Capitol Report Index Page

CAPITOL REPORT
Provided by Barrett Associates, Legislative Representative for
Independent Insurance Agents & Brokers of New York
5784 Widewaters Parkway, 1st Floor, DeWitt, New York, 13214

June 24, 2010

Lawmakers Continue Work on Budget, Other Issues 
While the official legislative session was scheduled to end June 21, lawmakers have been busy this week passing a variety of bills, working on the state budget and continuing discussions of important reforms, including those that affect no-fault and medical malpractice insurance. Earlier in the week, the legislature passed another emergency extender bill that included a tax increase of $1.60 on a pack of cigarettes. Higher taxes on other tobacco products, such as snuff and cigars, were also approved. Another controversial part of the extender calls for collecting taxes on cigarettes sold on Native American reservations. 

Legislative leaders this week continued budget discussions, which now include a proposal to expand the state’s 4-percent sales tax to clothing and footwear under $110. Those items are currently exempt from taxation in New York. Also being considered is the elimination of tax-free holidays. Gov. David Paterson has said the taxes are needed, in part, because New York may lose at least a portion of the $1 billion it expected in Medicaid reimbursement from the federal government. Gov. Paterson wants to use the money to help close a $9.2-billion budget deficit. Last week, the governor said he wants the budget completed by June 28, or he would put the remaining provisions of his budget into the next emergency spending proposal. Legislative leaders said they are hopeful a budget can pass before the June 28 deadline.

IIABNY to Provide Testimony at Upcoming Department Hearing 
IIABNY is preparing testimony to submit to the state Insurance Department on how it can improve the way it conducts various tasks, such as licensing producers, renewing applications and following through on procedures related to continuing education. The Insurance Department announced it will conduct a public hearing June 28, when consumers, insurers and producers could offer ideas on how to make the department more efficient. 

No-Fault Reform Discussions Continue 
Discussions at the Capitol continued this week as insurers and trial lawyers try to hammer out a deal on no-fault reform. The insurance industry continues to express concern over any expansion of the definition of serious injury, fearing it will raise costs and be counterproductive to other no-fault reforms insurers are seeking. However, if any no-fault reform package is to advance, the serious injury definition must be addressed. 

Medical Malpractice Reform Still a Possibility 
Talks also continue on legislation that would implement medical malpractice reform, an issue the Insurance Department has long addressed. The current proposal would establish a rate-setting organization to set medical malpractice insurance rates. It also authorizes an assessment on liability lines of insurance to fund the deficit incurred by the Medical Malpractice Insurance Plan for polices issued July 1, 2000 through June 30, 2010. The assessment, which could not exceed a half percent of an insurer's net written premiums for the prior year, would only pertain to personal injury liability and property damage liability lines. Companies could then offset the assessment by surcharging liability policies. The proposal has yet to be put into actual legislation, and time is running short. 

Legislation of Interest 
Some bills of interest that appeared to show movement this week include: 

• At- Fault Accident Surcharge. Legislation (A.1952-A/S.1700-A) that would raise the at-fault accident surcharge threshold from $1,000 to $2,000, which IIABNY supports, is moving through the legislature. The proposal awaits a vote in both houses. IIABNY provided input on a group of technical amendments, which were necessary to satisfy insurer concerns. The amendments would make the law effective 120 days after the effective date to give companies an opportunity to make the necessary rules changes. The amendments also decouple the surcharge threshold from the state Department of Motor Vehicle accident reporting amount. 
• Windstorm Triggers. A.4847-A, a bill that would authorize the Superintendent of Insurance to develop uniform windstorm trigger standards, was approved by the Assembly. IIABNY provided amendments to the bill sponsor, Assemblyman Harvey Weisenberg (D- Long Beach). The amendments limit the scope of the bill so that uniformity would be set in only the triggers and not the deductible amount. There is no Senate companion bill to this legislation. 
• Commercial Lines Deregulation. Bills (S.7220-A/A.10636-A) that would exempt large commercial risks from rate and form filing have cleared both the Senate and Assembly Insurance committees and were recently amended with changes that the Insurance Department and insurers have been discussing. IIABNY has been involved in discussions with insurers on the bill to ensure that it applies only to truly large and sophisticated risks. The legislation allows exemptions from rate and form regulation for policies issued to a "large commercial insured" that employs or retains a “risk manger” to assist in the negotiation or purchase of a policy. 

"Risk manager" would be defined as an individual who holds a professional designation of CPCU, ARM, or CRM with at least five years experience in the analysis and treatment of risk, loss exposure, insurance coverages, and alternative methods and programs, who is not employed by the insurer issuing the policy or any person in the insurer's holding company system, and who is licensed as an insurance producer, unless exempted from licensing. 

A "large commercial insured" would be defined as an entity that generates annual commercial risk insurance premium in excess of $25,000 and:

1. has a net worth of at least $7.5 million;
2. has gross assets exceeding $10 million and a net worth of at least $1.5 million;
3. is a for-profit business with annual gross revenues exceeding $15 million and has a net worth of at least $1.5 million;
4. is a for-profit business with gross assets exceeding $10 million and annual gross revenues exceeding $15 million;
5. is a not-for-profit or public entity with an annual budget exceeding $20 million;
6. is a municipality with a population of 50,000 or more; or
7. has 50 employees or 100 employees within the corporate structure.

The $25,000 premium threshold could be adjusted every five years to reflect changes in the Consumer Price Index.