New York has recently enacted and promulgated amendments to its insurance holding company laws and regulations and related laws. The changes in regulation were made by the Third Amendment to Insurance Regulation 52 effective June 23, 2013. The changes in law were made by Chapter 238 of the Laws of 2013, most of the provisions of which were effective July 31, 2013 but some of which will become effective October 29, 2013.
While all of these amendments affect New York domestic controlled insurers, many of these amendments affect New York commercially domiciled insurers and some of these amendments even affect New York foreign licensed insurers. Therefore, all New York licensed insurers should be aware of the impact of these changes on their (and their parent’s) New York reporting and compliance requirements.
A table setting forth (i) the key laws and regulations before and after the amendments, (ii) whether they affect domestic, foreign or commercially domiciled insurers, and (iii) the applicable effective dates of the amendments is attached to this Client Update.
The New York insurance holding company law, originally enacted in 1969, was among the first such laws enacted in the U.S. While it covers the same major regulatory subjects as the NAIC Insurance Holding Company System Regulatory Act, it has done so with substantial deviations from the NAIC Model Act, including:
- Insurance holding company registration for all controlled insurers, domestic and foreign.
- Low materiality thresholds for prior notice of certain affiliate transactions entered into by a domestic controlled insurer.
- No materiality threshold for prior notice of affiliate reinsurance transactions entered into by a domestic controlled insurer.
- Exemption from the prior notice of affiliate transactions for an affiliate transaction between a domestic controlled insurer and its subsidiary.
MAJOR 2013 AMENDMENTS
The 2013 amendments are designed to bring New York insurance company regulation into compliance with the insurance holding company accreditation standards of the National Association of Insurance Commissioners and thus include many of the amendments made to the NAIC’s Insurance Holding Company System Regulatory Act and Insurance Holding Company System Model Regulation With Reporting Forms and Instructions adopted in 2010. Among the major amendments made in New York are the following:
- New holding company notice to the domestic controlled insurer and the Superintendent of any proposed divestiture of the domestic controlled insurer at least 30 days prior to the cessation of control.
- New notice of material changes to information in a registration statement within 30 days following the change, applicable to domestic, foreign and commercially domiciled insurers.
- New annual enterprise risk report filing by a holding company that controls a domestic, foreign or commercially domiciled insurer.
- Liberalization of the affiliate transaction materiality thresholds for sales, purchases, exchanges, loans or extensions of credit, or investments involving a domestic or commercially domiciled controlled insurer and its non-subsidiary affiliate.
- Increase in the prior notice period for affiliate reinsurance agreements involving a domestic or commercially domiciled controlled insurer and its non-subsidiary affiliate from 30 to 45 days.
- New prior notice requirement for the following affiliate transactions between a domestic or commercially domiciled controlled insurer and its non-subsidiary affiliate: tax allocation agreements, guarantees and cost-sharing agreements.
- New prior notice requirements for certain affiliate transactions between a domestic insurer and its subsidiary.
Again, a table setting forth (i) the key laws and regulations before and after the amendments, (ii) whether they affect domestic, foreign or commercially domiciled insurers, and (iii) the applicable effective dates of the amendments is attached to this Client Update.
Click here to view table.