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The Office of General Counsel issued the following opinion on January 7, 2003, representing the position of the New York State Insurance Department.

Re: Unaffiliated Not-for-Profit Cultural Institutions Seeking Group Property/Casualty Insurance

Question Presented:

May an authorized insurer issue a group policy of property/casualty insurance to various unaffiliated, nonprofit cultural institutions (e.g., dance companies, museums, theatres, etc.) in accordance with N.Y. Ins. Law § 3435 (McKinney 2000) and N.Y. Comp. Codes R. & Regs. tit. 11, § 153 (2001) (Regulation 135)?

Conclusion:

An authorized insurer may issue a group policy of property/casualty insurance to such institutions if the policy fulfills the standards, requirements and procedures of N.Y. Ins. Law § 3435 (McKinney 2000) and N.Y. Comp. Codes R. & Regs. tit. 11, § 153 (2001) (Regulation 135).

Facts:

An authorized insurer (the "Insurer") plans to issue a group policy of property/casualty insurance to various unaffiliated, nonprofit cultural institutions (e.g., dancing companies, museums, theatres, etc.) (the "Members"), which offer a range of cultural and educational activities to the public.

Analysis:

N.Y. Comp. Codes R. & Regs. tit. 11, § 153 (2001) (Regulation 135) implements N.Y. Ins. Law § 3435 (McKinney 2000) and establishes the standards, requirements and procedures for all property/casualty insurance policies issued on a group or quasi-group basis in New York. N.Y. Comp. Codes R. Regs. tit. 11, § 153.1(g) defines a "Group Policy," in relevant part, as "a policy underwritten and issued on a collective basis of: (i) property/casualty insurance insuring the interests of two or more persons or entities . . . ." Accordingly, the Policy would fall within this definition, and would not meet the exceptions of § 153.1(g)(2)(i)-(v).

The Insurer may issue a group policy to the Members if the standards, requirements and procedures of N.Y. Comp. Codes R. & Regs. tit. 11, § 153 (2001) are fulfilled. Regulation 135 requires, in relevant part, that: (i) all members of the group are nonprofit organizations (as defined in § 153.1(k)), N.Y. Comp. Codes R. & Regs. tit. 11, § 153.3(c)(4); (ii) all members of the group are homogenous in nature, § 153.3(c)(1); (iii) the group consists of no fewer than ten members (or at least five members if each member generates at least $5 million in annual revenues or annual premiums for such group total at least $500,000), engaged in similar activities giving rise to similar risks, based upon standards acceptable to the superintendent, § 153.3(c)(3); (iv) the group program is formed for purposes other than obtaining insurance, § 153.3(c)(2); and (v) the coverages are of the kinds permitted to be written on a group basis, § 153.3(c)(5).

Please note that the Insurance Department must approve all group policy forms pursuant to § 153.6 of Regulation 135.

For further information you may contact Senior Attorney Kristian Earl Lynch at the New York City Office.

 

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