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 August 5, 2002, representing the position of the New York State Insurance Department.

Re: Premium Rates for Executors Bonds

Question Presented:

(1) Are premium rates for executors bonds set by statute or regulation?

(2) May a surety insurer seek an increased premium rate for an executor bond in a context where the Surrogate's Court has conditioned the issuance of Letters Testamentary upon receipt of an executor bond by an individual proposed executor whose background makes him a less desirable candidate for bonding?

Conclusion:

(1) No. However, executors bonds as surety bonds have premium rates that are subject to prior approval of the Department pursuant to N.Y. Ins. Law § 2305(f) (McKinney Supp. 2002). The rates must be justified by the criteria contained in N.Y. Ins. Law § 2303 (McKinney 2000).

(2) Yes. A rate filing for executors bonds may include appropriate risk factors or criteria in the surety insurer's rating plan as a basis for establishing the premium for an individual executor bond. Where the risk factors or criteria of the rating plan do not adequately reflect the risk for an individual proposed executor, the individual (proposed principal of the executor bond) may apply for an increased premium rate for an individual executor bond through a "consent-to-rate letter" pursuant to N.Y. Ins. Law § 2309 (McKinney 2000).

Facts:

No specific facts were provided.

Analysis:

An executor bond is a type of surety bond that may be underwritten by an insurer licensed to write surety insurance. The rate filing for executors bonds is encompassed within the rate filing of a surety insurer's surety bonds. The rate filing can be done by a specific surety insurer or by the Surety Association of America on behalf of a specific surety insurer.

Pursuant to N.Y. Ins. Law § 2305(f) (McKinney Supp. 2002), as of August 3, 2001, executors bonds premium rates are within the classes of property/casualty insurance rates subject to the Department's prior approval since such bonds are surety bonds. Prior to August 3, 2001, executors bonds premium rates were subject to file and use under N.Y. Ins. Law § 2305(a) (McKinney Supp. 2002). The rates "shall not be excessive, inadequate, unfairly discriminatory, destructive of competition or detrimental to the solvency of insurers." N.Y. Ins. Law § 2303 (McKinney 2000). A rate filing for executors bonds may include appropriate risk factors or criteria in the surety insurer's rating plan as a basis for establishing the premium for an individual executor bond.

Where the risk factors or criteria of the rating plan do not adequately reflect the risk for an individual proposed executor, the individual (proposed principal of the executor bond) may apply for an increased premium rate for an individual executor bond through a "consent-to-rate letter" pursuant to N.Y. Ins. Law § 2309 (McKinney 2000). That provision states:

Notwithstanding any other provisions of this article, upon the written application of the insured, stating the insured's reasons therefor, filed with and approved by the superintendent, a rate in excess of the rate provided by a filing otherwise applicable may be used on any specific risk.

In practice, the "consent-to-rate letter" is filed with the Department by the insurer after it is signed by the insured.

For further information you may contact Senior Attorney Robert Freedman at the New York City Office.