New York Governor Andrew M. Cuomo has signed into law a bill that consolidates the New York Insurance and Banking Departments into a new Department of Financial Services - Chapter 62 (Part A) of the Laws of 2011. The Department of Financial Services is to be overseen by a Superintendent whose powers are set forth in a new Financial Services Law. Chapter 62 will take full effect on October 3, 2011.
While most of the New York Insurance Law and Banking Law remains in effect, the Financial Services Law provides the Superintendent with a new layer of enforcement and regulatory power over financial products and services. Among other things, focusing on the insurance industry, Chapter 62:
1. Merges the two departments to establish the Department of Financial Services, headed by the Superintendent, with an Insurance Division and a Banking Division as well as a Deputy Superintendent for each
2. Creates a Financial Frauds and Consumer Protection Unit that is empowered to investigate financial fraud committed by insurers and other financial services entities as well as insurance fraud by claimants;
3. Extends the Superintendent's enforcement and rulemaking powers to previously unregulated financial products, services and entities;
4. Imposes new penalties, including a penalty of up to $5,000 per offense for financial fraud and other specified violations and $1,000 for violations of the Financial Services Law, while increasing the existing Insurance Law penalties;
5. Requires the Governor to appoint a working group that will consult with representatives of the insurance and banking industries and will develop by year end recommendations for more efficient and effective insurance and banking regulation; and
6. Provides funding of the Department of Financial Services through assessments on regulated entities.
The portions of Chapter 62 enacting the Financial Services Law, combining the departments and establishing the Department of Financial Services will take effect on October 3, 2011. Until that date, both offices will still exist - Superintendent of Insurance and Superintendent of Banks. On or prior to October 3, the Governor is required to appoint a candidate for Superintendent of Financial Services, who will take office on October 3 if confirmed by the New York Senate prior to that date, or who will otherwise serve as acting Superintendent as of October 3 until Senate confirmation.
One important amendment to the Insurance Law that takes effect April 1, 2011 is an amendment to Insurance Law Section 109 that increases the penalty for general violations of the Insurance Law from $500 to $1,000 per offense.
Lexis.com subscribers can read the full text of Chapter 62 of Laws of New York, 2011 (Department of Financial Services).
For further analysis of insurance law in New York, please see New Appleman New York Insurance Law:
Access New Appleman New York Insurance Law on lexis.com.
Learn more about New Appleman New York Insurance Law at The Store.
For more information about LexisNexis products and solutions connect with us through our corporate site.