New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter III - Policy and Certificate Provisions › Subchapter B - Property and Casualty Insurance › Part 66 - Surety Bond Forms-waiver Of The Filing And Prior Approval Requirements Of Section 2307 Of The Insurance Law › Section 66.0 - Preamble

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Section 2307 (b)  of the Insurance
				  Law provides:
"No policy form shall be delivered or issued for delivery
					 unless it has been filed with the superintendent and either (i) he has approved
					 it or (ii) thirty days have elapsed and he has not disapproved it as misleading
					 or violative of public policy."
(b) This provision creates serious problems
				  with respect to surety bond forms which generally are specially prepared to
				  meet the needs of individual insureds. Surety companies have little freedom in
				  determining the makeup of surety bond forms. In most instances the obligee
				  and/or its attorneys make this determination and the surety is given the choice
				  of writing the bond on a "take it or leave it" basis. In those few cases where
				  the surety is permitted to change a proffered surety bond form the final
				  product undergoes the careful scrutiny and receives the eventual approval of
				  the obligee's attorney.
(c) No
				  public benefit would be gained by requiring surety bonds to be filed for prior
				  approval. The provisions of surety bonds generally are not under the control of
				  the surety company but are controlled by the conditions of the underlying
				  contracts or prescribed under the authority of the laws, ordinances, documents
				  and orders of public officers or public bodies. With respect to court fiduciary
				  and judicial bonds, the form is essentially controlled by the condition
				  language of the pertinent statutory provision of the New York law or by court
				  rules. The form is checked by the attorney for the party obtaining the bond,
				  the attorney for the opposing party and it is subject to the approval of the
				  administrative personnel of the court in which it is required to be filed.
				  Where there is any question about its acceptability it is subjected to the
				  examination of the court, which is under the law the final arbiter of the form
				  of such bonds.
(d) The bond form is
				  usually needed immediately. The time required to file a new form and to obtain
				  approval of the Department of Financial Services would severely inhibit the
				  traditional use of surety bonds and cause principals and obligees to turn to
				  other forms of security. The immediate need for such forms makes it
				  impracticable to have them filed and approved prior to their use. Compliance
				  with the requirement under section 2307 (b)  of the Insurance
				  Law would also result in an inordinate number of filings of surety bond forms
				  that are tailor-made to meet the specific needs of individual
				  insureds.
(e) Section 2307 (c)  of the Insurance
				  Law provides that the superintendent may, by a regulation adopted after a
				  public hearing, waive the requirement of filings and prior approval of any
				  policy form by the superintendent.
(f) However, unlike other surety bonds, bail
				  bonds are usually standardized and are not specially prepared to meet the needs
				  of individual insureds. As a result of complaints filed with the department,
				  the superintendent is concerned that bail agents are using forms other than the
				  forms of the insurer issuing the bail bond. These forms often include language
				  and terms that impose unreasonable, punitive, or predatory conditions on
				  principals and indemnitors. Therefore, the superintendent has determined that
				  it would benefit the public for all bail bond forms to be filed with and
				  approved by the superintendent.