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S06789 Summary:

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S06789 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         6789--A
            Cal. No. 1285
 
                    IN SENATE
 
                                    February 23, 2016
                                       ___________
 
        Introduced  by  Sen. BRESLIN -- read twice and ordered printed, and when
          printed to be committed to the  Committee  on  Insurance  --  reported
          favorably  from  said  committee,  ordered to first and second report,
          ordered to a third reading, amended and ordered  reprinted,  retaining
          its place in the order of third reading

        AN ACT to amend the insurance law, in relation to authorizing the super-
          intendent  of  financial services to suspend crediting of underwriting
          earnings for a fiscal year for the purpose of accumulating a subscrib-
          er's operating reserve
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Section  6109  of  the  insurance  law, subsection (a) as
     2  amended by chapter 138 of the laws  of  1987,  is  amended  to  read  as
     3  follows:
     4    § 6109. Subscriber's operating reserve. (a) (1) Every subscriber of an
     5  authorized  reciprocal  insurer  in  which  subscribers  are  subject to
     6  contingent liability shall accumulate a minimum operating reserve, to be
     7  credited to such subscriber on the books and records of such  reciprocal
     8  insurer,  by  authorizing the attorney-in-fact to credit to such account
     9  at the end of the fiscal year of such reciprocal insurer, an amount  not
    10  less  than one quarter of such subscriber's underwriting earnings during
    11  such period.
    12    (2) Such accumulation shall be made so long as such subscriber's oper-
    13  ating reserve is less than twice the amount of annual premiums in force.
    14    (3) Notwithstanding the foregoing, the superintendent may, upon appli-
    15  cation from the attorney-in-fact[,]:
    16    (A) approve other methods for accumulating such subscriber's operating
    17  reserve; or
    18    (B) permit the suspension of the accumulation of the operating reserve
    19  for a fiscal year provided that  those  earnings  are  returned  to  the
    20  subscriber  in  accordance  with  subparagraph  (B)  of paragraph two of
    21  subsection (c) of this section.
    22    (b) Any authorized reciprocal insurer may, pursuant to  the  terms  of
    23  the  subscriber's  agreement and to any action of its advisory committee
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14124-02-6
        S. 6789--A                          2
 
     1  authorized thereunder, require its subscribers to  accumulate  subscrib-
     2  er's operating reserves in excess of the minimum specified in subsection
     3  (a)  [hereof]  of this section and may require a longer period of notice
     4  for  the  withdrawal of all or any part of such reserve than that herein
     5  specified.
     6    (c) (1) No subscriber shall have a secured or preferred claim  against
     7  any  assets  of  the  reciprocal  insurer  arising out of such operating
     8  reserve, but all assets held by such insurer shall be available for  the
     9  payment  of  claims  of  policyholders  and creditors of such reciprocal
    10  insurer in preference to any claim for withdrawal  by  a  subscriber  as
    11  such.
    12    (2)  Any subscriber's operating reserve accumulated by any such recip-
    13  rocal insurer shall be maintained at all times, except that:
    14    (A) a subscriber may, upon withdrawal from membership and cancellation
    15  of all insurance contracts held by [him] the subscriber in such insurer,
    16  and after giving to the attorney-in-fact written notice of withdrawal at
    17  least sixty days in advance, withdraw the amount of [his] the  subscrib-
    18  er's  operating  reserve  less such surrender charges as may be deducted
    19  pursuant to the subscriber's agreement; or
    20    (B) where the superintendent has determined that the suspension of the
    21  accumulation of the operating reserve would not be  harmful  to  policy-
    22  holders  or  the  people of this state, the attorney-in-fact may, in the
    23  fiscal year following the year for which the suspension of  the  accumu-
    24  lation of the operating reserve was authorized, return to each subscrib-
    25  er  an  amount equal to the underwriting earnings that would have other-
    26  wise been credited to the subscriber's operating reserve.
    27    (3) No [such] withdrawal shall be permitted after an order  of  liqui-
    28  dation  of, or the appointment of a receiver or liquidating trustee for,
    29  any such reciprocal insurer or, notwithstanding any other  provision  of
    30  law to the contrary, where there is an authorized control level event or
    31  a  mandatory  control level event as defined in section thirteen hundred
    32  twenty-four of this chapter.
    33    § 2. This act shall take effect immediately.