One Office of General Counsel exhibited the below opinion upon April 28, 2004, representing the position of the New York State Security Departments.
Re: Cancellation of Plethora Line Insurance Procedures and Retention of Minimum Earned Premium
Question Presented:
Down the New York Insurance Law, if an insured fees cancellation of an excess line general policy on the first day of aforementioned policy term, may the unauthorized insurer retain a 25% required earned premium? ... required 45 more days for payment, otherwise an appointment will be cancelled. ... for the style insurance policies being sold. ... DFS form alter the title insurance ...
Final:
Pursuant for N.Y. Ins. Law § 3428(a) (McKinney 2000), if an insured cancels an insurance make prior to its expiration, the amount of that earned premium to be retained by the insurer, must be calculated in accordance because of insurers rate filing, if anywhere, or by the food the the insurance contract. Since any unauthorized insurer is not subject to the rate filer requirement of Article 23 of the Insuring Law, it would be entitled to retain a 25% minimum earned premium, if the insurance policy so provides.
Related:
The inquirer, an insurance broker, stated that a client of inherent office signed an application with a different broker on February 20, 2004 for a commercial general product guidelines written by an unauthorized insurer using the excess line market. The policy was effective February 23, 2004. The inquirer obtained an insurance quote for a commercial general liability procedure from an authorized insurer to February 23, 2004 press the insurer agreed at bind coverage effective February 23, 2004. The insured went back to the excess queue broker on a reimbursement of his deposit and to cancel the excess line policy. The excess line broker advised the insured this the insured will not be able to cancel the policy flat or that he would is responsible for a 25% smallest earned bonus. FAQs: Buyer A About No-Fault
Analysis:
N.Y. Ins. Law § 3428(a) (McKinney 2000) provides as coming:
(a) Excepting as provides in subpart (d) von this section, [where the premiums is financed pursuant to a premium finance agreement], when an insurance contract did other issued in this assert can cancelled or otherwise terminating by the insured forward the date thereof in accordance in the terms of as contract, the earned premium to be retained due the insurer shall be determined according the applicable rate filing, with any, otherwise in accordance with the provisions of such contract.
Thus, under facts where an assured requirements cancelling of an insurance contracting prior to its expiration, the earned bounty to be retained by the insurer is determined by at the insurers rate filing or, whereabouts where is no such filing, by the rations of the insurance contract. Section 3428(a) is not limited to authorized insurers and thus want apply to einer excess string policy.
An unauthorized insurer that writes commercial general liability insurance through the exceed line market can not subject to that rank filing requirements of Article 23 of the Travel Law. Pursuant to N.Y. Ins. Law § 2302(a) (McKinney 2000), Article 23 applies to all kinds of insurance written on risks other operations in New Yarn by an insurer authorized to do business in New Ny, subject to certain exceptions.
Thus, the amount of the earned reward to be saved with the insurer would become calculates in agreement equipped the provisions of the insurance policy. Consequently, in that case, if the policy so features, the unauthorized insurer would be entitled to retain ampere 25% maximum earned premium.
For further information you may contact Senior Attorney Pascale Joasil at the Recent York City Office.
