New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on June 12, 2002, representing the position of the New York State Insurance Department.

RE: Safety Group Dividend Plans and Regulation 135.

Question Presented:

May members of an association be eligible to participate in a safety group dividend plan?

Conclusion:

Yes, members of an association may be eligible to participate in a safety group dividend plan, provided that they meet the requirements contained in N.Y. Comp. Codes. R. & Regs. tit. 11, §§ 153.0- 153.11 (2001) (Regulation 135).

Facts:

No specific facts were provided.

Analysis:

N.Y. Comp. Codes R. & Regs. tit. 11, § 153.1(q)(2001) (Regulation 135) defines the term "quasi-group" as follows:

(q) [A]ny method of marketing individually underwritten and issued property/casualty or liability insurance policies in a group context to participants engaged in similar activities or organized in a common network, through a mass merchandising, safety group or similar program, in connection with State law or a Federal purchasing group.

Section 153.1(r) defines the term "safety group" as follows:

(r) [A] method of marketing individually underwritten and issued property/casualty or liability insurance policies to participants engaged in similar activities giving rise to similar risks, placing special emphasis on common safety controls and risk management measures among such participants to reduce such risks. (emphasis supplied)

N.Y. Comp. Codes R. & Regs. tit. 11, § 153.7(2001) (Regulation 135) contains the requirements for group and quasi-group dividend plans. Specifically, section 153.7(a) provides, in relevant part, that:

(a) Dividends may be declared and paid by the insurer confined to group members or quasi-group participants, or for distribution of such dividends by the group or the group master policyholder to group members or by the sponsoring entity to quasi-group participants, pursuant to a dividend plan approved by the superintendent.

Section 153.7(c) further provides, in relevant part, that:

(c) [T]he following requirements shall apply in connection with any group or quasi-group dividend plan based upon implementation of safety-related or other risk management measures:

(1) group members or quasi-group participants shall have like exposures to the hazards insured against that can be materially affected by common safety-related or risk management measures beyond those normally required by the insurer for like risks not insured on a group or quasi-group basis;

(2) the insurer shall develop and monitor an accident prevention and loss reduction plan, with mandatory adherence to such plan by group members or quasi-group participants; and

(3) a safety committee is established to monitor progress and problems in implementing the accident prevention and loss reduction plan. (emphasis supplied)

Accordingly, provided that the members of an association meet the relevant requirements contained in N.Y. Comp. Codes R. & Regs. tit. 11, §§ 153.0-153.11(2001), they may be eligible to participate in a safety group dividend plan.

For further information, you may contact Attorney Pascale Joasil at the New York City office.