Summary of Proposed Third Amendment to 11 NYCRR 80-1 (Insurance Regulation 52)

Insurance Regulation 52 (11 NYCRR 80-1) implements Article 15 of the Insurance Law, which governs the regulation of insurance holding company systems. The National Association of Insurance Commissioners (“NAIC”) recently made amendments to its model Insurance Holding Company System Regulatory Act (“Model Act”), many of which are likely to become NAIC accreditation standards. Some of New York’s holding company requirements do not match the Model Act, so updating Regulation 52 is necessary to ensure that New York maintains its accreditation status. The proposed amendments to Regulation 52 aim to modernize the Department’s processes, to the benefit of both insurers and Department staff.

The Department made technical amendments to section 80-1.1.

The Department amended section 80-1.2 to require insurers to file a registration statement electronically, except in those instances where the Superintendent grants an exemption, and to require a registration statement to include language that provides that the board of directors oversees corporate governance and manages internal controls.

The Department made technical amendments to section 80-1.3.

The Department amended sections 80-1.4 and 80-1.6 to state that upon written application of a significant person or a controlled person who is an individual, the superintendent may permit the significant person to submit a certified public accountant compilation rather than an opinion of an independent certified public accountant, if the superintendent finds, upon review of the application, that submitting an opinion of an independent certified public accountant would constitute a hardship upon the significant person or controlled person. The written application must explain how submitting an opinion of an independent certified public accountant would constitute a hardship upon the significant person or controlled person.

The Department also amended section 80-1.4 to require every controlled insurer to submit to the Superintendent a list that identifies each insurer in the holding company system that is not an authorized insurer in New York State (an “unauthorized insurer”) and that electronically filed its most recent annual statement with the NAIC, and for an unauthorized insurer that has not electronically filed its most recent annual statement with the NAIC, a copy of the most recent annual statement filed with the unauthorized insurer’s state of domicile.

The Department amended section 80-1.5 to raise the threshold for when a property/casualty insurer must submit a reinsurance agreement to the Superintendent for review and raised the threshold for when an insurer must notify the Superintendent of any lease of real or personal property that does not provide for the rendering of services on a regular and systematic basis. The amendment to section 80-1.5 also would require an insurer to submit to the Superintendent notice of any management agreements, service contracts, tax allocation agreements, guarantees, or cost-sharing arrangements.

The Department made technical amendments to section 80-1.7.

The Department repealed section 80-1.8 and added a new section that states that where a holding company seeks to divest its controlling interest in a domestic insurer in any manner and the domestic insurer is aware of the proposed divestiture, the domestic insurer must file with the Superintendent notice of the proposed divestiture upon the earlier of 30 days prior to the proposed cessation of control or within ten days of becoming aware of the proposed divestiture; provided, however, that the domestic insurer need not file notice if a person seeking to acquire direct or indirect control of the domestic insurer submits an application for approval of acquisition of control.

The Department added a new section 80-1.9 that sets forth the way in which an insurer or a person may apply to the Superintendent for an exemption from the electronic filing requirement.