NU Online News Service, March 29, 12:12 p.m. EDT
New York Gov. Andrew Cuomo and legislative leaders have agreed on a state budget that still includes merging the state's insurance and banking departments.
The new agency would be called the Dept. of Financial Services—formerly referred to as the Dept. of Financial Regulation in previous proposals—and would not include the Consumer Protection Agency, as had also been discussed in prior plans, according to Kristina Baldwin, assistant vice president for the Property Casualty Insurers Association of America (PCI).
A number of details in the $132.5 billion budget "are still being worked out," she says. Bills to advance the budget through the legislative process have not been introduced; therefore, specific language is not available. But it is hoped the budget will be adopted by the midnight March 31 deadline.
PCI has been working with the governor's office to clarify language regarding the proposed merger, says Baldwin.
PCI and others, including the New York Insurance Association (NYIA), had some concerns about broad powers given to the new agency. Under previous proposal drafts the Dept. of Financial Services could go after and seek damages and restitution from any company engaged in financial fraud—a term open to interpretation.
Concerns with the new agency's authority "have been [addressed] appropriately," Baldwin says.
"Provisions in the [merger] proposal are significantly improved," adds Ellen Melchionni, president of the NYIA. She says the definition of financial fraud has been narrowed and also includes a definition of "intentional fraud."
"We're pleased with the final product," says Melchionni, who adds that the budget no longer includes a provision that would have expanded a 2 percent premium tax to cooperative insurance companies writing in excess of $25 million in direct annual premiums.
Cooperatives have received a premium-tax exemption since the companies serve niches that are either not served or underserved.
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