Proposed legislation introduced earlier this spring in the New York State Legislature could potentially lessen the hurdles faced by unauthorized insurers looking to offer excess lines coverage in New York. This development could also potentially broaden the scope of that market. Normally, such coverages are only available when no or inadequate coverage exists in the admitted marketplace. Unauthorized carriers, who are usually not subject to the same level of regulatory requirements, are defined by the state as this kind of marketplace.
The proposed changes encompass additional exceptions to diligent effort mandates for excess lines policies offered by unlicensed carriers in New York. Diligent Effort laws demand that brokers engage in a comprehensive search for coverage from admitted insurers before placing a policy with an unauthorized carrier. The aim of these laws is to safeguard the interests of consumers by ensuring they are only placed with unauthorized carriers when coverage is unavailable or not adequate from admitted insurers.
New York State Legislature’s intention to reevaluate the Diligent Effort mandates marks a notable moment for legal professionals, particularly those active in the insurance field. While the potential impacts on the broader insurance market remain to be seen, it does raise some essential questions for legal practitioners and regulated companies.
Undoubtedly, law firms and corporations with insurance liabilities or providing insurance services should closely monitor the progress of this proposed legislation. The potential loosening of regulations around unlicensed carriers in New York can have significant strategic and operational implications for many legal professionals and businesses operating in this space.
For more detailed information on the proposed adjustments to the Diligent Effort mandates, the original report can be found on the blog of Bressler, Amery & Ross, P.C. at jdsupra.com.