New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter XII - Group Property/casualty Insurance › Part 301 - Purchasing Groups › Section 301.0 - Preamble

Current through Register Vol. 46, No. 28, July 10, 2024
(a) On October 27,
				1986, Congress enacted the Federal Liability Risk Retention Act of 1986 (15
				USC 3901 et seq.) (LRRA), amending the
				Product Liability Risk Retention Act of 1981. Certain State laws affecting the
				purchase of commercial liability insurance on a group basis by purchasing
				groups are specifically preempted by the LRRA, by which Congress intends to
				facilitate the formation and operation of purchasing groups and the ability of
				insurers to provide group coverage for such purchasing groups.
(b) In response to the LRRA, a new article 59
				of the Insurance Law, entitled Risk Retention Groups and Purchasing Groups, was
				enacted into law on June 13, 1988. Article 59 will take effect on December 10,
				1988, conforming New York law to the LRRA to the extent necessary as well as
				implementing a State regulatory framework for these new entities.
(c) Prior to the enactment of article 59, it
				was necessary to provide guidance to the insurance industry, including the risk
				retention sector, and the general public as to the continuing applicability of
				the New York Insurance Law and related laws in conjunction with and not
				preempted by the LRRA. Accordingly, this Part was promulgated initially on an
				emergency basis on February 16, 1988, effective February 22, 1988, and twice
				repromulgated, again on an emergency basis, on April 21, 1988, effective April
				22, 1988, and on June 20, 1988, effective June 21, 1988, without any
				lapse.
(d) The superintendent held
				a public hearing on March 9, 1988 in connection with proposed and emergency
				Part 301. Some of the public comments received, both at and following the
				hearing, asserted that this Part was contrary to "the spirit and intent" of the
				LRRA. These comments assumed that the LRRA had preempted state regulatory
				control to an extent beyond that recognized by the superintendent in enacting
				this Part.
(e) The superintendent's
				authority and duty is to enforce and interpret the Insurance Law and other
				related New York laws, consistent with applicable Federal law. Recent Federal
				court decisions confirm the proposition that the superintendent is acting in a
				manner consistent with both the letter and the spirit of the LRRA.
(f) Given the LRRA's explicit preemption of
				only certain State laws regarding purchasing groups and their insurers, those
				State laws not so preempted continue to apply. Thus, statutory and regulatory
				requirements of the New York Insurance Law and regulations not preempted by the
				LRRA remain applicable to purchasing groups and their insurers doing business
				in this State.
(g) This Part:
(1) clarifies how existing requirements of
				the Insurance Law not preempted by the LRRA apply to purchasing groups and
				insurers of such groups, to reduce confusion as to how such laws operate in
				regard to insurance sold on a purchasing group basis;
(2) distinguishes between transactions
				involving the group and transactions involving the group members;
(3) applies only to insurance transactions
				with a New York nexus, in the same manner as in nonpurchasing group
				situations;
(4) specifies rules for
				the transitional period before article 59 takes effect on December 10, 1988,
				and establishes rules which apply on and after such effective date (except as
				otherwise provided, all sections of this Part are applicable on and after the
				effective date of this Part [August 22, 1988]);
(5) specifies rules governing the application
				of New York law to rate and form requirements for authorized insurers and the
				placement of business with unauthorized insurers, including excess line laws,
				as such laws and requirements relate to the placement and writing of insurance
				coverage for purchasing groups and their members in this State; and
(6) establishes registration procedures for
				purchasing groups doing business in this State with reasonable fees to defray
				the department's costs relative to such registration.