This updates our June 29, 2011 blog posting.

On November 21, 2011, New York Superintendent of Financial Services Benjamin M. Lawsky announced the issuance of regulations (the “Regulations”) for the implementation of the amendments to Article 63 of the New York Insurance Code that created a Class 3 for special risks (also referred to as the “Free Trade Zone”).  The new Class 3 exempts certain large commercial insurance policies from rate and form approval requirements if the insured qualifies as a “large commercial insured” under N.Y. Ins. Code § 6303(b)(1) and uses a special risk manager to obtain the policy.  While such policies are exempt from rate and form approval requirements, insurers must:

  • Satisfy the requirements of New York Insurance Law and regulations;
  • File electronically, within one business day of binding, a certificate evidencing the existence and terms of the policy;
  • File electronically, within 30 calendar days of inception, the identity of the insured and a statement that the insured meets the large commercial insured requirements, along with certain other information as provided for in the supplemental checklist and certification form issued by the New York Department of Financial Services (the “Department”); and
  • File electronically, within three business days after delivery but no later than 60 calendar days after inception, a copy of the policy for informational purposes if not previously filed with the Department.

The Regulations also require a disclosure notice on the front page of each issued or renewed Class 3 binder, policy, contract, rider or endorsement to the effect that the policy forms are exempt from New York rate and form requirements but meet the minimum standards of the New York Insurance laws and regulations.