S.1373 (Seward)


S.1373 (Seward)


Commercial Insurance Deregulation



The Business Council of New York State, Inc., whose membership includes small and large companies, associations, and chambers of commerce, has reviewed the above mentioned legislation and supports its enactment.

The Business Council would like to commend the Assembly, Senate and Governor for attempting to deal with a serious problem facing New York's employers. The ability for all of New York's employers to tailor their business insurance products to fit their needs is one that we enthusiastically support.

Under present law, as an insured's needs change, insurance companies must file new and/or revised rates and forms with the New York Insurance Department. The benefits of a new or enhanced product are not available to industry and business until approval from the regulator is received. Often this delay causes business to leave the state and the country. Data from the firm of Sedgwick Inc., a brokerage and consulting company, indicate that 48 percent of commercial insurance business has fled the domestic insurance industry and is now in the alternative and foreign markets. This loss represents a sizeable portion of money no longer available to insurers in New York and countrywide, plus diminished tax payments to the state, and increased potential unemployment or lost future employment opportunities in the insurance industry.

This legislation relieves the regulator from the routine review of rates and forms applicable to commercial risks and other filings will be processed more readily. The public will be better protected and served by allowing Department personnel to concentrate more time and attention on those policy forms affecting the personal lines, auto and homeowners consumers.

This bill deregulates all commercial insurance lines except the following; life insurance, annuities, accident and health insurance, workers compensation, title insurance, mortgage guaranty, credit unemployment, financial guaranty, gap insurance, service contracts and legal services insurance. Also, there are not minimum annual premium threshold requirements necessary to qualify for deregulated treatment.

This enables small businesses to enjoy the same coverage and pricing options as would be offered large businesses under a deregulated environment. We have heard that establishment of a threshold is a sticking point in negotiations, because it is assumed that small employers are unsophisticated buyers of insurance. We would disagree and argue just the opposite. We believe that small employers are just as concerned with the quality and cost of their insurance product as large employers. Because of this fact we think its important to allow all employers to tailor their business insurance to fit their particular needs.

Passage of S.1373 will restore New York to its proper leadership role in terms of insurance regulation. In recent years, several states have passed some form of commercial lines deregulation; Arizona, Arkansas, Colorado, Georgia, Kansas, Maryland, New Hampshire, Oklahoma, Pennsylvania, Texas, Virginia, and Washington. Several other states are actively considering legislation on this topic.

We believe that it is time to make New York the next state to deregulate commercial business insurance and urge the Legislature to pass Senate bill 1373.