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A00172 Summary:

BILL NOA00172
 
SAME ASSAME AS S03404
 
SPONSORPaulin
 
COSPNSRLupardo, Simpson
 
MLTSPNSR
 
Amd §§9104 & 9105, Ins L
 
Relates to the distribution of the foreign and alien fire insurance premium tax; provides amount received shall be distributed to the fire companies in proportion to the number of active members within each company.
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A00172 Actions:

BILL NOA00172
 
01/04/2023referred to insurance
01/03/2024referred to insurance
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A00172 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A172
 
SPONSOR: Paulin
  TITLE OF BILL: An act to amend the insurance law, in relation to the distribution of the foreign and alien fire insurance premium tax   PURPOSE: To provide that fire insurance money for fire departments, companies, and volunteer benevolent associations be distributed in proportion to the number of active members within each company.   SUMMARY OF PROVISIONS: Sections one and two amend sections 9104 and 9105 of the insurance law to provide that beginning on the effective date of the chapter of the laws of 2020 which amended these sections, the monies received by fire companies shall be distributed to the companies in proportion to the number of active members within each company. The term 'active member' shall mean a member who participates in firefighting and is subject to call for whatever duties may be assigned to him or her under the rules and regulations of the fire department or company of which he or she is a member. Section three provides the effective date.   JUSTIFICATION: Sections 9104 and 9105 of the Insurance Law establish a tax on all out- of-state insurance companies selling policies to protect against loss or damage by fire of properties within New York. These funds are colloqui- ally referred to as "2% funds" because the percentage of the tax obli- gated under the Insurance Law are 2% of the premiums. The tax is paid by insurers to the New York State Insurance Department and dispensed to fire departments, fire companies, fire department benevolent associ- ations, and the Firemen's Association of the State of New York (FASNY). The overwhelming majority of entities receiving 2% monies spend them appropriately on approved uses and are in compliance with State law, their individual charters or enabling legislation, and guidelines put out by FASNY, DFS, and the State Comptroller. However, a number of prob- lems have surfaced over the last two decades which, although represent- ing a tiny fraction of entities receiving 2% monies, have received sufficient press attention to suggest areas where the program could be improved. There have been some high profile disputes in municipalities, where both an existing voluntary benevolent association and a professional fire department or fire company co-exist, as to which entity is entitled to which percentage of the money. Most notably, Eastchester had a Volunteer Benevolent Association which had for decades received the 2% monies when the town established a professional Fire Department as well. Because there was no clarity in the insurance law on how to distribute the money where multiple entities existed and had active members, the current formula for distribution was arrived at through the negotiated settle- ment of a lawsuit. Because of the adversarial way the formula was estab- lished, this has resulted in continued strained relations between the two entities. The Office of General Counsel for the Department of Financial Services has issued opinions and guidance on how fire districts that contain multiple fire companies ought to distribute 2% monies for those compa- nies. The standard set by both the General Counsel's most recent opinion and court cases over the previous decades have held that the money should be distributed pro rata on the basis of the number of active members in each company. They have come to the same decision often, as there is nothing in the relevant sections of the insurance law to deter- mine how the money is to be allocated between multiple overlapping companies, or between a paid and voluntary organization covering the same fire district. Codifying the "active member" standard would help resolve or perhaps even avoid future disputes.   LEGISLATIVE HISTORY: 2021-2022: A.1109, Referred to Insurance/ Same as S.500, Referred to Insurance. 2019-2020: A.352A, Referred to Insurance, Print Number 352A/ 5.2950, Referred to Insurance, Amend and Print Number 2950A 2018: A. 11027, Referred to Insurance   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: Immediately.
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A00172 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                           172
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                       (Prefiled)
 
                                     January 4, 2023
                                       ___________
 
        Introduced  by  M.  of  A.  PAULIN,  LUPARDO,  SIMPSON  -- read once and
          referred to the Committee on Insurance
 
        AN ACT to amend the insurance law, in relation to  the  distribution  of
          the foreign and alien fire insurance premium tax

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Paragraph 4 of subsection (a) of section 9104 of the insur-
     2  ance law, as amended by chapter 293 of the laws of 1988, is  amended  to
     3  read as follows:
     4    (4)  if  such payment is made to the treasurer or other fiscal officer
     5  of a fire department or fiscal officer of authorities  having  jurisdic-
     6  tion and control of such fire department, such treasurer or fiscal offi-
     7  cer  shall on or before the fifteenth day of March in each year distrib-
     8  ute the amount so received to the fire companies constituting  the  fire
     9  department  if such fire department is constituted of more than one fire
    10  company. Beginning on the effective date of the chapter of the  laws  of
    11  two  thousand  twenty-three  which amended this paragraph, the amount so
    12  received shall be distributed to the fire companies in proportion to the
    13  number of active members within each company. For the purposes  of  this
    14  paragraph, the term "active member" shall mean a member who participates
    15  in  firefighting  and  is  subject  to  call  for whatever duties may be
    16  assigned to him or her under the  rules  and  regulations  of  the  fire
    17  department or company of which he or she is a member.
    18    § 2. Subparagraph (E) of paragraph 2 of subsection (d) of section 9105
    19  of  the insurance law, as amended by chapter 293 of the laws of 1988, is
    20  amended to read as follows:
    21    (E) if such payment is received by the treasurer or other fiscal offi-
    22  cer of a fire department or fiscal officer of authorities having  juris-
    23  diction  and  control  of such fire department, such treasurer or fiscal
    24  officer shall on or before the  fifteenth  day  of  July  in  each  year
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02135-01-3

        A. 172                              2
 
     1  distribute the amount so received to the fire companies constituting the
     2  fire  department if such fire department is constituted of more than one
     3  fire company. Beginning on the effective date of the chapter of the laws
     4  of two thousand twenty-three which amended this subparagraph, the amount
     5  so  received shall be distributed to the fire companies in proportion to
     6  the number of active members within each company. For  the  purposes  of
     7  this  subparagraph,  the  term  "active  member" shall mean a member who
     8  participates in firefighting and is subject to call for whatever  duties
     9  may  be  assigned  to  him or her under the rules and regulations of the
    10  fire department or company of which he or she is a member.
    11    § 3. This act shall take effect immediately.
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