NY Insurance Law
Article 41
Property/Casualty Insurance Companies
Section 4101. Definitions.
4102. Powers.
4103. Stock companies; financial requirements.
4104. Deposits.
4105. Domestic stock companies; declaration and payment of
dividends.
4106. Stock companies; participating policies.
4107. Domestic mutual companies; financial and other
requirements.
4108. Foreign and alien mutual companies; licensing.
4109. Mutual companies; special contingent surplus.
4110. Domestic mutual companies; expense limits.
4111. Mutual companies; assessments.
4112. Mutual companies; protection against assessments.
4113. Mutual companies; non-assessable policies.
4114. Mutual companies; dividends.
4115. Certain mutual companies existing prior to January first,
nineteen hundred forty.
4116. Domestic mutual companies; voting rights of members.
4117. Loss and loss expense reserves.
4118. Limitation of risks; fidelity and surety; fire; hospital
mutuals.
4119. Foreign and alien companies; license qualification.
4121. Security may be required from banking officers and
employees.
S 4101. Definitions. In this article: (a) "Basic kinds of insurance"
means the kinds of insurance described in the following paragraphs of
subsection (a) of section one thousand one hundred thirteen of this
chapter numbered therein as set forth in parentheses below:
fire (4);
burglary and theft (7);
glass (8);
boiler and machinery (9);
elevator (10);
animal (11);
personal injury liability (13);
property damage liability (14) - basic as to stock companies only;
workers` compensation and employers` liability (15);
fidelity and surety (16);
credit (17);
marine and inland marine (20);
marine protection and indemnity (21) - basic as to mutual companies
only.
(b) "Non-basic kinds of insurance" means the kinds of insurance
described in the following paragraphs of subsection (a) of section one
thousand one hundred thirteen of this chapter numbered therein as set
forth in parentheses below:
accident and health (item (i) of (3));
non-cancellable disability (item (ii) of (3));
miscellaneous property (5);
water damage (6);
collision (12);
property damage liability (14) - non-basic as to mutual companies
only;
motor vehicle and aircraft physical damage (19);
inland marine as specified in marine and inland marine (20);
marine protection and indemnity (21) - non-basic as to stock companies
only;
residual value (22);
credit unemployment (24);
gap (26);
prize indemnification (27);
service contract reimbursement (28);
legal services insurance (29).
* S 4102. Powers. (a) A property/casualty insurance company may be
organized and licensed to write any one or more basic kinds of
insurance.
(b) A property/casualty insurance company organized and licensed to
write any one or more basic kinds of insurance, may be licensed to write
non-basic kinds of insurance, subject to the following requirements
(references are to paragraphs of subsection (a) of section one thousand
one hundred thirteen of this chapter describing kinds of insurance):
(1) If licensed to write burglary and theft (7), glass (8), boiler and
machinery (9), elevator (10), animal (11), personal injury liability
(13), property damage liability (14), workers` compensation and
employers` liability (15), fidelity and surety (16) or credit (17), it
may be licensed to write accident and health (item (i) of (3)),
non-cancellable disability (item (ii) of (3)), water damage (6),
collision (12), residual value (22), credit unemployment (24), gap (26)
and prize indemnification (27) and service contract reimbursement
insurance (28);
(2) If licensed to write fire (4), it may be licensed to write
miscellaneous property (5), water damage (6), collision (12), motor
vehicle and aircraft physical damage (19) and inland marine as specified
in marine and inland marine (20);
(3) If licensed to write marine and inland marine (20), it may be
licensed to write collision (12), motor vehicle and aircraft physical
damage (19), and marine protection and indemnity (21);
(4) If licensed to write personal injury liability (13) and property
damage liability (14), it may be licensed to write motor vehicle and
aircraft physical damage (19) and legal services insurance (29); and
(5) In the case of a mutual company licensed to write burglary and
theft (7), glass (8), boiler and machinery (9), elevator (10), animal
(11), personal injury liability (13), workers` compensation and
employers` liability (15), fidelity and surety (16), or credit (17), it
may be licensed to write property damage liability (14).
(c) A property/casualty insurance company organized and licensed to
write any basic kind of insurance, may be licensed, except with respect
to the kinds of insurance defined respectively in the following
paragraphs of subsection (a) of section one thousand one hundred
thirteen of this chapter: life insurance (1), annuities (2) and title
insurance (18), to (i) reinsure risks of every kind or description and
(ii) insure property or risks of every kind or description located or
resident outside of the United States, its territories and possessions.
(d) A property/casualty insurance company complying with the
provisions of this section shall meet all other applicable requirements
of this article.
* SPECIAL NOTE.--Notwithstanding that Chapter 585 of the Laws of 1984:
Bill sections 2, 3, 5, 6, 7, and 9 of such chapter amend provisions of
the former Insurance Law that are not possible to juxtapose at this time
due to the highly technical nature of such changes and will need future
corrective legislation to implement such provisions into the new
Insurance Law as enacted by such Chapter 367 of the Laws of 1984.
* S 4103. Stock companies; financial requirements. (a) (1) A stock
property/casualty insurance company organized in the manner prescribed
in subsection (a) of section one thousand two hundred one of this
chapter may be licensed under subsection (e) of section one thousand one
hundred two of this chapter to write one or more kinds of insurance as
specified in TABLE ONE upon meeting the applicable paid-in capital and
an additional amount of paid-in surplus for each kind of insurance
licensed, in the aggregate at least equal to the requirements specified
in TABLE ONE and every such company shall thereafter maintain a minimum
capital at least equal to the amount specified in this section and a
surplus to policyholders at least equal to the aggregate paid-in capital
specified in TABLE ONE for the kind or kinds of insurance licensed.
TABLE ONE
{intentionally omitted}
Notes to TABLE ONE
{1} If licensed to write paragraph 4, no additional paid-in capital
and surplus is required.
{2} If licensed to write paragraph 4 or 20, no additional paid-in
capital and surplus is required.
{3} If licensed to write paragraph 4, no additional paid-in capital
and surplus is required for a license to write paragraphs 5, 6, 12, 19
and 20 (inland marine only).
{4} If licensed to write paragraph 20, no additional paid-in capital
and surplus is required for a license to write paragraphs 12, 19 and 21.
(2) A stock property/casualty insurance company licensed to write one
or more of the kinds of insurance as specified in TABLE ONE, Group A,
and having a minimum capital of one million dollars, may be licensed to
write any other kind of insurance specified in TABLE ONE, Group A, upon
at least having an initial surplus to policyholders equal to the
aggregate of the paid-in capital and paid-in surplus specified in TABLE
ONE for the kinds of insurance for which it is to be licensed, and shall
thereafter maintain a surplus to policyholders at least equal to the
aggregate paid-in capital prescribed in TABLE ONE for the kinds of
insurance licensed or one million dollars, whichever is greater.
(3) A stock property/casualty insurance company licensed to write any
kind of insurance specified in TABLE ONE, Group A, must have a minimum
capital of one million dollars and a surplus to policyholders as
specified in this paragraph before being licensed to write either kind
of insurance specified in Group B. If licensed to write the kind or
kinds of insurance specified in TABLE ONE, Group B, it may, in addition
write any one or more kinds of insurance specified in TABLE ONE, Group
A, provided it has a minimum capital of one million dollars and a
surplus to policyholders as specified in this paragraph before being
licensed to write any other kind or kinds of insurance specified in
TABLE ONE, Group A. Every such company shall have an initial surplus to
policyholders at least equal to the aggregate of the paid-in capital and
paid-in surplus specified in TABLE ONE for the kinds of insurance for
which it is to be licensed and shall thereafter maintain a surplus to
policyholders at least equal to the aggregate paid-in capital prescribed
in TABLE ONE for the kinds of insurance licensed or one million dollars
whichever is greater.
(4) A stock property/casualty insurance company licensed under
subsection (c) of section four thousand one hundred two of this article
to reinsure risks or write insurance on risks outside the United States,
its territories and possessions, must maintain a surplus to
policyholders of at least thirty-five million dollars.
(5) The dollar amounts set forth in paragraphs one (except the dollar
amounts set forth for paragraphs (22), (24) and (26)), two and three of
this subsection shall be reduced by fifty percent for a domestic stock
property/casualty insurance company initially licensed to do business in
this state prior to July first, nineteen hundred eighty-two.
(b) No foreign stock property/casualty insurance company shall be
granted a license to do business in this state unless it has a paid-in
capital and surplus at least equal, respectively, to the amounts
required by subsection (a) hereof for the organization of a domestic
company to write the same kind or kinds of insurance which such foreign
company is to be licensed to write in this state, and every such company
shall thereafter maintain a minimum capital and a surplus to
policyholders at least equal to the amount required of a domestic
company licensed for the same kind or kinds of insurance.
(c) No alien stock property/casualty insurance company shall be
granted a license to write any kind of insurance specified in TABLE ONE,
Group A, except as permitted by the provisions of notes {1} and {2} to
TABLE ONE, unless it has a trusteed surplus, as defined in section one
thousand three hundred twelve of this chapter, at least equal in amount
to one hundred fifty percent of the paid-in capital set forth in TABLE
ONE for such kind or kinds of insurance, nor to write any kind of
insurance specified in TABLE ONE, Group B, unless it has such a trusteed
surplus at least equal in amount to two hundred percent of the paid-in
capital set forth in TABLE ONE for such kind or kinds of insurance.
Every such insurer shall thereafter maintain a trusteed surplus at least
equal to the paid-in capital set forth in TABLE ONE for such kind or
kinds of insurance.
(d) The financial requirements specified in subsections (b) and (c)
hereof shall be reduced by fifty percent for a foreign or alien stock
property/casualty insurance company initially licensed to do business in
this state prior to July first, nineteen hundred eighty-two, but such
reduction shall not apply to such a foreign or alien insurer licensed
under subsection (c) of section four thousand one hundred two of this
article to reinsure risks or write insurance on risks outside the United
States, its territories and possessions. Such reduction shall also not
apply to the financial requirements specified in subsection (a) of this
section in order to write paragraph twenty-two, twenty-four or
twenty-six.
* SPECIAL NOTE.--Notwithstanding that Chapter 585 of the Laws of 1984:
Bill sections 2, 3, 5, 6, 7, and 9 of such chapter amend provisions of
the former Insurance Law that are not possible to juxtapose at this time
due to the highly technical nature of such changes and will need future
corrective legislation to implement such provisions into the new
Insurance Law as enacted by such Chapter 367 of the Laws of 1984.
* S 4104. Deposits. (a) Before being licensed to write one or more of
the kinds of insurance defined respectively in the following paragraphs
of subsection (a) of section one thousand one hundred thirteen of this
chapter: burglary and theft (7), glass (8), boiler and machinery (9),
elevator (10), animal (11), personal injury liability (13), property
damage liability (14), workers` compensation and employers` liability
(15), fidelity and surety (16), or credit (17), a domestic
property/casualty insurance company shall have made a deposit with the
superintendent of eligible securities in an amount of at least five
hundred thousand dollars or the amount required as paid-in capital or
minimum surplus for the kind or kinds of insurance which such company is
to be licensed to write, whichever is the lesser, but in no event shall
the amount of the deposit be less than four hundred thousand dollars for
any stock company writing any two kinds of insurance designated in this
subsection.
(b) Before being licensed pursuant to subsection (c) of section four
thousand one hundred two of this article to reinsure risks or to write
insurance on risks outside of the United States, its territories and
possessions, a domestic property/casualty insurance company shall have
made a deposit with the superintendent of eligible securities in an
amount of at least three million dollars. Such deposit shall be
inclusive of any deposit required by subsection (a) or (c) hereof.
(c) Before being authorized to issue non-assessable policies pursuant
to section four thousand one hundred thirteen of this article, a
domestic mutual property/casualty insurance company shall have made a
deposit with the superintendent of eligible securities in an amount of
at least five hundred thousand dollars. Such deposit shall be inclusive
of any deposit required by subsection (a) or (b) hereof.
(d) Before being granted any license or renewal license, every foreign
property/casualty insurance company shall have made a deposit with the
superintendent of eligible securities in an amount not less than the
amount required for a similar domestic property/casualty insurance
company. The superintendent shall accept in lieu of such deposit a
certificate of the proper state officer of the state under whose laws
such company is organized showing that such company has deposited with
the proper officer of such state, in trust for the benefit and
protection of, or for the security of, all of its policyholders, or of
all of its policyholders and creditors, securities valued at an amount
not less than the amount hereinbefore specified. Such certificate and
deposit shall be governed by the provisions of sections one thousand
three hundred eighteen and one thousand three hundred nineteen of this
chapter.
(e) The dollar amounts of the deposits specified in subsections (a)
and (c) hereof shall be reduced by fifty percent for any
property/casualty insurance company initially licensed to do business in
this state prior to July first, nineteen hundred eighty-two.
* SPECIAL NOTE.--Notwithstanding that Chapter 585 of the Laws of 1984:
Bill sections 2, 3, 5, 6, 7, and 9 of such chapter amend provisions of
the former Insurance Law that are not possible to juxtapose at this time
due to the highly technical nature of such changes and will need future
corrective legislation to implement such provisions into the new
Insurance Law as enacted by such Chapter 367 of the Laws of 1984.
S 4105. Domestic stock companies; declaration and payment of
dividends. (a) Except as provided in subsection (c) hereof no domestic
stock property/casualty insurance company shall declare or distribute
any dividend to shareholders except out of earned surplus. No such
company shall declare or distribute any dividend to shareholders which,
together with all dividends declared or distributed by it during the
next preceding twelve months, exceeds the lesser of ten percent of its
surplus to policyholders as shown by its last statement on file with the
superintendent, or one hundred percent of adjusted net investment income
during such period unless, upon prior application therefor, the
superintendent approves a greater dividend distribution based upon his
finding that the insurer will retain sufficient surplus to support its
obligations and writings.
In this section, (1) "earned surplus" means the portion of the surplus
that represents the net earnings, gains or profits, after deduction of
all losses, that have not been distributed to the shareholders as
dividends, or transferred to stated capital or capital surplus or
applied to other purposes permitted by law but does not include
unrealized appreciation of assets;
(2) "adjusted net investment income" means net investment income for
the twelve months immediately preceding the declaration or distribution
of the current dividend increased by the excess, if any, of net
investment income over dividends declared or distributed during the
period commencing thirty-six months prior to the declaration or
distribution of the current dividend and ending twelve months prior
thereto; and
(3) "surplus" means the amount of the insurer`s admitted assets in
excess of its capital and liabilities, and both "surplus" and "surplus
to policyholders" include any voluntary reserves, or any part thereof,
which are not required by law.
(b) If the superintendent finds, after notice and hearing, that any
such company has distributed any dividend in violation of this section,
he may order the company to cease doing any new business until the
amount of the dividend has been restored to the company. The directors
of any such company who vote in favor of the declaration and
distribution of any dividend in violation of this section shall, in
addition to all other liabilities or penalties prescribed by law, be
jointly and severally liable to the creditors, including policyholder
creditors, of the company to the extent of the dividend so declared and
distributed, and every shareholder receiving any such dividend shall be
liable to the creditors of the company to the extent of the dividend
received by such shareholder.
(c) Such company may declare and distribute a stock dividend to its
shareholders whenever it shall have a surplus, as defined in subsection
(a) hereof, in an amount at least equal to the sum of the dividend and
thirty percent of its unearned premium liability as shown by its last
statement on file with the superintendent and, for such purpose, the
company may increase its capital stock from such surplus in the manner
prescribed in section one thousand two hundred six of this chapter, and
it shall distribute the additional or increased stock to its
shareholders in proportion to the stock held by each, respectively.
S 4106. Stock companies; participating policies. A stock
property/casualty insurance company authorized to do business in this
state may include in its charter a provision authorizing the board of
directors to permit its policyholders from time to time to participate
in the profits of its operations through the payment of dividends to
policyholders. For the purpose of carrying into effect this provision,
the board of directors may from time to time make reasonable
classifications of policies. Every such classification of risks shall
be filed with the superintendent and shall not be effective as to
policies issued or delivered in this state unless approved by the
superintendent as fair and equitable and not unfairly discriminatory.
Any classification approved by the superintendent shall remain in effect
in this state until disapproved by him or until withdrawn or modified
with his approval by the company filing the same. No dividends to
policyholders shall be declared or paid by any such company except out
of its earned surplus as defined in subsection (a) of section four
thousand one hundred five of this article.
* S 4107. Domestic mutual companies; financial and other requirements.
(a) (1) A mutual property/casualty insurance company organized in the
manner prescribed in subsection (a) of section one thousand two hundred
one of this chapter may be licensed pursuant to subsection (e) of
section one thousand one hundred two of this chapter to write any one
kind (but only one kind except as hereinafter in this section provided)
of insurance as specified in TABLE TWO upon at least meeting the
requirements set forth therein. In this section, "initial surplus" means
the paid-in initial surplus required pursuant to subparagraph (A) of
paragraph nine of subsection (a) of section one thousand two hundred one
and subparagraph (B) of paragraph one of subsection (e) of section one
thousand one hundred two of this chapter, and "minimum surplus" means
the surplus required to be maintained unimpaired after a company is
licensed to do business.
* SPECIAL NOTE.--Notwithstanding that Chapter 585 of the Laws of 1984:
Bill sections 2, 3, 5, 6, 7, and 9 of such chapter amend provisions of
the former Insurance Law that are not possible to juxtapose at this time
due to the highly technical nature of such changes and will need future
corrective legislation to implement such provisions into the new
Insurance Law as enacted by such Chapter 367 of the Laws of 1984.
TABLE TWO
{intentionally omitted}
Notes to TABLE TWO
{1} If licensed to write paragraph 4, no additional surplus is
required for a license to write pargraphs 5, 6, 12, 19 and 20 (inland
marine only).
{2} The aggregate premiums in respect to the separate risks shall be
at least $100,000 and each applicant shall have paid one-half of the
premium payable with the balance due upon the issuance of the policy.
{3} Shall have received cash from each applicant at least equal to 1/2
of the annual premium on the policy.
{4} Not more than 5 risks from any one member.
{5} If licensed to write paragraph 13, no additional surplus is
required for a license to write paragraphs 6, 12 and 14.
{6} The aggregate annual premium cost of such insurance shall be at
least $50,000.
{7} Substitute "employers" for "members" and "employees" for "separate
risks".
{8} If licensed to write paragraph 20, no additional surplus is
required for a license to write paragraphs 12, 19, and 21.
{9} The aggregate amount of cash received for the premiums on the
policies applied for shall be at least $150,000.
{10} The 20 applications shall be from persons, firms, corporations,
associations or joint stock companies, each owning, operating or
chartering one or more vessels.
{11} Applicants shall take insurance covering in the aggregate at
least 200 vessels having an aggregate gross tonnage of at least 500,000
tons.
{12} Shall have received cash, from such applicants, on account of the
premiums on the respective policies applied for, a sum at least equal to
20 cents per ton upon such aggregate gross tonnage.
(2) A mutual property/casualty insurance company whose membership is
limited to hospitals may be organized in the manner prescribed in
subsection (a) of section one thousand two hundred one of this chapter
and may be licensed pursuant to subsection (e) of section one thousand
one hundred two of this chapter to write the kinds of insurance
specified in paragraph thirteen or fourteen of subsection (a) of section
one thousand one hundred thirteen of this chapter provided (i) it shall
have applications from at least forty members on at least forty separate
risks, (ii) the total annual premium cost shall be at least seven
hundred fifty thousand dollars, (iii) it shall have an initial surplus
of at least five hundred thousand dollars and shall maintain a surplus
of at least four hundred thousand dollars and (iv) it shall receive from
its members advances pursuant to the requirements of section one
thousand three hundred seven of this chapter averaging not less than
one-third of the average annual indicated premium, but the total thereof
shall not be less than the initial minimum surplus.
(b) If licensed to write any kind of insurance specified in TABLE TWO,
a mutual property/casualty insurance company may in addition write any
one or more of the kinds of insurance specified in Group A and/or Group
B of TABLE THREE, and if licensed to write any kind of insurance
specified in Group A, it may in addition write any one or more of the
kinds of insurance specified in Group C of TABLE THREE, in either case,
upon at least meeting the initial surplus requirement prescribed in
TABLE THREE for the kinds of insurance for which it is to be licensed.
It shall thereafter maintain the minimum surplus prescribed in TABLE
THREE for the kinds of insurance licensed.
TABLE THREE
{intentionally omitted}
Notes to TABLE THREE
{1} The amounts shown in TABLE THREE are added to the initial and
minimum surplus for the kind of insurance for which the mutual was
organized as set forth in TABLE TWO. In addition, if organized to write
paragraphs 4, 20 or 21 the initial and minimum surplus required for
paragraphs 7, 8, 9, 10, 11, 13, 15, 16 or 17 shall be determined from
TABLE TWO for the kind of insurance with the highest initial surplus
requirement as indicated in TABLE TWO. After such determination use
TABLE THREE to derive the initial and minimum surplus requirements for
all other kinds of insurance.
{2} If licensed to write paragraph 13, no additional surplus is
required for a license to write paragraphs 6, 12, and 14.
{3} If licensed to write paragraph 4, no additional surplus is
required for a license to write paragraphs 5, 6, 12, 19 and 20 (inland
marine only).
{4} If licensed to write paragraph 20, no additional surplus is
required for a license to write paragraphs 12, 19, and 21.
{5} If licensed to write paragraph 4 or 13, no additional initial and
minimum surplus is required.
{6} If licensed to write paragraphs 4, 13 or 20, no additional initial
and minimum surplus is required.
(c) A mutual property/casualty insurance company licensed pursuant to
paragraph four of subsection (b) of section four thousand one hundred
two of this article to write the kind of insurance specified in
paragraph nineteen of subsection (a) of section one thousand one hundred
thirteen of this chapter must maintain a minimum surplus of at least six
hundred thousand dollars.
(d) A mutual property/casualty insurance company licensed pursuant to
subsection (c) of section four thousand one hundred two of this article
to reinsure risks or write insurance on risks outside the United States,
its territories and possessions, must maintain a surplus to
policyholders of at least thirty-five million dollars.
(e) The dollar amounts of initial surplus, minimum surplus and surplus
to policyholders set forth in subsections (a), (b) and (c) of this
section shall be reduced by fifty percent for any mutual
property/casualty insurance company initially licensed to do business in
this state prior to July first, nineteen hundred eighty-two. Such
reduction shall not apply to the financial requirements specified in
subsection (b) of this section in order to write paragraph twenty-two,
twenty-four or twenty-six.
(f) Notwithstanding any provision of this section to the contrary, if
licensed to write the kind of insurance specified in paragraph fifteen
of subsection (a) of section one thousand one hundred thirteen of this
chapter, a mutual property/casualty insurance company may be licensed
for the purposes of article nine of the workers` compensation law to
write the kind of insurance specified in item (i) of paragraph three of
subsection (a) of section one thousand one hundred thirteen of this
chapter without having any additional surplus.
S 4108. Foreign and alien mutual companies; licensing. (a) No foreign
or alien mutual property/casualty insurance company shall be granted a
license to do business in this state unless it substantially complies
with all of the requirements set forth in this chapter for a domestic
mutual property/casualty insurance company licensed to write the same
kind or kinds of insurance.
(b) No alien mutual property/casualty insurance company shall be
authorized to do business in this state unless it maintains a trusteed
surplus, as required by section one thousand three hundred twelve of
this chapter, at least equal to the surplus to policyholders required to
be maintained by a domestic stock property/casualty insurance company
licensed to write the same kind or kinds of insurance.
(c) The financial requirements specified in subsections (a) and (b)
hereof shall be reduced by fifty percent for a foreign or alien mutual
property/casualty insurance company initially licensed to do business in
this state prior to July first, nineteen hundred eighty-two, but such
reduction shall not apply to such a foreign or alien insurer licensed
under subsection (c) of section four thousand one hundred two of this
article to reinsure risks or write insurance on risks outside the United
States, its territories and possessions. Such reduction shall also not
apply to the amounts required in order to write paragraph twenty-two,
twenty-four or twenty-six of subsection (a) of section one thousand one
hundred thirteen of this chapter.
Article 68 Continued . . .
S 4109. Mutual companies; special contingent surplus. (a) A domestic
mutual property/casualty insurance company licensed to write any of the
kinds of insurance defined respectively in the following paragraphs of
subsection (a) of section one thousand one hundred thirteen of this
chapter: accident and health (item (i) of (3)), non-cancellable
disability (item (ii) of (3)), burglary and theft (7), glass (8), boiler
and machinery (9), elevator (10), animal (11), personal injury liability
(13), property damage liability (14), workers` compensation and
employers` liability (15), fidelity and surety (16) or credit (17),
shall establish on its general ledger a special contingent surplus and
shall thereafter maintain the same unimpaired so long as it is licensed
to write one or more of the foregoing kinds of insurance. An impairment
exists in the surplus of any such company at any time when the aggregate
value of its admitted assets is less than the amount of all of its
liabilities and the special contingent surplus which it is required to
maintain at such time.
(b) During each full calendar year except the first two full calendar
years next following the calendar year in which such company was
licensed to write any kind of insurance specified in subsection (a)
hereof, the amount of such contingent surplus shall exceed the required
amount thereof at last year-end, by an amount at least equal to one and
one-half percent of the net premium income received for the kinds of
insurance referred to in subsection (a) hereof during such whole
calendar year, until the amount of such contingent surplus shall be at
least equal to the amount of surplus to policyholders required under
section four thousand one hundred three of this article to be maintained
by a similar domestic stock property/casualty insurance company licensed
to do any one or more of the kinds of insurance specified in subsection
(a) hereof. Such special contingent surplus, by whatever name called,
shall be inclusive of the minimum surplus required by the provisions of
this chapter and shall be exclusive of any divisible surplus available
for the payment of dividends.
(c) No domestic mutual property/casualty insurance company shall
declare or pay any dividend to policyholders if, after the payment of
such dividend, its special contingent surplus as herein required will be
impaired. The declaration and payment of dividends by any such company
shall be subject to the provisions of section one thousand two hundred
eleven of this chapter.
(d) Any domestic mutual property/casualty insurance company shall be
authorized in any year to further increase its special contingent
surplus by an amount in excess of the annual accumulation required by
this section, and any such excess shall be credited upon the amount
which otherwise it would have been required to accumulate by the
provisions of this section in any subsequent year or years.
(e) The superintendent may refuse to issue a license or renewal
license to do an insurance business in this state to any foreign or
alien mutual property/casualty insurance company which does not comply
in substance with this section applicable to a similar domestic mutual
property/casualty insurance company licensed to write the same kind or
kinds of insurance.
S 4110. Domestic mutual companies; expense limits. (a) No domestic
mutual property/casualty insurance company licensed to write a kind of
insurance specified in paragraph seven, eight, nine, ten, eleven,
thirteen, fourteen, fifteen, sixteen or seventeen of subsection (a) of
section one thousand one hundred thirteen of this chapter shall expend
in any one calendar year for management expenses a greater amount than
thirty percent of its net premium income for such year. Management
expenses shall be held to include all expenses of the company except
expenses incurred in the investigation, adjustment and settlement of
claims, taxes, fees and expenses of examination, and taxes, repairs and
expenses on real estate. In applying the provisions of this section the
net premium income of, and expenses of, boiler and machinery insurance
or elevator insurance shall not be included.
(b) Subsection (a) hereof shall not apply to a mutual company
organized before the effective date of this chapter as a domestic mutual
fire or marine or marine protection and indemnity company.
S 4111. Mutual companies; assessments. (a) Except as provided in
section four thousand one hundred thirteen of this article, every
domestic mutual property/casualty insurance company shall in its by-laws
and policies prescribe the contingent mutual liability of its members
for the payment of assessments, in such a way that each member shall be
liable to pay the member`s proportionate share, subject to the
limitations hereinafter specified, of the amount of any assessment or
assessments permitted for any purpose under any provisions of this
chapter or necessary to make good an impairment of the minimum surplus
of such company. The contingent liability of a member may be limited to
an amount not less than one additional annual premium on each policy
held by a member. The aggregate amount of all assessments whether levied
by the board of directors of such insurer or by the superintendent as
liquidator or rehabilitator of the insurer, or otherwise, shall be no
greater amount than that specified in the by-laws and policies. Except
as provided in section four thousand one hundred thirteen of this
article, no such insurance company shall make, issue or deliver any
policy of insurance, which does not prescribe the contingent liability
of the policyholder in clear and explicit language printed in type not
smaller than eight point.
(b) If any domestic mutual property/casualty insurance company does
not have admitted assets at least equal in amount to the aggregate of
its liabilities and its minimum surplus as required by the provisions of
this chapter, and if such impairment is not otherwise made good, the
board of directors of the company may, with the approval of the
superintendent and within such time as he prescribes, order an
assessment in the manner specified in the by-laws for an amount which
will provide sufficient funds to make good the impairment, except that
no member shall be liable for an assessment exceeding the limit
specified in his policy in accordance with subsection (a) hereof. All
orders of assessment made by the board of directors shall be filed with
the superintendent and shall not take effect unless and until approved
by him. The superintendent may refuse any such approval if, in his
judgment, refusal will best promote the interests of the policyholders
and creditors of the company, and of the insuring public. Every
assessment shall be made upon all members liable to assessment therefor
in the proportion hereinafter specified. Every person, firm or
corporation who or which was a member of such company at any time during
one year prior to the making of an order of assessment by the board of
directors shall be liable to pay and shall pay the member`s
proportionate share of any assessment which may be made in accordance
with law, if the member is notified of the assessment within one year
after making of an order of assessment. A member`s proportionate part of
any assessment shall be determined by applying to the premium earned on
the member`s policy or policies in force during a period of one year
next preceding the order of assessment the ratio of the total assessment
to the total premiums earned during such period on all policies subject
to assessment.
(c) Unless specifically authorized by the provisions of this chapter
to issue non-assessable policies in this state, no foreign mutual
property/casualty insurance company shall be or continue to be
authorized to do business in this state unless its by-laws and policies
issued in this state contain provisions for the levying and collection
of assessments upon members, at least for the payment of losses and
expenses, which conform in substance to subsection (b) hereof.
(d) In the case of a mutual property/casualty insurance company
subject to paragraph two of subsection (a) of section four thousand one
hundred seven of this article, an assessment authorized by this section
shall be made when, in addition to the grounds set forth in this
section, if the ratio of net premium writings to surplus as regards
policyholders is four to one or greater, based upon the last annual
statement or any quarterly statement projected on an annual basis,
subject to the approval of the superintendent, and if, at any time, upon
examination, the superintendent determines that an assessment should be
made pursuant to subsection (b) hereof or this subsection the
superintendent shall make an appropriate order that the assessment be
made.
S 4112. Mutual companies; protection against assessments. No domestic
mutual property/casualty insurance company and no officer or
representative thereof shall make any contract whether on behalf of such
company or of all or any of its policyholders, whereby the company or
the policyholders are insured or indemnified against the imposition or
payment of assessments which may be made upon members of the company, if
the contract is cancellable or otherwise terminable by any party thereto
upon the giving of notice of cancellation or termination within a period
of less than one year before the effective date of the cancellation or
termination.
* S 4113. Mutual companies; non-assessable policies. (a) Every mutual
property/casualty insurance company licensed to do business in this
state, if its charter or by-laws permit or are amended to permit the
issuance of policies without contingent mutual liability of the
policyholder for assessment, may with the permission of the
superintendent issue non-assessable policies in this state upon
compliance with the following requirements:
(1) It shall maintain a surplus, as determined from its latest filed
statement, which together with its unearned premium reserve from its
latest filed statement is at least equal to the surplus to policyholders
required to be maintained by a domestic stock property/casualty
insurance company licensed to write the same kind or kinds of insurance.
(2) It shall have submitted a copy of its proposed non-assessable
policy or policies for approval of the superintendent, and shall have
obtained his approval.
(b) Every policy issued by any such company shall clearly state
whether or not the holder of the policy is subject to a liability for
assessment.
(c) Any surplus required for the purposes specified in this section
shall be inclusive of any surplus required by any other sections of this
chapter.
(d) A mutual property/casualty insurance company subject to paragraph
two of subsection (a) of section four thousand one hundred seven of this
article and subject to subsection (d) of section four thousand one
hundred eleven of this article may with the prior approval of the
superintendent amend its charter and by-laws to permit the issuance of
policies without contingent mutual liability of the policyholder and may
with the permission of the superintendent issue non-assessable policies
in this state upon compliance with the requirements of this section.
(e) The financial requirement specified in paragraph one of subsection
(a) hereof shall be reduced by fifty percent for a mutual
property/casualty insurance company initially licensed to do business in
this state prior to July first, nineteen hundred eighty-two.
* SPECIAL NOTE.--Notwithstanding that Chapter 585 of the Laws of 1984:
Bill sections 2, 3, 5, 6, 7, and 9 of such chapter amend provisions of
the former Insurance Law that are not possible to juxtapose at this time
due to the highly technical nature of such changes and will need future
corrective legislation to implement such provisions into the new
Insurance Law as enacted by such Chapter 367 of the Laws of 1984.
S 4114. Mutual companies; dividends. The board of directors of a
mutual property/casualty insurance company may from time to time fix and
determine an amount to be declared and paid as a dividend or as a return
of unused or unabsorbed premiums or premium deposits on policies,
retaining such sums as they may deem necessary to meet outstanding
policy obligations and for the maintenance of reserves and surplus as
herein provided. The determination, declaration and payment of such
dividend shall be subject to section one thousand two hundred eleven of
this chapter. In declaring any dividend to policyholders, the board of
directors may make reasonable classifications of policies. Every such
classification shall be filed with the superintendent and shall not
become effective unless approved by the superintendent as fair,
equitable, not impracticable in operation and not unfairly
discriminatory. Any such classification approved by the superintendent
shall remain in effect until disapproved by the superintendent or until
withdrawn with the superintendent`s approval by the company filing the
same. The requirements as to filing and approval, as applied to any
foreign or alien mutual property/casualty insurance company, shall apply
only to risks located or resident in this state.
S 4115. Certain mutual companies existing prior to January first,
nineteen hundred forty. (a) Notwithstanding the provisions of sections
four thousand one hundred eleven, four thousand one hundred thirteen and
four thousand one hundred fourteen of this article, any domestic mutual
property/casualty insurance company heretofore organized as a domestic
mutual marine and fire insurance company under special act of this state
and reincorporated pursuant to former section fifty-two of the insurance
law in effect immediately before January first, nineteen hundred forty
and doing business immediately prior to such date, may continue to issue
non-assessable policies in accordance with its charter powers, without
making any deposit, if and so long as it maintains a surplus of not less
than one million dollars.
(b) Notwithstanding the provisions of sections one thousand two
hundred nine and one thousand two hundred eleven of this chapter and
section four thousand one hundred fourteen of this article, any such
domestic mutual insurance company of the kind specified in subsection
(a) hereof, may continue to issue both participating and
non-participating policies or contracts of insurance, in accordance with
its charter, and may continue to exercise its existing charter powers as
to the qualification of its members and trustees and as to the election
and powers of its board of trustees.
S 4116. Domestic mutual companies; voting rights of members. The
charter or by-laws of any domestic mutual property/casualty insurance
company may, with the approval of the superintendent pursuant to section
one thousand two hundred nine of this chapter, provide for the
distribution of voting power, at all meetings of the corporation, among
the members on the basis of the amount of insurance held, the number of
policies held, or the amount of premiums paid, by the member or on any
other basis which the superintendent finds to be fair and equitable; but
in any event every member whose insurance is in force at the time of the
election shall be entitled to at least one vote, and no member shall be
entitled to more than ten votes.
S 4117. Loss and loss expense reserves. (a) In determining the
financial condition of any property/casualty insurance company for the
purpose of applying the provisions of this chapter, and in any financial
statement or report of any such company, there shall be included in the
liabilities of such company loss reserves and loss expense reserves at
least equal to the amounts required under the provisions of this
section, and the amount of such reserves shall be diminished by
allowance or credit for reinsurance recoverable from assuming insurers
in accordance with paragraph fourteen of subsection (a) of section one
thousand three hundred one of this chapter. The date as of which such
determination, statement or report is made is hereinafter referred to as
the date of determination.
(b) For all outstanding losses and loss expenses, the reserves shall
include the following:
(1) the aggregate estimated amounts due or to become due on account of
all known losses and claims and loss expenses incurred but not paid,
including the estimated liability on any notice received by the company
of the occurrence of any event which may result in a loss;
(2) the aggregate amounts of liability for all losses and loss
expenses incurred but on which no notice has been received, estimated in
accordance with the company`s prior experience, if any, otherwise in
accordance with the experience of similar companies under similar
contracts of insurance. The estimated liabilities for such losses under
all its bonds, policies or contracts of fidelity insurance, shall be not
less than ten percent of the net premiums in force thereon, and the
estimated liabilities for all such losses under all its surety contracts
shall be not less than five percent of the net premiums in force
thereon.
(c) Except as provided in subsection (e) hereof the minimum reserves
for outstanding losses and loss expenses under policies of personal
injury liability insurance and under policies of employers` liability
insurance, where the losses were incurred during the three years
immediately preceding the date of determination, shall be calculated in
accordance with any method adopted or approved by the National
Association of Insurance Commissioners and shall be not less than the
aggregate of the estimated unpaid losses and loss expenses for claims
incurred computed in accordance with subsection (b) hereof.
(d) The minimum reserves for outstanding losses and loss expenses
under policies of workers` compensation insurance, except as provided in
subsection (e) hereof, shall be computed as follows:
(1) For all such compensation policies where losses were incurred more
than three years prior to the date of determination, such reserves shall
be the sum of the present values, at five percent interest per annum, of
the determined and estimated unpaid losses computed on an individual
case basis plus the estimated unpaid loss expenses computed in
accordance with subsection (b) hereof.
(2) Where losses were incurred during the three years immediately
preceding the date of determination, such reserves shall be the sum of
the reserves for each year, which shall be calculated in accordance with
any method adopted or approved by the National Association of Insurance
Commissioners and shall be not less than the sum of the present values,
at five percent interest per annum, of the determined and estimated
unpaid losses computed on an individual case basis plus the estimated
unpaid loss expenses computed in accordance with subsection (b) hereof.
(e) Whenever in the judgment of the superintendent, the loss and loss
expense reserves of any property/casualty insurance company doing
business in this state calculated in accordance with the foregoing
provisions are inadequate or excessive, he may prescribe any other basis
which will produce adequate and reasonable reserves.
(f) Every property/casualty insurance company doing business in this
state shall keep a complete and itemized record showing all losses and
claims on which it has received notices including all notices received
by it of the occurrence of any event which may result in a loss.
(g) (1) Effective with the nineteen hundred ninety annual statement,
every licensed property/casualty insurer required to file such annual
statement with the superintendent by the following April first, shall,
unless exempted by the superintendent, engage a qualified independent
loss reserve specialist for the following year to render an opinion as
to the adequacy of its loss and loss adjustment expense reserves when
two of three of such insurer`s results of its loss and loss adjustment
expense ratios as indicated below are outside of the indicated
acceptable ranges:
(A) One Year Reserve Development to Surplus
Add the year-end estimate of the losses that were outstanding one year
earlier to the payments on those losses made during that year. The
difference between that sum and the reserves that were established at
the end of the prior year is the one-year reserve development. The ratio
of one-year reserve development to prior year`s surplus is the
deficiency or redundancy. The acceptable range is less than twenty-five
percent deficiency. Any redundancy is acceptable.
(B) Two Year Reserve Development to Surplus
Add the year-end estimate of the losses that were outstanding two
years earlier to the payments on those losses made during those two
years. The difference between that sum and the reserves that were
established at the end of the second prior year is the two-year reserve
development. The ratio of two-year reserve development to the second
prior year`s surplus is the deficiency or redundancy. The acceptable
range is less than twenty-five percent deficiency. Any redundancy is
acceptable.
(C) Estimated Current Reserve Deficiency to Surplus
For the last two years the reserves as stated in those years are
adjusted by the one-year or two-year reserve development as calculated
in the above two ratios. This total is then divided by the net premium
earned in the appropriate year to obtain the developed reserve to
premium ratio. The estimated reserves required is the current net
premium earned multiplied by the average ratio between developed
reserves and earned premium for the last two years. The estimated
deficiency is the difference between the estimated reserves required by
the company and the actual reserves maintained. The estimated current
reserve deficiency or redundancy is taken as a percentage of surplus and
the acceptable range is less than twenty-five percent deficiency. Any
redundancy is acceptable.
(2) Such opinion shall be submitted by the qualified loss reserve
specialist to the insurer and the superintendent, by such date
established by the superintendent. For the purposes of this section, a
"qualified independent loss reserve specialist" shall mean a person who
is not an employee, principal or director or indirect owner of the
insurer and is a member of the Casualty Actuarial Society, or has such
other experience as is acceptable to the superintendent to assure a
professional opinion on the adequacy of loss and loss adjustment expense
ratios.
(3) Nothing in this subsection shall be construed to restrict or
diminish any right or power of the superintendent under any other
provision of this chapter.
(4) The superintendent shall keep the contents of each report made
pursuant to this subsection and any information obtained in connection
therewith confidential and shall not make the same public without the
prior written consent of the insurer to which it pertains unless the
superintendent after notice and an opportunity to be heard shall
determine that the interests of policyholders, shareholders or the
public will be served by the publication thereof.
S 4118. Limitation of risks; fidelity and surety; fire; hospital
mutuals. (a) (1) In applying the limitation of section one thousand one
hundred fifteen of this chapter to fidelity and surety risks the net
amount of exposure on any one fidelity or surety risk shall, except as
provided in paragraph four hereof, be deemed within the limit of ten
percent if the company is protected in excess of that amount by:
(A) reinsurance in a company authorized to write such business in this
state or reinsurance in an accredited reinsurer, as defined in
subsection (a) of section one hundred seven of this chapter, which is in
such form as to enable the obligee or beneficiary to maintain an action
thereon against the ceding insurer jointly with the assuming insurer or,
where the commencement or prosecution of actions against the ceding
insurer has been enjoined by any court of competent jurisdiction or any
justice or judge thereof, against the assuming insurer alone, and to
have recovery against the assuming insurer for its share of the
liability thereunder and in discharge thereof; or
(B) the co-suretyship of any other company authorized to do such
business in this state; or
(C) a deposit of property with it in pledge or conveyance of property
to it in trust for its protection; or
(D) a conveyance or mortgage of property for its protection; or
(E) in case a suretyship or guaranty obligation was made on behalf or
on account of a fiduciary holding property in a trust capacity, by such
a deposit or other disposition of a portion of the property so held in
trust that no future sale, mortgage, pledge or other disposition can be
made thereof except with the consent of the insurance company or by
decree or order of a court of competent jurisdiction.
(2) Notwithstanding the provisions of paragraph one hereof, a company
may execute bonds of the kind commonly known as transportation or
warehousing bonds for United States internal revenue taxes in a net
amount not exceeding twenty percent of its surplus to policyholders,
determined as provided in paragraph one hereof.
(3) In determining the net amount of exposure on any one risk, the
following rules shall be applicable to the kinds of obligations
hereinafter described:
(A) When the penalty of a suretyship obligation exceeds the amount of
a judgment prescribed therein as appealed from and thereby secured, or
exceeds the amount of the subject matter in controversy or of the estate
in the hands of the fiduciary for the performance of whose duties it is
conditioned, the bond may be executed by such company if the actual
amount of the judgment or the subject matter in controversy or estate
not subject to supervision or control of the surety, is not in excess of
a limitation of ten percent.
(B) When the penalty of a suretyship obligation executed for the
performance of a contract exceeds the contract price, the latter amount
shall be taken as the basis for estimating the limit of risk within the
meaning of this paragraph.
(4) In addition to any other limitation contained in this chapter, no
authorized company shall at any one time be exposed to risks on
suretyship obligations guaranteeing the deposits of any single financial
institution in an aggregate net amount in excess of ten percent of the
surplus to policyholders of such company, determined as provided in
paragraph one hereof, unless it shall be protected in excess of that
amount by security in accordance with the provisions of subparagraphs
(A), (B), (C) and (D) of paragraph one hereof.
(b) No insurer authorized to write fire insurance in this state shall
expose itself to any loss on any one fire risk, whether located in this
state or elsewhere, in an amount exceeding ten percent of its surplus to
policyholders, except that in the case of risks adequately protected by
automatic sprinklers or risks principally of non-combustible
construction and occupancy such insurer may expose itself to any loss on
any one risk in an amount not exceeding twenty-five percent of the sum
of its unearned premium reserve and its surplus to policyholders. Any
risk or portion of any risk reinsured in an assuming insurer authorized
to write such business in this state or in an accredited reinsurer, as
defined in subsection (a) of section one hundred seven of this chapter,
shall be deducted in determining the limitation of risk prescribed in
this subsection.
(c) A mutual property/casualty insurance company subject to paragraph
two of subsection (a) of section four thousand one hundred seven of this
article may be permitted to write coverage on any one risk in excess of
the limitation provided by section one thousand one hundred fifteen of
this chapter, based upon criteria approved by the superintendent.
S 4119. Foreign and alien companies; license qualification. No foreign
or alien property/casualty insurance company shall be licensed to do
business in this state unless it shall have continuously transacted an
insurance business in the state or country of its incorporation for at
least three years immediately prior to the issuance of such license. The
superintendent may waive or reduce the three year requirement, with
respect to a license applicant, upon determination that the three year
period is not necessary to safeguard the interests of the public or
policyholders.
S 4121. Security may be required from banking officers and employees.
(a) The board of directors or trustees of each bank, trust company,
savings bank or savings and loan associations in this state, may require
from each officer and employee thereof an individual fidelity bond in
favor of the institution in an amount and form approved by such board of
directors or trustees.
(b) Such bond shall be accepted only from a corporation authorized to
issue fidelity bonds and doing business in this state under the
authority of the department.
(c) The premium for such bond may be paid as a necessary expense of
any such banking institution.