Statement that the Proposed Consolidated Action to Repeal 11 NYCRR Parts 175 and 177 (Insurance Regulations 111 and 142), Repeal Sections 178.8 and 178.10 of 11 NYCRR Part 178 (Insurance Regulation 163), and Amend 11 NYCRR Part 178 (Insurance Regulation 163) Is a Consensus Rulemaking and that No Person Is Likely to Object to Its Adoption
Part 175 (applicable to domestic life insurers) and Part 177 (applicable to property/casualty insurers) were promulgated to permit insurers to engage in hedging and the use of derivatives in limited circumstances. However, the enactment of Insurance Law section 1410 in 1998 (effective July 1, 1999) made Parts 175 and 177 obsolete by establishing statutory provisions allowing insurers to engage in hedging and derivative use transactions. Because Insurance Law section 1410 was made subject to sunset provisions that allowed the statute to expire if not extended by the Legislature, the Department did not at that time repeal Parts 175 and 177, but suspended those Parts until such time as Insurance Law section 1410 was allowed to expire. By Chapter 71 of the Laws of 2008, the Legislature permanently eliminated the sunset provisions of Insurance Law section 1410, making 11 NYCRR Parts 175 and 177 forever obsolete.
Part 178 of 11 NYCRR was promulgated in furtherance of Insurance Law section 1410, and is the only remaining regulatory provision governing derivative transactions by insurers. Chapter 398 of the Laws of 2012 revised Insurance Law section 1410(f) by, among other things, adding a definition for "qualified counterparty," thus superseding the definition of "qualified counterparty" provided by 11 NYCRR section 178.8.
Section 178.10 of 11 NYCRR provides that should Insurance Law section 1410 expire, Parts 175 and 177 would again become effective and the provisions of Part 178 would be suspended. Because the sunset provisions of Insurance Law section 1410 have been permanently eliminated, 11 NYCRR section 178.10 is also obsolete.
Therefore, this rulemaking repeals Parts 175 and 177 and sections 178.8 and 178.10 of 11 NYCRR, and amends 11 NYCRR Part 178 by renumbering section 178.9 to 178.8.
This rulemaking is determined by the agency to be a consensus rulemaking, as defined in State Administrative Procedure Act §102(11) ("SAPA"), and is proposed pursuant to subparagraph (i) of paragraph (b) of subdivision one of section two hundred two of SAPA. Accordingly, it is exempt from the requirement to file a Regulatory Impact Statement, Regulatory Flexibility Analysis for Small Businesses and Local Governments or a Rural Area Flexibility Analysis.