NU Online News Service Aug. 20, 3:35 p.m.EDT

A public hearing by the New York Department of Insurance onwhether to add coverages to the state's excess and surplus lines"export" list was deemed successful by an agent tradeassociation.

According to the department, the hearing was held pursuant toSection 2118(b)(4) of the state's Insurance Law, authorizing thesuperintendent to amend the number of declinations required to beobtained prior to making an excess line placement, with respect toparticular coverages.

T.J. Derella, a past president of the Professional InsuranceAgents of New York and national director of the PIANY, as well aschair of the excess lines association testified at the hearing.

"My take on the meeting is that it was very productive," he toldthe NU Online News Service. "It's a rare occurrence thatwe get producer organizations and carrier associations on the samepage. It was nice that we were all working together on somethinginstead of working against each other."

The only issue, he said, was "an item on the list for physicaldamage coverage for certain types of livery business in New Yorkthat there was some objection to. But the collective agreed towithdraw that from our proposal–so really there were no majordisagreements."

He said the department asked questions about market availabilityand updates on the non-admitted marketplace, which wereanswered.

If the department decides to go forward with this, Mr. Derellasaid, "it's very good for the broker community in that it makes itless onerous to place business in the excess lines marketplace, butwhile still protecting the consumers' rights–so it's awin-win."

He added that this wouldn't "eviscerate the regulation. Itrecognizes that there are natural classes of business that aregoing to be written in the non-admitted marketplace, that thedeclination process doesn't make any sense."

For example, he said, a bunji-jumping facility "would never beplaced in the admitted marketplace, so the idea of making thateasily exportable makes a lot of sense."

Not only does it make it easier to get coverage, he added, butit makes it "less onerous from a paperwork point of view. You don'thave to go through the full declination process."

He explained that New York requires three declinations from anadmitted market before authorizing an excess placement, but thatfor certain classes there are no admitted markets.

For example, he said, one class discussed was excess disabilityfor large limits. The reality, however, is that nobody is writingthose large limits, he noted, adding that "if nobody is writing it,why shouldn't it be on the export list?"

In a hearing in June 2008, retail and wholesale agents urgedexpansion of the list to eliminate what they said were unnecessaryregulatory burdens inherent in the system.

Regulators said at the time that the department would considerthe agents' arguments, but would also examine possible negativeconsequences of allowing agents to place business with carriers notlicensed in the state without first receiving declinations fromadmitted carriers.

Last year, the department formally proposed a regulation toexpand the list.

In the final approved version, nine coverages were added whereagents do not have to receive declinations from admitted carriers,and 10 additional coverages now require two declinations instead ofthree. (http://www.property-casualty.com/News/2009/9/Pages/NY-Dept-Finalizes-Rule-To-Expand-Export-List.aspx?k=surplus+lines%2c+phil+gusman%2c+N.Y.)

The coverages currently proposed to be added to the Export Listare:

o Auto Physical Damage: Coverage for commercial trucks, blackcars, limousines and other commercial passenger transportationvehicles. These are risks characterized by unfavorable underwritingattributes that are deemed unacceptable to licensed insurers.

o Excess Salary Protection (Disability) Insurance: High excessdisability coverage and/or disability coverage which licensedinsurers are unwilling to write in part due to moral hazards.

o Recreational Liability Insurance: Parachuting, bungee jumping,hunting clubs, fishing clubs, camp grounds, children's camps,gymnastics, spas, athletic teams, dance schools and other clubs,camps and recreational business operations. These are unique risksthat licensed insurers are unwilling or unprepared to write.

o Builders Risk Insurance: Coverage for construction projectswhere the total insured values exceed $10 million. These arehigh-capacity risks requiring high insurance limits that exceed thecapacity of licensed insurers.

o Primary and/or Excess "Liability" Insurance for Vacant orUnoccupied Buildings: Vacant properties are distressed riskscharacterized by unfavorable underwriting attributes that aredeemed unacceptable to licensed insurers. Beyond the vacantproperty hazard concerns, vacant property can become a liabilityhazard to the public and municipality (fire, police or utilityworkers).

o Excess Professional/Errors & Omissions Liability, AllClasses: Excess liability coverage where the underlying policylimits and/or self-insured retention is at least $10 million peroccurrence. These are high-capacity risks requiring large insurancelimits where the buyers tend to be sophisticated and the guarantyor security fund is of limited value.

There was also a request for a reduction in the number ofdeclinations to zero for the following coverage types, currently onthe export list requiring two declinations. The request includesprimary or excess errors and omissions/miscellaneous professionalliability coverage (other than medical malpractice Insurance),including general liability coverage (if included in the samepolicy) with respect to the following risks or coverages:

o Alcohol and/or drug rehabilitation programs.

o Residential facilities including convalescent centers, nursinghomes, and assisted care facilities.

o Day care centers for adults, children or the physically ormentally disabled.

o Halfway house for adults, children and/or the physically ormentally disabled.

o Hospices care service providers.

o Social services agencies.

o Foster care service providers.

o Home health care providers.