Assessment of Public Comments for 11 NYCRR 381 (Insurance Regulation 198)
A trade association of approximately 450 surety and fidelity bond insurers is the only party that submitted comments on the proposal within the 45-day comment period.
The association commented that a net worth requirement is not a sufficient substitute for a surety bond under proposed section 381.1 because a surety bond provides prequalification services and it provides financial protection in the event the life settlement provider defaults.
As previously stated in the Department’s regulatory impact statement, an outreach draft of the proposed rule was posted on the Department's website for a two-week public comment period and was discussed at a meeting with interested parties in April 2010. The outreach draft originally only provided two options to demonstrate financial accountability – purchase of a surety bond or placement of securities on deposit. The Department received comments indicating that these options would create a financial barrier for some providers wishing to enter and operate in the New York market. In response to such comments, the Superintendent added a third option that provides a less costly and less capital restrictive compliance alternative. The third option allows a life settlement provider to satisfy the financial accountability requirements by demonstrating that its assets exceed its liabilities by an amount no less than $250,000. The three financial accountability requirements provided in the rule are on a par with the requirements in many other states. The Department has determined that additional changes to the rule in light of the foregoing comment are not necessary.