Excess Lines Association of New York (ELANY) fielding numerous questions on insurer eligibility requirements relating to Nonadmitted and Reinsurance Reform Act (NRRA); New York recently amended (11 NYCRR Part 27) a/k/a Regulation 41

The Excess Lines Association of New York (“ELANY”) issued Bulletin No. 2011-26 on October 25, 2011, which is reprinted below:

RE:  INSURER ELIGIBILITY REQUIREMENTS/BROKER RESPONSIBILITIES

ELANY is fielding numerous questions regarding insurer eligibility requirements in light of the enactment of the Nonadmitted and Reinsurance Reform Act (NRRA).

New York recently amended (11 NYCRR Part 27) a/k/a Regulation 41.  The excess line broker has the duty to obtain certain documents and certifications from an insurer (see the attached list) in order to meet the “due care” standard when selecting an excess line insurer.  The broker’s duty to obtain the documents and certifications is relieved if the insurer files all of the required documents and certifications with ELANY.

While some insurers or insurer representatives contend that these requirements were preempted by the NRRA, and therefore these requirements should no longer be imposed, ELANY respectfully disagrees. Regulation 41 continues to be valid law setting forth an excess line broker’s duties unless and until it is challenged and overturned by a court of competent jurisdiction.  Therefore, ELANY will continue to request that insurers who seek eligibility or those who wish to remain eligible continue to file all necessary documents and certifications with ELANY rather than burden each and every excess line broker.

Further, ELANY will continue to post a list of eligible insurers that file all necessary documents and certifications with ELANY and meet all financial solvency standards.  Excess line brokers are exposed to fines, discipline and other sanctions for noncompliance with Regulation 41.  ELANY will therefore advise excess line brokers of the additional duties and legal exposures which exist when any individual placement is made with an insurer which has failed to provide to ELANY, the documents and certifications which relieve an excess line broker of these duties and legal exposures.

Excess line brokers should not procure coverage from any insurer which is not published on ELANY’s list of eligible insurers unless you have first verified with ELANY that such insurer is in fact, eligible but is not published on ELANY’s list because the insurer has not provided all necessary documents and certifications.

All current ELANY bulletins and other current ELANY publications can be found on the ELANY Web site at http://www.elany.org .

To view this Bulletin at the ELANY Web site, click here.

Should you have any questions or comments, please contact Colodny Fass.