Posted on 23 Feb 2009
Insurance companies licensed to do business in New York must file annual financial reports or supplements that comply with the accounting requirements prescribed in New York Insurance Law, Insurance Superintendent Eric Dinallo announced late last week in a bulletin to all Insurance Department licensees. The bulletin, known as a Circular Letter, reminded insurers that New York Insurance Law has always required companies to comply with the accounting requirements of New York Insurance Law in their reports to the State.
“New York State Insurance Law sets out a level playing field for all insurers,” Dinallo said. “In order that consumers looking at the reports filed with New York State can fairly and confidently compare the financial strength of various insurance companies, these reports must be clear and consistent. Consumer protection and transparency are guiding principles for this Department, and this Circular Letter reaffirms that.”
Insurance companies file annual financial reports with the State. These reports, due March 1 each year, allow the State to monitor the strength and solvency of these companies. This protects consumers, who can buy insurance from companies licensed by the State secure in the knowledge the State has determined these companies are solvent, able to pay claims as they come due.
Insurance companies are primarily regulated by their home states. While general accounting and reporting practices are similar for all states, state regulators are allowed to permit certain accounting practices that may differ from the requirements of other states. In some circumstances, this may mean the capital or surplus reported by an insurer under the rules of its home state regulator may be different from that which would be reported had the accounting requirements of New York Insurance Law been followed. Capital and surplus levels reflect the financial strength of an insurance company, showing its ability to pay claims and the cushion available to absorb economic losses.
Companies using these permitted practices that are authorized to do business in New York have always been required to file a New York supplement along with their annual financial statement. In that supplement, the company must adjust its assets, liabilities and surplus to reflect New York law.