NY Ins L § 5405 (2021)
2021 New York Laws ISC - Insurance Article 54 - New York Property Insurance Underwriting Association 5405 - Participation.

§  5405.  Participation.  (a)  Every  member  of the association shall participate in  its  writings,  expenses,  profits  and  losses  in  the proportion  that  the  net  direct premiums of the member (but excluding that  portion  of  premiums  attributable  to  the  operation   of   the association)  written  during  the  preceding  calendar year bear to the aggregate net direct premiums written in this state by  all  members  of the association. Each member's participation in the association shall be determined  annually  on  the  basis of such net direct premiums written during the preceding calendar year as disclosed in the annual statements and other reports filed by the member with the superintendent.  (b) No member  shall  be  obligated  in  any  year  to  reimburse  the association  on  account  of its proportionate share in the deficit from operations of the association in that year in excess of one  percent  of its  surplus  to  policyholders.  The aggregate amount not so reimbursed shall be reallocated among the remaining members in accordance with  the method  of  determining  participation prescribed in this section, after excluding from the computation the total  net  direct  premiums  of  all members  not  sharing  in  such  excess  deficit.  In the event that the deficit from operations allocated to all members in  any  calendar  year shall  exceed  one percent of their respective surplus to policyholders, the amount of  such  deficit  shall  be  allocated  to  each  member  in accordance  with  the  method of determining participation prescribed in this section.  (c) Annually, on a date set by  the  superintendent,  the  association shall estimate its deficit from operations, and after application of the funds  provided  for  in  subsection  (d)  of  this section, calculate a factor, not to exceed one percent,  by  relating  such  deficit  to  net direct  premiums  written  for  the latest calendar year, subject to the approval of the superintendent. Such factor  may  be  reflected  in  the determination  of  rates  filed  by the principal rating organization in this state  and  by  members  of  the  association  for  fire,  extended coverage, broad form coverage pursuant to subsection (g) of section five thousand four hundred two of this article, additional perils, homeowners and  commercial multiple peril package policies which include the perils of fire and extended coverage. Notwithstanding the provisions of section five thousand four hundred four of this article  to  the  contrary,  any part  of  such deficit which exceeds one percent as so calculated, shall be defrayed by  an  increase  in  rates  for  the  respective  occupancy classes,   based   upon  the  association's  related  loss  and  expense experience together with other information the superintendent  requires, in accordance with filings approved by the superintendent. Each member's share  of the estimated deficit shall be collected by the association in accordance with the plan of operation.  (d) In accordance with regulations of the superintendent, the  deficit from  the  operations  of  the association shall be credited with income earned from the New York property/casualty insurance security fund.  The credit  shall be an amount determined by the superintendent, which in no year shall exceed income earned or the sum of  fifteen  million  dollars whichever  is  less.  The  credit  shall  be  estimated  annually by the superintendent on a date set by the superintendent, and  such  estimated amount  shall  be  credited  to the association and transferred from the income as earned during the  year  by  the  New  York  property/casualty insurance  security fund. Any difference between the estimated amount of income and the actual amount of income for the year shall be taken  into account  in  computing the estimate for the next period. Notwithstanding the foregoing provisions of  this  section  or  any  other  law  to  the contrary, if the assets of the association exceed its liabilities on the thirtieth  day  of  November  in  any  year commencing on or after April  first, nineteen hundred eighty-two in accordance with regulations of the superintendent,  the   association   shall   pay   to   the   New   York property/casualty insurance security fund an amount equal to any amounts paid from such fund to the association in accordance with the provisions of  article  seventy-six of this chapter and this section which have not been repaid prior to such thirtieth day of November, together  with  any investment   income   attributable   thereto,   as   determined  by  the superintendent, up to the amount of such excess. Any such payment  shall be made no later than February first of the following year.  (e) Members shall not be relieved of their obligation to reimburse the association for their share of the deficit resulting from the operations of the association prior to August first, nineteen hundred seventy-nine.  (f)  (1)  Any member that voluntarily writes, as of expiration date, a policy or coverage currently  written  through  the  association,  shall receive  credit  against its participation in association writings. Such credit shall be to the extent of twice the net  direct  premium,  on  an annual  basis,  of such policy or coverage voluntarily written and shall apply for one year.  (2) Subject to approval by the superintendent, the  association  shall develop  and  implement  an incentive plan for members which voluntarily write policies that include windstorm coverage in  coastal  areas.  Such plan  shall  also  include  incentives  for members to voluntarily write wraparound policies, as defined by the association,  in  coastal  areas, when  such  wraparound  policies  include  coverage  for  windstorm on a replacement cost basis in excess of the windstorm coverage contained  in an  association  policy  issued to the same policyholder. The purpose of these  incentives  shall  be  to  encourage  the  writing  of  voluntary insurance policies in coastal areas by reducing the participation in the writings  of the association of those member companies which voluntarily write policies that include windstorm coverage in such  areas.  For  the purposes  of  this section, coastal areas include: areas within one mile of a saltwater ocean, sound, inlet or bay on Long Island's  south  shore or  along the shore of Brooklyn, Queens, Staten Island and Long Island's forks; areas within two thousand five hundred feet of a saltwater ocean, sound, inlet  or  bay  on  Long  Island's  north  shore,  the  Bronx  or Westchester.  (3)  The  association shall offer a policy form which may be used only in conjunction with voluntary market wraparound  policies  that  provide windstorm  coverage in excess of amounts insured by the association. The policy form, which  may  include  broad  form  coverage,  shall  provide replacement cost coverage for dwellings and personal property for repair or   replacement   without  deduction  for  depreciation  on  terms  and conditions generally consistent with policies customarily in use in  the voluntary  market  as modified to make the association policy compatible with voluntary market  wraparound  policies.  Coverage  offered  by  the association  under  such  policy  shall  not exceed six hundred thousand dollars for dwelling coverage and two hundred fifty thousand dollars for personal property, and shall be available to cover one  to  four  family owner-occupied  dwellings,  apartment  units  or  condominium units. The association may require applicants to provide evidence of  the  purchase of flood insurance as a condition of eligibility for coverage under this policy.  The  association  shall  file  the  form  for approval with the superintendent.