Court Opinion

ID: 5860360
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:16:54.862849+00
Date Added: 2024-06-11T08:44:24.598684
License: Public Domain

Alexander, J.
(dissenting). At the heart of the petitioner’s complaint is the contention that the date on which regulation 41 and the new EL-2 procedure became effective and was thus “known to have its detrimental effect” upon the members of the petitioner’s organization was February 23, 1981, when the Insurance Department released circular letter number 5, which contained the revised form EL-2. The ability to establish that date, February 23,1981, as the effective date will salvage this case from the time-barring effect of the four-month Statute of Limitations. Petitioner’s contention on this appeal that regulation 41 and the EL-2 procedure only became effective on February 23 is at odds with the allegation in paragraph 6 of the petition herein which alleges that revised regulation 41 was promulgated and issued “to be effective on November 25, 1980”. The real objection raised in the petition to regulation 41 is that it required that the risk sought to be covered be submitted to and rejected by five unaffiliated authorized brokers with a confirmation by those brokers that they had rejected the offered coverage. Indeed, the news release of November 25, 1980, which accompanied the promulgation of regulation 41 announced that “the broker who places the excess and surplus lines insurance must identify in writing, the New York admitted carriers who declined the risks. In addition, the representatives of the admitted carriers who, in fact, declined the proposed risk must corroborate the statement of the broker”. This provision is in implementation of subdivisions (a), (b) and (c) of section 27.3 of regulation 41 (11 NYCRR Part 27). The form EL-2 initially issued with regulation 41, provided that it must be completed “by the submitting broker or Excess Line broker and signed and dated by the company representative”. The form further provided for the company representative, that is the underwriter or agent, to confirm that he declined coverage and to state the reason. The revised form promulgated on February 23, 1981, is to be completed “by the submitting broker or excess line broker and signed and dated by the company representative”. It, too, requires the submitting broker or excess line broker to state the reason the risk was declined by the particular company with the underwriter or agent merely confirming that the statement made by the broker is correct. Thus it is seen that both forms required a statement of the reason for the declination of the proffered coverage. The only significant difference between the two forms is that the form initially promulgated was to be completed but not signed by the submitting or excess line broker, and signed and dated by the company representative, while the form promulgated on February 23, was to be completed by the submitting or excess line broker and signed by him as well as signed and dated by the company representative. Since both forms required a statement of the reason for the declination of coverage, it is difficult to see how the fact that “the regulation itself makes no reference to requiring the reasons given by the Underwriters for declining coverage” is of any consequence in respect to when the regulation became effective, or how the sophisticated members of the industry were in any way misled by the news release cited by the majority. That the members of the industry may have harbored some hope of a later revision of the form is not a sufficient basis upon which to ground the contention that the regulation did not become effective at the time of its promulgation in November, 1980. Nor is the fact that the superintendent may not have intended to enforce the regulation until a later date a basis for holding that the effective date should be postponed. That petitioners were fully aware of the effective date of the regulation is seen from a reading of a letter of the president of the association written to the Deputy Superintendent of Insurance on December 12, 1980. It contains the following statement: “While I am of the understanding that the Regulation is effective now, is it your opinion that the New York State *843Insurance Department will not enforce said Regulation until a future date? * * * I need your opinion * * * as to the date the Insurance Department will begin enforcing the Regulation. I am hopeful that your answer will be March 1st, 1981 at the very earliest.” (Emphasis added.) The conclusion is inescapable that the argument relating to alleged confusion as to the form and the fact that in its news release, the department indicated that it was awaiting comment by alien insurers in respect to that form is an afterthought advanced to avoid the bar of the Statute of Limitations.