Ask Tim

Are Reciprocals Covered By the Guaranty Fund?

Question from an IIABNY member: We are thinking of doing business with a property carrier which is a reciprocal. I just want to make sure they are covered under the New York State guaranty fund and there is no other issue with a reciprocal. I was told their policy is not assessable and they have A rated reinsurers.

Answer: The guaranty fund (the New York State Property/Casualty Insurance Security Fund) does cover most policies issued by reciprocals. Article 76 of the New York Insurance Law applies to the PCISF. Section 7602(c) states:

" Insurer " means any insurer (other than an insolvent insurer, or a municipal reciprocal insurer which issues policies not covered by the property/casualty insurance security fund, or a risk retention group …, or a provider of service contracts …) authorized to transact the (following) kinds of (insurance: Fire; miscellaneous property; water damage; burglary and theft; glass; boiler and machinery; elevator; animal; collision; personal injury liability; property damage liability; fidelity and surety; credit; motor vehicle and aircraft physical damage; marine and inland marine; and marine protection and indemnity.)

Note that Workers’ Compensation is not on that list. This is because there is a separate guaranty fund for Workers’ Comp, known as the Workers’ Compensation Security Fund. New York Workers’ Compensation Law Sections 106 and 107 clearly state that policies issued by reciprocal insurers are covered by this fund. Section 107 states:

The purpose of the fund is to assure to persons and funds entitled thereto the compensation and benefits provided by this chapter for employments insured in insolvent carriers, including the return of unearned premiums. Such fund shall be applicable to the payment of awards for compensation or death benefits and to the payment of benefits into the special funds … and remaining unpaid, in whole or in part, by reason of the default … of an insolvent carrier including the return of unearned premiums, but such fund shall not be applicable to the payment of any amounts due under any policy of reinsurance issued to an insurance carrier. The fund shall also be applicable to the payment of liability claims against an employer under the employer's liability insurance portion of the standard New York workers' compensation and employer's liability insurance policy, but no payment from the fund for such liability claim shall exceed the lesser of the policy limit or one million dollars on any one claim…

Section 106 defines the terms:

" Mutual carrier " means any mutual corporation or reciprocal insurer, other than an insolvent carrier, authorized to transact the business of workmen's compensation insurance in this state. …

" Reciprocal insurer " means any reciprocal insurer authorized to transact the business of workmen's compensation insurance in this state and such reciprocal insurer shall be deemed to be a mutual carrier within the intent of the several provisions of this article.

" Carrier " means a stock or mutual corporation or a reciprocal insurer or a nonprofit property/casualty insurance company, if such corporation or insurer is authorized to transact the business of workers' compensation insurance in this state, including but not limited to the issuance of an assumption of workers' compensation liability insurance policy, but not including any such corporation or insurer which is insolvent.

" Insolvent carrier " means a carrier as to which an order of rehabilitation or of liquidation, or, if such carrier be a foreign insurer, as to which an order for conservation of its assets within the state, shall have been made after the effective date of this article pursuant to article seventy-four of the insurance law, or a foreign carrier which withdraws from or discontinues operation in this state and fails to meet payments due on awards made, but not including a carrier, whether a domestic or foreign insurer, which shall have become rehabilitated and allowed to resume business after any such rehabilitation or conservation of assets and meets its obligations as they mature.

Therefore, most P&C policies issued by reciprocals are covered by the guaranty funds. 

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Insurance Carrier Wins Round 1 of 'Late Notice' Litigation

The law firm of Clausen Miller, PC reports on the first court decision to address the question of prejudice in a case of a late notice of a claim. It's been four years since the changes to New York Insurance Law Section 3420 took effect. The changes require an insurer that wishes to deny a liability insurance claim based on late notice given within two years of when it should have prejudiced the carrier's ability to properly adjust the claim. I'm a bit surprised that it took this long for a court test to occur, but the wheels of justice sometimes turn slowly. Also, the incident that started the dispute happened nearly three years ago:

This insurance coverage dispute arose out of an underlying breach of contract and negligence lawsuit pending in the New York Supreme Court. On February 25 and 26, 2010, a major snow storm occurred in New York City leaving approximately 20 inches of snow on the roof of a Kansas Fried Chicken, Inc. ("KFC") property. Two days after the snow storm, the roof of KFC's property collapsed.  Shortly before the February 26, 2010 storm, Value Waterproofing, Inc. ("Value Waterproofing") performed work on the property's roof system. 

Atlantic Casualty Insurance Company ("Atlantic Casualty") was Value Waterproofing's liability carrier.  Approximately six months after the roof collapsed, on September 8, 2010, Greenwich Insurance Company ("Greenwich"), KFC's property insurer, sent a letter to Atlantic Casualty notifying Atlantic Casualty of the collapse that had occurred at the property. The next day, Atlantic Casualty retained a claims investigation company to investigate the collapse at the property. On September 22, the investigation company visited the property and learned that the entire roof and second story had been removed in March, 2010 pursuant to a demolition order.  Atlantic Casualty was not able to conduct an investigation.

Atlantic Casualty went to court to get a declaration that it had no obligation to defend or indemnify its insured. It did so on the grounds that it never got a chance to investigate the collapse, and the evidence was long gone by the time it was notified. The court sided with the carrier:

Atlantic Casualty first received notice of the collapse at the property over six months after the collapse occurred.  Its insured, Value Waterproofing, knew of the collapse within a few hours of it.  However, neither Value Waterproofing nor the injured party, KFC, notified Atlantic Casualty; rather, KFC's insurer, Greenwich, mailed notice to Atlantic Casualty.  The court held that this delay of roughly six months was unreasonable. ...

The court concluded that the late notice materially impaired Atlantic Casualty's ability to investigate the claim and defend against it.  Since the insurer was prejudiced by its failure to receive timely notice of the claim and because Value Waterproofing's work was not covered by its insurance policy, the insurer's request for a declaratory judgment was granted.

The effort to get New York to restrict carriers' ability to deny claims based on late notice was not an easy one. Many IIABNY members complained to me over the years of how carriers would seize on any late notice to deny coverage. Eventually, the reforms happened. So, now that a carrier has won a court test, what do you think of the decision? Read the text of the decision. Do you agree with it? Was this fair? If you would have sided with the insured, why? Get the conversation going in the comments.

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NY Changes to the Personal Auto Policy (Part 3)

Photo by Clay Shonkwiler

In parts one and two of my analysis of the New York changes to the ISO Personal Auto Policy endorsement, I looked at changes to the Liability Coverage insuring agreement, supplementary payments, and exclusions. Part three is about changes to the Limit of Liability section. 

The endorsement completely replaces the Limit of Liability section in the unendorsed policy, but it has two different versions -- one if the limits are equal to or greater than $100,000 per person, $200,000 per accident; the other if they are less.

If the limits are $100/$200 or greater, the endorsement states that the limit shown in the declarations for Bodily Injury Liability for each person is the insurer's maximum limit of liability for all damages (including damages for care, loss of services or death) resulting from one auto accident for bodily injury to one person, whether or not the injury results in that person's death. Similarly, it states that the limit shown for each accident is the insurer's maximum limit for all damages resulting from one accident for bodily injury, whether or not resulting in death, subject to the "per person" limit.

The insurer will apply the limit of Bodily Injury Liability to first provide the separate limits required by New York State Law.

When the limits are less than $100/$200, the endorsement establishes separate limits for injuries that result in death and those that do not. An automatic per person limit of $50,000 applies in cases of death; a $100,000 limit applies to the deaths of two or more people, subject to the per-person limit. The stated policy limits apply in cases where the injuries do not result in death.

The provisions for the limit of liability that applies to Property Damage Liability is identical to that in the unendorsed policy. The limit shown in the Declarations is the insurer's maximum limit for all property damage resulting from any one auto accident, regardless of the number of insureds, claims made, vehicles or premiums shown in the Declarations, or vehicles involved in the accident. 

The provision stating that no one is entitled to receive duplicate payment for the same elements of loss under the Liabilty, Medical Payments and Uninsured Motorist Coverages is changed by taking out the reference to Uninsured Motorist Coverage, meaning that theoretically a claimant could receive duplicate payments under Liability and UM.

The Other Insurance condition is changed to refer to "other valid and collectible insurance," not "other applicable liability insurance." The Liability Coverage for a non-owned auto is excess over any other "valid and collectible insurance, including physical damage insurance provided under this or any other policy." This makes the Liability Coverage applicable to damage to non-owned autos the insured is using, but only on an excess basis. 

Special provisions apply to U.S. government employees using their vehicles in government business. It explicitly states that the U.S. government and its agencies are not insureds (meaning it has no additional insured coverage.) Neither is a person for injury or damage resulting from the operation of the vehicle by that person as a federal government employee. The loss of insured status applies only to the extent that the person has coverage and protection under federal law.

Next time: Medical Payments Coverage, Uninsured Motorists Coverage, Comp and Collision, and New York's mandatory photo inspection requirement. 

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NY Changes to the Personal Auto Policy (Part 2)

Photo by Alden Jewell

Part one of my analysis of ISO endorsement PP 01 79 04 09, Amendment of Policy Provisions -- New York, looked at how the endorsement changes the Liability Coverage Insuring Agreement in the Personal Auto Policy. Now let's look at Supplementary Payments and Exclusions.

The Supplementary Payments provisions in the unendorsed policy provides for benefits such as the cost of bail bonds, appeal bonds, and bonds to release attachments; interest that accrues after a judgment; wages lost because of attendance at hearings and trials; and other reasonable expenses. The endorsement adds to that list:

• Expenses the insured incurs administering first aid to others at the time of the accident, and
• Costs taxed against the insured in a suit the carrier defends.

If, for example, the accident happens in a supermarket parking lot and the insured rushes into the store to buy up bandages, braces, paper towels, or other first aid supplies. The carrier will reimburse the insured for the cost of those supplies.

The endorsement makes a number of changes to the exclusions section of the Liability Coverage:

• It reduces coverage by expanding the intentional injury exclusion. The original exclusion applies to an insured who intentional causes bodily injury or property damage. The endorsement adds to that those who direct another person to cause the injury or damage.
• It changes the care, custody or control exclusion so that it gives coverage back for private passenger autos, trailers, pickups and vans not rented to, owned by, or furnished or available for the regular use of the named insured or a family member. It also provides $2,000 coverage for damage to a trailer the insured rents if the insured has assumed responsibility for the damage under a written rental contract. In effect, these provisions provide physical damage coverage for some non-owned autos and trailers. 
• It deletes the nuclear energy exclusion. If the insured is liable for bodily injuries for which that person is also an insured under a nuclear energy liability policy, the PAP will cover the damages resulting from an auto accident. Offhand, I cannot come up with a plausible example of this.
• It adds a spousal liability exclusion. There is no coverage for one insured's legal liability for bodily injury to that insured's spouse.
• The unendorsed policy covers the named insured while she is maintaining or "occupying" (in, upon, or getting in, on, out or off) a vehicle owned by a family member or furnished or available for the family member's regular use. The endorsement changes that to give coverage for the named insured's "maintenance or use" of such a vehicle. Presumably, there are situations where someone could "use" a vehicle while not actually occupying it. If you can think of examples, I'd love to see them in the comments. 
• It deletes the racing exclusion.

That's it for the Liability exclusions. Next time we'll look at significant changes to the Limit of Liability section. In the mean time, I'm serious -- if your imagination is better than mine and you can think of claim examples where I couldn't, share them in the comments. Much obliged.

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New Series: NY Changes To the Personal Auto Policy (Part 1)

ISO forms are the standard for the insurance industry, yet the unendorsed ISO forms are almost never sold to actual insureds. That's because every state has one or more "amendatory" endorsements that make a particular ISO policy conform to that state's laws. New York is no different; ISO has endorsements for personal and commercial policies that reflect unique features of our laws. One such endorsement is number PP 01 79 04 09, Amendment of Policy Provisions -- New York. This endorsement is attached to every personal auto policy sold in this state. Since I have to refer to it several times a week to answer IIABNY members' questions, I thought it would be worth a few blog posts to explain what's in it. I'll stretch this over several posts so as to avoid lengthy posts.

Photo copyright by Moyan Brenn

The endorsement starts out with changes to the policy definitions, but I'll skip them until I need to use them in a relevant coverage change. Therefore, the first difference is in the Insuring Agreement for Liability Coverage. There are enough changes here to warrant quoting the complete texts. In the unendorsed PAP, the Insuring Agreement states: We will pay damages for "bodily injury" or "property damage" for which any "insured" becomes legally responsible because of an auto accident. Damages include prejudgment interest awarded against the "insured". We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted by payment of judgments or settlements. We have no duty to defend any suit or settle any claim for "bodily injury" or "property damage" not covered under this policy. The New York changes endorsement replaces this entire paragraph with the following: We will pay damages for "bodily injury", including damages for care and loss of services, or "property damage" for which any "insured" becomes legally responsible because of an auto accident. Damages include prejudgment interest awarded against the "insured". We will settle or defend, as we consider appropriate, any claim or suit asking for damages which are payable under the terms of the policy. This applies even if the claim or suit is groundless. In addition to our limit of liability, we will pay all defense costs we incur. A few things I want to point out here: The New York policy specifically includes damages for care and loss of services in the coverage grant for damages for bodily injury. For example, the New York policy will cover damages for long-term care in a rehabilitation facility and for loss of consortium (a/k/a, loss of the ability to have marital relations.) The New York endorsement removes the word "tangible" from the policy's definition of "property damage" ("physical injury to, destruction of or loss of use of tangible property.") Therefore, the New York policy will cover damages for damage to intangible property. Electronic data is an example of intangible property. If the insured were to be legally responsible for someone else's data loss resulting from a car accident (a computer's hard drive is destroyed in the accident,) the New York policy will respond. The promise to settle or defend a claim or suit asking for damages is limited under the endorsement to those "damages which are payable under the terms of the policy." This appears to be a minor difference from the unendorsed wording. The endorsement makes it clear that the insurer will defend or defend claims or suits even if they are groundless. I don't know whether insurers refusing to defend against groundless claims is a problem in other states, but the New York endorsement leaves no wiggle room. The endorsement deletes the provisos in the insuring agreement that the insurer's duty to defend ends when the limits are exhausted and that it has no duty to defend claims not covered by the policy. The intent here appears to be that the insurer will not try to shirk its defense duties for claims that will exhaust the limits or that may possibly involve a policy exclusion.  That's it for now. We'll look at supplementary payments and exclusions next time.

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Why Do Excess Line Policies Have To Be Stamped? (Part 3)

More on last week's post on why excess line policies have to be stamped (see also yesterday's post.) This letter came from Gene Nunziata at the Excess Line Association of New York. He and ELANY Executive Director Dan Maher have graciously given me permission to share the letter's contents on this blog.

We would like to weigh in on the “Question of the Week” and offer our two cents in response to the question from an IIABNY member who was asked by an insured, “What the stamp on an excess line policy is for?” There are actually two different “stamps” that are required to be put on an excess line policy. 

1) Excess Line Broker Stamp

The excess line broker is required [per Sections 27.17 and 27.18 of Reg. 41] to put the following stamped “disclosure language” on every excess line insurance policy, memorandum, certificate, confirmation of coverage or other document evidencing insurance coverage placed with an eligible excess line insurer and delivered to a New York insured: 

“THE INSURER(S) NAMED HEREIN IS (ARE) NOT LICENSED BY THE STATE OF NEW YORK, NOT SUBJECT TO ITS SUPERVISION, AND IN THE EVENT OF THE INSOLVENCY OF THE INSURER(S), NOT PROTECTED BY THE NEW YORK STATE SECURITY FUNDS.  THE POLICY MAY NOT BE SUBJECT TO ALL OF THE REGULATIONS OF THE DEPARTMENT OF FINANCIAL SERVICES PERTAINING TO POLICY FORMS.”  

This required disclosure language provides notification to the insured consumer that the excess line insurer providing them insurance coverage is not protected by the state security funds in case of insolvency and not subject to all of the supervision and regulatory requirements of the Department of Financial Services (DFS). This consumer protection disclosure language is in addition to the “Notice of Excess Line Placement” advisement memo that must be given to every NY insured that is placed in the excess line market. 

It should be noted that the stamped disclosure language and the “Notice of Excess Line Placement” memo also provides protection to the excess line broker and producing broker if at a later date the insured complains to the DFS that they were never advised that their insurance policy was being placed with an eligible excess line insurer. 

The above noted excess line broker disclosure language usually initiates most of the questions and concerns that insured consumers have with regards to coverage being placed with an eligible excess line insurer.   

2) ELANY Stamp 

The second “stamp” that is required [per Section 2118(b)(6)of the NYIL] to be placed on every excess line insurance policy is the stamped language that ELANY must place on the policy which reads as follows: 

“This is to certify that Excess Line Association of New York received and reviewed the attached insurance document in accordance with Article 21 of the New York State Insurance Law.” 

This stamp indicates that the affidavits and related insurance documents submitted to ELANY by the NY licensed excess line broker for review and filing were examined and it was determined that the excess line transaction was examined by ELANY for compliance with the applicable excess line laws and regulations of New York. 

Section 2118(b)(6) of the NY Insurance Law advises that it is unlawful for an excess line broker to deliver in this state any declarations page or cover note unless such insurance document is stamped by the excess line association. Additionally, Section 27.6 (b) of Regulation 41 states that, “an excess line broker shall not deliver, or provide to any producing broker for delivery, an excess line insurance policy declarations page or cover note unless the first page of the declarations page or cover note bears the stamp applied by the excess line association or a duplicate copy of the declarations page or cover note bearing the stamp is attached to the original.” 

The review and examination of required affidavits and related insurance documents by ELANY to verify licensee compliance with applicable NY excess line laws and regulations and subsequent placement of the ELANY stamp on these insurance documents is what generates the “stamping” fees that are paid to ELANY by the NY licensed excess line broker. 

The disclosure by the broker and the review by ELANY help protect NY citizens by 1) making them aware of the potential risks involving E&S coverage and 2) establishing a level of oversight to make sure the E&S market is used only in accordance with NY excess line laws and regulations.

Thanks to Gene for giving us more insight on the stamping process and what it means.

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Why Do Excess Line Policies Have To Be Stamped? (Part 2)

My blog post last week on why excess line policies have to be stamped has drawn comment from those who are actually in the excess line industry. Eric Keller of H. R. Keller & Co. sent me the following email (reprinted here with permission):

This is by no means an exhaustive list, but here are some reasons that excess line policies are stamped:

1.  As far as control, no surplus line insurer is licensed by the state, so the state relies on excess line brokers (licensed by the state) to comply with all sorts of regulations that still apply to non-admitted insurers and policies. The excess line brokers are the guys who get whipped by the state if something is done wrong - like unacceptable coverages or exclusions.

2. ELANY (the "stamping office") conducts financial analysis of the strength of non-admitted insurers. If a carrier is not on ELANY's "whitelist", an excess line broker is prohibited from using that insurer. Far fewer excess line insurers fail than admitted ones, according to NAPSLO, the non-admitted trade association.

3. ELANY keeps track of the taxes that are due New York State by accounting for premiums as it stamps declarations and endorsements. Yes, every piddling endorsement for additional insureds, etc. has to be sent to ELANY for stamping.

4. ELANY wears the white hat and turns in violators for disciplinary action to be taken by the New York State Department of Financial Services - Insurance. They recently blew in an internet marketer of wedding insurance who wasn't stamping policies it sold - cost the perp a $25,000 fine.

5. The ELANY stamping process also verifies that the retail broker is properly licensed as a property-casualty broker. Surprisingly, some licensed property-casualty agents try to place business as a broker - a DFS no-no.

This list just skims the surface of the benefits derived from having policies "stamped."

These are great points, and I really appreciate Eric's taking the time to write. I received another response earlier today from ELANY. That will be the subject of the next blog post.

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Ask Tim, Episode #34: What is an Independent Contractor in Construction?

It's not unusual for me to get a phone call from an IIABNY member who has a client that is hiring people on a "1099" basis; that is, the client thinks the person hired is an independent contractor and not an employee. "1099" refers to the form on which the business reports the person's compensation to the U.S. Internal Revenue Service. But does the mere use of a 1099 form make someone an independent contractor, rather than an employee?

This is the first of two episodes of the Ask Tim podcast in which I look at this question. This episode looks at the construction industy; the next one will discuss non-construction situations. Suffice to say, the answer is a bit more complicated than just an IRS form.

In this episode:

• The Trusted Choice® chopper exhibition at the New York State Fair
• The chopper's appearance on the TV show American Chopper
• My office improvement plans
• The New York Construction Industry Fair Play Act
• The Workers Compensation page in the IIABNY Research Library

Any thoughts, comments or questions about the episode? Feel free to leave them in the comments.

  Download Ask Tim Episode #34

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NY Court: SUM Coverage Is Reduced By Non-Auto Coverage

An interesting New York court decision came down the other day on Supplementary Uninsured/Underinsured Motorists Coverage. A drunk driver killed a married couple (and himself) in an auto accident. His auto liability policy carried bodily injury limits of $50,000 per person, $100,000 per accident. The couple had an auto policy with SUM limits of $250,000 per person, $500,000 per accident. The couple's estate collected the $100,000 from the drunk driver's insurance and another $255,000 from the insurance covering a bar and a diner that served drinks to the driver.

The trouble started when the estate made a SUM claim. The insurance carrier subtracted the $355,000 that the estate had recovered from all sources from the $500,000 SUM coverage available and offered the estate $145,000. The estate sought $400,000, in the belief that the only amount that the carrier should have subtracted from the SUM limits was the $100,000 from the driver's auto policy. The carrier refused, the estate sued, and a trial court sided with the estate. 

However, the appellate court ruled on Wednesday in favor of the insurance carrier. The court relied on a condition in the SUM endorsement that states, "This SUM coverage shall not duplicate any of the following: ... Any amounts recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds." 

This appears to be an entirely correct decision to me, and it's heartening to see the appellate court uphold the clear provisions of the auto insurance policy. Anyone have a different view?

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Why Do Excess Line Policies Have To Be Stamped?

Question from an IIABNY member: An insured asked what the stamp on an excess line policy is for, and  I replied as follows:

1. New York State Department of Financial Services rules require all policies issued by a nonadmitted insurance company be stamped indicating that, if the company becomes insolvent, they are not regulated by New York State.
2. The stamp is applied to policies to make the consumer aware of the insurance placement as required by New York State.

Do you have a better explanation as to why the stamp is applied to the policy?

Answer: Here’s the real reason for the stamping fee. New York Insurance Law Section 2118(b)(1) states, “Within forty-five days after a policy is procured, a licensee shall submit the declarations page or cover note of every policy procured under his or her license to the excess line association established pursuant to section two thousand one hundred thirty of this article for recording and stamping.” New York Insurance Law Section 2130 states:

(a) There is hereby created a non-profit association to be known as the excess line association of New York. All excess line licensees shall be deemed to be members of the association. The association must perform its functions under the plan of operation established and approved under subsection (c) of this section and must exercise its powers through a board of directors established under subsection (b) of this section. The association shall be supervised by the superintendent. The association shall be authorized and have the duty to:

(1) receive and record all excess line insurance documents which excess line brokers are required to file with the association under section two thousand one hundred eighteen of this article;

(2) notify the superintendent or his designee prior to stamping submitted insurance documents as provided in paragraph three of this subsection if the association believes that the unauthorized insurer does not meet the standards of eligibility imposed by section two thousand one hundred eighteen of this article, together with any rules and regulations promulgated pursuant to said section;

(3) stamp all excess line insurance documents which excess line brokers are required to file with the association under section two thousand one hundred eighteen of this article, provided that an unauthorized insurer meets the standards of eligibility imposed by section two thousand one hundred eighteen of this article, together with any rules and regulations promulgated pursuant to said section;

(4) prepare reports to be provided to the superintendent on the fifteenth day of every month, which reports shall include premium data from excess line licensee affidavits relating to excess line insurance filed by each licensee and stamped by the association during the preceding calendar month. Such reports shall also include corresponding licensee affidavits in such form as the superintendent may prescribe. The association shall provide each licensee with a copy of the report as it pertains to said licensee's business for the calendar month;

(5) prepare and deliver to each licensee and to the superintendent annually the reports of excess line business, which reports shall include a delineation of the classes and kinds of business procured during the preceding calendar year in such form as the superintendent may prescribe;

(6) deliver to each licensee standard forms for affidavits required under section two thousand one hundred eighteen of this article;

(7) employ and retain such persons as are necessary to carry out the duties of the association;

(8) borrow money as necessary to effect the purposes of the association;

(9) enter contracts as necessary to effect the purposes of the association;

(10) perform such other acts as will facilitate and encourage compliance by its members with the excess line law of this state and rules promulgated thereunder; and

(11) provide such other services to its members as are incidental or related to the purposes of the association…

(f) The services performed by the association shall be funded by a stamping fee assessed for each declarations page, cover note or other premium bearing document submitted to the association. The stamping fee shall be established by the board of directors of the association from time to time and shall be subject to approval by the superintendent. The stamping fee shall be paid by the excess line licensee. Provided, however, the licensee shall be allowed to receive and collect from the insured the stamping fee if the licensee obtains a written memorandum, signed by the insured, specifying the amount and the insured's agreement to pay the stamping fee.

Section 2118(b)(1) requires excess line brokers to submit documents to ELANY for stamping, Section 2130(a)(3) requires ELANY to stamp the documents, and Section 2130(f) requires a stamping fee to fund ELANY’s operations. It is currently equal to 0.2 percent of a policy’s New York Excess Line Premium, half of what it was nine years ago. The Department of Financial Services must approve the amount of the fee.

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