STATE OF NEW YORK
________________________________________________________________________
8258
2025-2026 Regular Sessions
IN SENATE
May 28, 2025
___________
Introduced by Sen. SKOUFIS -- read twice and ordered printed, and when
printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to administrative super-
vision
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative findings. In order to increase the authority of
2 the superintendent of financial services to respond to the harm posed by
3 impaired insurers in this state, the legislature finds that it is in the
4 best interest of the people of this state to enact an administrative
5 supervision statute. The superintendent of financial services has the
6 right and responsibility to enforce the insurance law and the authority
7 to seek redress against any person responsible for the impairment or
8 insolvency of the insurer, and nothing in this act is intended to
9 restrict or limit such right, responsibility, or authority.
10 § 2. The insurance law is amended by adding a new section 1125 to read
11 as follows:
12 § 1125. Administrative supervision. (a)(1) The superintendent may
13 issue an order placing a domestic insurer under administrative super-
14 vision if the superintendent determines that one or more of the condi-
15 tions set forth in subsection (b) of this section exists. Upon such a
16 determination, the superintendent shall furnish the insurer with a writ-
17 ten list of requirements to abate the condition or conditions within the
18 time specified in the order, which shall be sixty days or another period
19 of time as designated by the superintendent. The domestic insurer may
20 challenge the order by requesting an administrative hearing pursuant to
21 the adjudicatory proceeding rules in article three of the state adminis-
22 trative procedure act. Upon issuance of the order, the superintendent
23 shall advise such domestic insurer of its right to request a hearing
24 challenging the order pursuant to the adjudicatory proceeding rules in
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD13211-01-5
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1 article three of the state administrative procedure act and regulations
2 promulgated by the superintendent.
3 (2) If, at the end of the period specified in the order, the super-
4 intendent determines that the condition or conditions that gave rise to
5 the order still exists or exist, then administrative supervision shall
6 continue. The insurer may request a hearing to challenge the superinten-
7 dent's determination to continue administrative supervision.
8 (3) If the superintendent determines that the condition or conditions
9 that gave rise to administrative supervision no longer exists or exist,
10 then the superintendent shall release the insurer from supervision.
11 (b) (1) An insurer may be subject to administrative supervision by the
12 superintendent if upon examination or any other time it appears in the
13 superintendent's discretion that:
14 (A) The insurer's condition renders the continuance of its business
15 hazardous to the public or to its insureds;
16 (B) The insurer has or appears to have exceeded its powers, as that
17 term is defined in paragraph two of this subsection, granted under its
18 charter and applicable law;
19 (C) The insurer has failed to comply with the applicable provisions of
20 this chapter;
21 (D) The business of the insurer is being conducted fraudulently; or
22 (E) The insurer gives its consent.
23 (2) The term "exceeded its powers" means any one or more of the
24 following conditions:
25 (A) The insurer has refused to permit examination of its books,
26 papers, accounts, records or affairs by the superintendent or the super-
27 intendent's deputies, employees or duly commissioned examiners;
28 (B) A domestic insurer has unlawfully removed from this state books,
29 papers, accounts or records necessary for an examination of the insurer;
30 (C) The insurer has failed to promptly comply with the applicable
31 financial reporting statutes or rules and departmental requests relating
32 thereto;
33 (D) The insurer has neglected or refused to observe an order by the
34 superintendent to make good, within the time prescribed by law, any
35 prohibited deficiency in its capital, capital stock or surplus;
36 (E) The insurer is continuing to transact insurance or write business
37 after its license has been revoked or suspended by the superintendent;
38 (F) The insurer, by contract or otherwise, has unlawfully or has in
39 violation of an order of the superintendent or has without first having
40 obtained written approval of the superintendent if approval is required
41 by law: (i) totally reinsured its entire outstanding business; or (ii)
42 merged or consolidated substantially its entire property or business
43 with another insurer;
44 (G) The insurer engaged in any transaction in which it is not author-
45 ized to engage under the laws of this state; or
46 (H) The insurer refused to comply with a lawful order of the super-
47 intendent.
48 (3) The term "consent" means agreement to administrative supervision
49 by the insurer.
50 (c) During the period of supervision, the superintendent may prohibit
51 the insurer from engaging in any of the following activities without the
52 superintendent's prior approval:
53 (1) disposing of, conveying, or encumbering any of its assets or its
54 business in force;
55 (2) withdrawing any funds from its bank accounts;
56 (3) lending any of its funds;
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1 (4) investing any of its funds;
2 (5) paying any claims;
3 (6) transferring any of its property;
4 (7) incurring any debt, obligation, or liability;
5 (8) merging or consolidating with another company;
6 (9) approving new premiums or renewing any policies;
7 (10) entering into any new reinsurance contract or treaty;
8 (11) terminating, surrendering, forfeiting, converting, or lapsing any
9 insurance policy, certificate, or contract, except for nonpayment of
10 premiums due;
11 (12) releasing, paying, or refunding premium deposits, accrued cash or
12 loan values, unearned premiums, or other reserves on any insurance poli-
13 cy, certificate, or contract;
14 (13) making any material change in management; or
15 (14) increasing salaries and benefits of officers or directors or the
16 payment of bonuses, dividends, or other payments.
17 (d) The superintendent may appoint as administrative supervisor, at
18 the insurer's expense, one or more persons not employed by any insurer
19 or interested in such insurer, except as a policyholder.
20 (e) During the period of administrative supervision, an insurer may
21 contest an action taken or proposed to be taken by the superintendent or
22 by the administrative supervisor on the grounds that the action or
23 proposed action would not result in improving the condition of the
24 insurer. Denial of the insurer's request upon reconsideration may be
25 challenged by the insurer by requesting an administrative hearing pursu-
26 ant to the adjudicatory proceeding rules in article three of the state
27 administrative procedure act.
28 (f) (1) The expenses of administrative supervision pursuant to this
29 section shall be borne and paid by the insurer so supervised.
30 (2) In the event that an insurer becomes subject to a proceeding under
31 article seventy-four of this chapter within one year of the superinten-
32 dent releasing the insurer from administrative supervision, all accrued
33 and outstanding expenses incurred in connection with administrative
34 supervision shall be treated as actual and necessary costs and expenses
35 of the administration of such proceeding under article seventy-four of
36 this chapter.
37 (g) (1) Notwithstanding any other section of law and except as set
38 forth in this section, proceedings, hearings, notices, correspondence,
39 reports, and other information in the possession of the superintendent
40 or department relating to the supervision of any insurer shall be confi-
41 dential and not subject to subpoena or public inspection under article
42 six of the public officers law or any other statute, and shall not be
43 subject to discovery or admissible in evidence in any private civil
44 action, except as provided in this section; provided, however, that the
45 superintendent is authorized to use the documents, materials, or other
46 information in the furtherance of any regulatory or legal action brought
47 as part of the superintendent's official duties.
48 (2) The superintendent may share the notices, correspondence, reports,
49 records, or information pursuant to section one hundred ten of this
50 chapter.
51 (3) The superintendent may open the proceedings or hearings or make
52 public the notices, correspondence, reports, records, or other informa-
53 tion if the superintendent deems that it is in the best interest of the
54 public or in the best interest of the insurer, its insureds, creditors,
55 or the general public.
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1 (4) This subsection shall not apply to hearings, notices, correspond-
2 ence, reports, records, or other information obtained upon the appoint-
3 ment of a receiver for the insurer by a court of competent jurisdiction.
4 (h) Nothing in this section shall be construed as precluding the
5 superintendent from initiating judicial proceedings to place an insurer
6 in rehabilitation, liquidation, conservation, or dissolution
7 proceedings.
8 (i) Notwithstanding any other provision of law, the superintendent may
9 meet with a supervisor appointed under this section and with the attor-
10 ney or other representative of the supervisor, without the presence of
11 any other person, at the time of any proceeding or during the pendency
12 of any proceeding held under authority of this section to carry out the
13 superintendent's duties under this section or for the supervisor to
14 carry out the supervisor's duties under this section.
15 § 3. Subsection (a) of section 1309 of the insurance law is amended to
16 read as follows:
17 (a) Whenever the superintendent finds from a financial statement or
18 report on examination that an authorized insurer is unable to pay its
19 outstanding lawful obligations as they mature in the regular course of
20 business, as shown by an excess of required reserves and other liabil-
21 ities over admitted assets, or by its not having sufficient assets to
22 reinsure all outstanding risks with other solvent authorized assuming
23 insurers after paying all accrued claims owed, such insurer shall be
24 deemed insolvent and the superintendent may proceed against it pursuant
25 to the provisions of article seventy-four of this chapter or may place
26 the insurer under administrative supervision pursuant to section one
27 thousand one hundred twenty-five of this chapter.
28 § 4. Subsection (a) of section 1310 of the insurance law is amended to
29 read as follows:
30 (a) Whenever the superintendent finds from a financial statement, or a
31 report on examination, of any domestic stock insurer that [(i)] (1) the
32 admitted assets are less than the aggregate amount of its liabilities
33 and outstanding capital stock or [(ii)] (2) the admitted assets of any
34 such insurer [which] that is required to maintain a minimum surplus to
35 policyholders are less than the aggregate amount of its liabilities and
36 the amount of its minimum surplus to policyholders, [he] the superinten-
37 dent shall determine the amount of the impairment and order the insurer
38 to eliminate the impairment within such period as [he] the superinten-
39 dent designates, not more than ninety days from the service of the
40 order. [He] The superintendent may also order the insurer not to issue
41 any new policies while the impairment exists. If the impairment as
42 determined by the provisions of [item (i) hereof] paragraph one of this
43 subsection equals or exceeds twenty-five percent of the insurer's
44 outstanding capital stock, or as determined by the provisions of [item
45 (i) or (ii) hereof] paragraph one or two of this subsection is such that
46 the insurer does not have the minimum capital or minimum surplus to
47 policyholders required by this chapter, and if at the expiration of such
48 designated period, such insurer has not satisfied the superintendent
49 that such impairment has been eliminated, the superintendent may proceed
50 against the insurer pursuant to the provisions of article seventy-four
51 of this chapter on the ground that its condition is such that its
52 further transaction of business will be hazardous to its policyholders
53 or its creditors or the public or the superintendent may place the
54 insurer under administrative supervision pursuant to section one thou-
55 sand one hundred twenty-five of this chapter.
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1 § 5. Subsection (c) of section 1311 of the insurance law is amended to
2 read as follows:
3 (c) If the impairment so determined is such that such insurer does not
4 have the minimum surplus required for item (iii) of subsection (a) here-
5 of, and if when such designated period expires the insurer has not
6 satisfied the superintendent that such impairment has been eliminated,
7 then the superintendent may proceed against such insurer pursuant to the
8 provisions of article seventy-four of this chapter on the ground that
9 its further transaction of business will be hazardous to its policyhold-
10 ers, its creditors or the public or the superintendent may place the
11 insurer under administrative supervisions pursuant to section one thou-
12 sand one hundred twenty-five of this chapter.
13 § 6. Paragraph 2 of subsection (c) of section 1312 of the insurance
14 law is amended to read as follows:
15 (2) If at the expiration of such designated period such insurer has
16 not satisfied the superintendent that such impairment has been elimi-
17 nated, the superintendent may proceed against such insurer pursuant to
18 the provisions of article seventy-four of this chapter as an insurer
19 whose condition is such that its further transaction of business in the
20 United States will be hazardous to its policyholders, its creditors or
21 the public in the United States or the superintendent may place the
22 insurer under administrative supervision pursuant to section one thou-
23 sand one hundred twenty-five of this chapter.
24 § 7. This act shall take effect immediately.
