The Office of General Counsel issued the following opinion on July 14, 2006, representing the position of the New York State Insurance Department.
Re: Issuance of a special risk insurance license to an authorized insurer to write Class 1 and Class 2 New York Free Trade Zone business
Does the issuance of a special risk insurance license to an insurer authorize the insurer to write both Class 1 special risks and Class 2 special risks?
Issuance of a special risk insurance license to an insurer authorizes the insurer to write both Class 1 special risks and Class 2 special risks.
No facts were provided.
Under N.Y. Ins. Law Article 63 (McKinney 2000) the Superintendent may permit exemption from filing requirements only with respect to rates and policy forms relating to special risks. Special risk insurance is commonly referred to as the "New York Free Trade Zone". The Superintendent implemented Article 63 in promulgating N.Y. Comp. Codes R. & Regs. tit. 11, Part 16 (2002) (Regulation 86). "Special risk" is defined in § 16.1 of Regulation 86 and establishes two classes of special risks. A Class 1 special risk is one that has a premium of a size specified in § 16.1(f)(1) and a Class 2 special risk is one that is included on the list contained in § 16.12(e) or added by the Superintendent pursuant to § 16.8(f). An authorized insurer must be issued a special risk insurance license by the Superintendent in order for the insurer to utilize the filing exemption. The issuance of a special risk insurance license authorizes the insurer to write both Class 1 and Class 2 special risks; no separate licenses are issued.
The Article 63 exemption relates only to rate and form filing requirements and an authorized insurer must comply with all other requirements of the N.Y. Insurance Law, including, among other things, policy form standards and rate standards which are emphasized in §§ 16.4 and 16.5 of Regulation 86 respectively. Section 16.10 of Regulation 86 affirmatively provides: "All insurers licensed under section 6302 of the Insurance Law shall be subject to all other provisions of the Insurance Law and this Title that are not inconsistent with article 63 or this Part [Regulation 86]."
For further information you may contact Senior Attorney Robert Freedman at the New York City Office.