2023 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.