Benjamin M. Lawsky, New York Superintendent of Financial Services, on Monday announced that new regulations have been issued to implement a law that deregulates most insurance business with large, sophisticated companies. The new law exempts insurers from rate filing and form approval requirements when issuing a policy to businesses that generate annual commercial risk insurance premiums totaling more than $25,000 in property/casualty insurance or that retain special risk managers to assist in negotiating and purchasing the policies.
“The new law and regulation enhance the ability of insurers to underwrite large commercial insureds in New York, increase speed to market for certain insurance products not currently exempted and eliminate barriers to economic development in New York,” said Benjamin M. Lawsky, Superintendent of Financial Services.
The special exemption allows insurers to issue policies to these insureds without submitting rate filings to the Department of Financial Services or obtaining the Superintendent’s prior approval for the sale of policies.
An insurer using the exemption must file with the Superintendent a certificate of insurance documenting the terms of the policy within one business day of binding the insurance coverage, and a supplemental checklist and certification form that the Department has developed to facilitate compliance with this submission requirement, along with a copy of the certificate previously filed, within 30 days from the inception date of the policy.
An insurer also must file with the Superintendent, for informational purposes, within three business days after first delivery of the policy but no later than 60 calendar days after the inception date of the policy, any policy forms that the insurer has not previously filed with the Superintendent.
Insurers are not exempt from the requirements of the New York Insurance Law or insurance regulations. And the exemption does not apply to workers' compensation, medical malpractice and certain other kinds of property/casualty insurance.
To be eligible to use the exemption, an insurer must issue the policy to an entity that meets the definition of a “large commercial insured.” For example, a for-profit business entity would be considered a “large commercial insured,” if, among other things, it generates annual gross revenues exceeding $15 million and has a net worth of at least $1.5 million.
A not-for-profit organization or public entity would be considered a “large commercial insured” if, among other things, it has an annual budget exceeding $20 million for each of its three fiscal years immediately preceding the policy’s effective date, while a municipality would meet this definition if, among other things, it has a population of at least 50,000 people.