Conrad, Stern, Schiavoni, Brown K, O'Pharrow, Lunsford, Lavine, Tapia, Griffin, Clark
MLTSPNSR
Add §7438, Ins L
Authorizes the New York Liquidation Bureau to establish a program to evaluate and reimburse eligible local educational agencies for monetary liabilities arising from civil claims or settlement agreements related to certain acts that occurred during a period covered by a liability insurance policy issued by an insolvent insurer.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10065
SPONSOR: Kassay TITLE OF BILL:
An act to amend the insurance law, in relation to authorizing the New
York Liquidation Bureau to establish a reimbursement program for eligi-
ble local educational agencies
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to authorize the New York Liquidation Bureau
to establish a reimbursement program for local educational agencies
(LEAs) facing financial liabilities resulting from civil claims brought
under the Child Victims Act, in cases where the LEAs' liability insurers
have become insolvent. The bill aims to ensure that public schools
impacted by such claims are able to access relief through the estates of
these defunct insurers, or through alternative funding mechanisms, to
mitigate financial hardship and support victims' restitution.
SUMMARY OF PROVISIONS:
Section 1. States the Legislative Findings and intent.
Section 2. The Insurance law is amended by adding a new section 7438 to
authorize the Superintendent of Financial Services to create and admin-
ister a reimbursement program for school districts facing civil liabil-
ity under the Child Victims Act. Eligible districts must have held
insurance policies with insurers that are now insolvent and unable to
cover claims related to past abuse. The Superintendent may use funds
from the estates of insolvent insurers, or other funds under the Liqui-
dation Bureau's management where legally permissible, to provide
reimbursement. The section further authorizes the Superintendent to
promulgate rules and regulations necessary for the implementation and
oversight of the program.
Section 3. Establishes the enacting clause.
JUSTIFICATION:
This legislation supports the continued implementation of the Child
Victims Act (CVA) by providing a pathway for school districts to resolve
outstanding claims in situations where their former insurance carriers
have since entered liquidation. When the CVA lookback window was
enacted, it was designed to provide long-overdue justice for survivors
of childhood sexual abuse. However, some school districts are facing
significant challenges in meeting their obligations under the law due to
the insolvency of the insurers that covered them at the time the abuse
occurred. As a result, these districts are left without access to the
coverage they once held, even as survivors have received valid legal
judgments or entered into good faith settlements.-'
In these cases, the lack of available insurance has shifted the finan-
cial responsibility onto school districts that may not have the
resources to pay claims without making serious budgetary tradeoffs.
Districts have been forced to consider using reserve funds, bonding to
cover settlement costs, delaying capital projects, reducing programs, or
limiting staff hires. These choices can have a direct and lasting impact
on students, faculty, and the broader school community. While there is
technically a path to restitution, it is not readily accessible and
comes at the significant cost of weakening the core services school
districts provide today.
To address this issue, this legislation authorizes eligible school
districts to apply for funds held by the New York Liquidation Bureau in
scenarios where their insurer has been declared insolvent and that
insolvency has directly blocked the payment of a CVA judgment or settle-
ment. This measure does not create a new appropriation or entitlement.
Instead, it allows the Bureau, which already manages and distributes
assets from failed insurers, to evaluate and process applications from
impacted school districts under its existing structure and authority.
By establishing a clear process to access the appropriate liquidation
funds, this legislation helps close a gap in the CVA framework that has
left some survivors without a viable path to resolution. It also ensures
that school districts are not forced to choose between honoring legal
judgments and maintaining the educational services they provide to
current students. This approach offers a balanced and practical solution
that respects the rights of survivors while supporting the long-term
strength and stability of school communities.
PRIOR LEGISLATIVE HISTORY:
None.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date upon which it shall have become a law.
STATE OF NEW YORK
________________________________________________________________________
10065
IN ASSEMBLY
January 30, 2026
___________
Introduced by M. of A. KASSAY, CONRAD, STERN, SCHIAVONI, K. BROWN --
read once and referred to the Committee on Insurance
AN ACT to amend the insurance law, in relation to authorizing the New
York Liquidation Bureau to establish a reimbursement program for
eligible local educational agencies
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative findings and intent. The legislature acknowl-
2 edges that local educational agencies (LEAs), including public school
3 districts and special education providers, are facing unanticipated and
4 significant financial liabilities resulting from settled civil claims
5 brought under the Child Victims Act. These settlements often arise from
6 misconduct occurring during periods when LEAs were insured by liability
7 carriers that have since become insolvent.
8 In many cases, the current LEAs are now required to satisfy settle-
9 ments or judgments without the avail of expected insurance coverage.
10 Under the Child Victims Act, the lookback window for civil claims was
11 originally set for one year and later extended by an additional year due
12 to the COVID-19 pandemic. However, the state has not yet accounted for
13 or addressed this extended period in relation to claims involving insol-
14 vent insurers. The New York Liquidation Bureau, under the Department of
15 Financial Services, administers the estates of insolvent insurers but is
16 not currently authorized to reimburse LEAs for such liabilities or
17 pursue reciprocal claims due to expired statutory limitations.
18 The legislature hereby finds that this legal gap creates an inequita-
19 ble burden on public educational institutions and threatens the fiscal
20 functionality of school systems throughout the state. Furthermore, the
21 legislature recognizes that the inability of LEAs to reach or fund
22 settlements due to insolvency risks directly undermines the ability of
23 victims to obtain timely restitution and resolution of their claims.
24 Accordingly, this act authorizes the Bureau to establish a reimbursement
25 program for eligible LEAs and empowers the Bureau and the State of New
26 York to supplement insolvent estates where necessary. This authorization
27 shall not apply to educational entities located within the City of New
28 York, which operates under separate and distinct educational funding
29 structures.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD13226-03-6
A. 10065 2
1 § 2. The insurance law is amended by adding a new section 7438 to read
2 as follows:
3 § 7438. Reimbursement program for local educational agencies impacted
4 by insolvent insurers. (a) As used in this section, the following terms
5 shall have the following meanings:
6 (1) "Local educational agency" or "LEA" means any public school
7 district or approved board of cooperative educational services, exclud-
8 ing those located within a city having a population of one million or
9 more.
10 (2) "Bureau" means the New York Liquidation Bureau.
11 (3) "Insolvent insurer" means any insurer that has been adjudicated
12 insolvent pursuant to an order of liquidation by a court of competent
13 jurisdiction of this state under this article, and whose estate is or
14 has been administered by the Bureau.
15 (4) "Child Victims Act" means chapter eleven of the laws of two thou-
16 sand nineteen and any subsequent laws extending the statute of limita-
17 tions for civil claims based on child sexual abuse.
18 (b) Notwithstanding any other provision of law, the superintendent,
19 through the Bureau, is authorized to establish a program to evaluate and
20 reimburse eligible LEAs for monetary liabilities arising from civil
21 claims or settlement agreements related to acts that occurred during a
22 period covered by a liability insurance policy issued by an insolvent
23 insurer, provided that such claims are brought pursuant to the Child
24 Victims Act.
25 (c) A LEA shall be eligible for reimbursement under this section if
26 it:
27 (1) demonstrates that the insurer which issued the policy, or any
28 successor insurer that has assumed the issuing insurer's obligations,
29 has been adjudicated insolvent pursuant to an order of liquidation by a
30 court of competent jurisdiction of this state under this article;
31 (2) provides documentation that the incident giving rise to the claim
32 occurred during the period the policy was in effect;
33 (3) provides evidence of financial liability, whether by court order,
34 settlement agreement, or payment to a claimant; and
35 (4) certifies that no other insurance or indemnification source is
36 available to satisfy the claim.
37 (d) Reimbursements under this section shall be made from available
38 assets of the insolvent insurer's estate. The superintendent shall
39 promulgate a fixed amount to be paid to LEAs from these assets. Applica-
40 tions may be submitted prior to a final judgment and shall include all
41 supporting documentation required by the Bureau.
42 (e) In the event that assets from the insolvent estate are insuffi-
43 cient, the superintendent shall promulgate a secondary reimbursement
44 mechanism, which may include but not be limited to:
45 (1) recoveries from reinsurers of the insolvent insurer;
46 (2) subrogation or third-party recoveries;
47 (3) any interest the Bureau may generate from existing funds;
48 (4) residual balances from closed estates; and
49 (5) voluntary contributions from other insurers or industry sources,
50 to the extent permitted by law.
51 (f) In cases where reimbursements are limited, the Bureau shall prior-
52 itize LEAs demonstrating significant financial hardship, based on crite-
53 ria established by the Bureau in consultation with the education depart-
54 ment.
55 § 3. This act shall take effect on the one hundred twentieth day after
56 it shall have become a law.
