if an alien
insurer, then evidence that such insurer appears in the most recent NAIC IID
list of alien insurers;
(3) if
accessible to the excess line broker, a copy of the insurer's latest report on
examination, if any, in English (or true translation) and stated in United
States dollars, as conducted by its home jurisdiction; and
(4) a certification, in English (or true
translation), from the insurer's home jurisdiction, or any other documentation
sufficient to ascertain and verify the fact that the insurer is authorized in
its domiciliary jurisdiction to write the insurance policy proposed to be
procured from it by the excess line broker.
(b) An excess line broker shall not place
coverage with an unauthorized insurer, unless the insurer's financial
statements or other evidence demonstrate that 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:
(i) for
an individual incorporated foreign unauthorized insurer, the insurer maintains
surplus to policyholders of not less than US $45,000,000;
(ii) for a partnership of foreign
unauthorized insurers, each licensed in its domicile and which parternship is
duly authorized by its domiciliary jurisdiction to insure risks on a joint and
several basis, each insurer maintains surplus to policyholders of not less than
US $45,000,000; and
(3)
as of January 1, 2016 and every three years thereafter, the minimum surplus to
policyholders requirements in subparagraphs (2)(i) and (ii) of this subdivision
shall be increased by US $1,000,000.
(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 not 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 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 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
paragraph (3) of this subdivision shall be increased by US
$1,000,000.
(d) If the
excess line broker satisfies the superintendent that placing coverage with the
insurer is necessary and will not be detrimental to the public and the
policyholder, then the requirement set forth in paragraph (a)(2) of this
section may be waived by the superintendent, in light of such factors as the
length of time the insurer has been authorized in its home jurisdiction and
elsewhere, its financial condition, and unavailability of particular coverages
from authorized insurers or unauthorized insurers meeting the requirements of
this Part.
(e) Before placing
business with an unauthorized insurer, an excess line broker shall make inquiry
sufficient to demonstrate that such insurer's:
(1) claims practices have been, and continue
to be, satisfactory; and
(2)
management is trustworthy and competent.
(f) Whenever an excess line broker knew or
should have known that an unauthorized insurer is not in compliance with any
requirement of this section, the excess line broker shall:
(1) cease procuring coverage from such
insurer; and
(2) notify, in writing
and within 10 days, the superintendent, excess line association, any producing
broker and each insured having a policy placed by the excess line broker with
such insurer that, in the excess line broker's judgment, replacement of
coverage is warranted, stating reasons supporting that judgment. Proof of
mailing of the excess line broker's notice to replace coverage, to the first
named insured at the address shown in the policy, shall be sufficient proof of
notice required by this paragraph.
(g) An excess line broker's need to obtain
and retain any information or materials specified in this section may be waived
to the extent that the excess line association:
(1) maintains such information or materials;
and
(2) makes the information and
materials available, during normal business hours and at reasonable cost, to
excess line brokers, producing brokers, insureds or prospective insureds,
provided, however, that nothing in this paragraph shall be interpreted in any
way to relieve or diminish the obligation of the excess line licensee to
inquire about unauthorized insurers and review all the relevant material
required by this section.
(h)
(1) The
requirements of paragraph (b)(2) or (c)(3) of this section may be satisfied by
an unauthorized insurer possessing less than the surplus to policyholders
required, and the requirements of paragraph (c)(1) of this section regarding
the maintenance of funds on a joint and several basis may be satisfied by an
insurance exchange possessing less than the amount of funds in trust or
custodial accounts required to be maintained on a joint and several basis for
the protection of all insurance exchange policyholders, upon an affirmative
finding of acceptability by the superintendent. The finding shall be based upon
such factors as quality of management, capital and surplus of any parent
company, the unauthorized insurer's or insurance exchange's underwriting profit
and investment income trends, unauthorized insurer or insurance exchange record
and reputation within the industry, whether the unauthorized insurer or
insurance exchange will provide capacity for risks for which coverage is not
readily available in the admitted market or from unauthorized insurers which
satisfy the requirements of paragraph (b)(2) or (c)(3) of this section, and
insurance exchanges which satisfy the requirements of paragraph (c)(1) of this
section, and the degree to which a finding of acceptability would benefit
insurance consumers in this State.
(2) An unauthorized insurer or insurance
exchange seeking an affirmative finding of acceptability from the
superintendent shall file a business plan with the superintendent detailing the
unauthorized insurer's or insurance exchange's proposed underwriting activity
on New York risks. Any affirmative finding of acceptability pursuant to this
subdivision shall be conditioned upon the unauthorized insurer's or insurance
exchange's adherence to the business plan as filed with the superintendent. Any
unauthorized insurer's or insurance exchange's granted an affirmative finding
of acceptability pursuant to this subdivision may file a revised business plan
with the superintendent seeking to alter its underwriting activity on New York
risks.
(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 $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.
