N.Y. ISC Law § 6106 — New York Code / Act ISC / Article 61 / Section 6106
Subscriber's agreement
Status: in_force

§ 6106. Subscriber's agreement. (a) (1) Every subscriber of an\nauthorized reciprocal insurer shall have executed a subscriber's\nagreement, and every subscriber executing such a subscriber's agreement\ncontaining a provision for contingent liability of subscribers shall\nexecute and duly acknowledge the same, in a manner sufficient for the\nacknowledgment of conveyances of real property to be recorded in the\nstate in which such subscriber is domiciled.\n  (2) Every subscriber's agreement shall be identical in terms, except\nas to the date and the name and address of the subscriber, with all\nother subscriber's agreements currently in force and effect with all\nother subscribers of such reciprocal insurers. However, in the case of\nany reciprocal insurer authorized pursuant to section six thousand one\nhundred eight of this article to issue non-assessable policies or\nagreements, or having a corporate attorney-in-fact wholly owned by the\nsubscribers at such reciprocal insurer, the acceptance of a policy or\nbinder of insurance containing the subscriber's agreement printed at the\nend of the standard policy provisions or the binder, as the case may be,\npreceded by the words printed upon the policy or binder:\n      "The acceptance of this policy or binder shall constitute\n      that insured designated therein is a subscriber of the\n      reciprocal insurer and shall constitute the execution and\n      delivery by the insured of the subscriber's agreement which\n      is appended to this policy or binder, and hereby made a part\n      thereof",\nshall constitute the execution and delivery of said subscriber's\nagreement by that insured as fully and to the same extent as though said\nagreement had been signed and acknowledged by that insured.\n  (3) Every such subscriber's agreement shall contain in substance the\nfollowing provisions:\n  (A) A designation and appointment of the attorney-in-fact to act for\nand bind the subscriber in all transactions relating to or arising out\nof the operations of such reciprocal insurer, subject to such\nlimitations as may be lawfully provided.\n  (B) An agreement that service of summons or other legal process on the\nattorney-in-fact or on any other person appointed by the\nattorney-in-fact to receive such process, shall, in any action, suit or\nproceeding arising out of any contract, agreement or transaction of such\nreciprocal insurer, be equivalent to personal service of such summons or\nother legal process on each and every subscriber.\n  (C) Unless the reciprocal insurer is authorized to issue\nnon-assessable policies under section six thousand one hundred eight of\nthis article an agreement for the contingent liability of the\nsubscriber, which shall state that such subscriber agrees to pay on\ndemand such subscriber's proportionate share of any assessment lawfully\nordered or levied by the advisory committee or by the superintendent\nunder article seventy-four of this chapter.\n  (D) A provision that there shall be an annual meeting of the\nsubscribers, in person or by proxy, at a time and place to be determined\nin accordance with such agreement, of which each subscriber shall be\nduly notified and at which each subscriber shall have power to vote in\nperson or by proxy for all members of the advisory committee to be\nchosen or appointed at such time, except that in the case of a foreign\nreciprocal insurer, the superintendent may permit a modification of such\nprovision provided that he is satisfied that the interests of the\nsubscribers are properly protected.\n  (E) A provision specifying the powers and duties of the advisory\ncommittee, which shall include the power and duty to regulate the\ncompensation, powers and duties of the attorney-in-fact, if not\nspecifically provided in the subscriber's agreement, and shall also\ninclude the power to make regulations for the effective control and\ncustody of the funds and investments of the reciprocal insurer. In\naddition, the advisory committee of a municipal reciprocal insurer shall\nestablish procedures to prevent any conflicts of interest between the\nattorney-in-fact and such insurer. Such procedures shall be submitted to\nand approved by the superintendent, who shall also approve the\nattorney-in-fact for a municipal reciprocal insurer.\n  (F) Provisions setting forth the rights, privileges and obligations of\nthe subscriber as an underwriter, and as a policyholder subject to the\nterms of insurance contracts required or permitted by law to be issued.\n  (G) General provisions relating to the operations of the reciprocal\ninsurer, including the subscriber's operating reserve requirements,\nregulations for the return of savings or dividends, for withdrawals and\nrefunds and such other matters as may be necessary to maintain the\noperation of such reciprocal insurer in compliance with the provisions\nof this chapter. In the case of a municipal reciprocal insurer, such\nagreement shall include procedures to: (i) establish and promote loss\ncontrol, safety programs and other methods of risk management; (ii)\nestablish equitable risk classifications; and (iii) establish uniform\nrecordkeeping and reporting procedures.\n  (4) The following provisions shall be contained in either the\nsubscriber's agreement or a separate management agreement between the\nattorney-in-fact and the advisory committee or the attorney-in-fact and\nany person to which its functions have been delegated after approval of\nthe advisory committee:\n  (A) A provision that the attorney-in-fact shall provide written\nnotification of, and make all necessary arrangements as provided in the\nsubscriber's agreement, for the election, in person or by proxy, of the\nmembers of the advisory committee. The cost of notification, ballot, or\nproxy for any meeting of the advisory committee and for any meeting\nwhich may be called for the election shall be incurred by the\nreciprocal.\n  (B) A provision that the attorney-in-fact shall provide written\nnotification to the members of the advisory committee of not less than\nten days for any regular meeting or five days for any special meeting\ncalled pursuant to subsection (k) of section six thousand one hundred\nfive of this article. The cost of such notification shall be incurred by\nthe reciprocal.\n  (C) A provision that the advisory committee may, upon a vote of a\nmajority of its members at any regular or special meeting thereof and\nupon written notice to the superintendent and the attorney-in-fact,\nrecommend termination of the attorney-in-fact for a stated cause and\nappointment of a new attorney-in-fact, subject to the provisions of any\nmanagement agreement approved by the superintendent. Termination of the\nattorney-in-fact shall require the approval of a two-thirds majority of\nthe subscribers present in person or by proxy at a special meeting\ncalled for that purpose. The attorney-in-fact shall provide by mail not\nless than thirty days prior written notification of such meeting to all\nsubscribers. The mailing of notification shall include the\nrecommendation of termination and replacement as prepared by the\nadvisory committee, and any other appropriate documents submitted by the\nattorney-in-fact. A copy of all documents mailed and certification of\ntheir mailing to all subscribers shall be provided to all members of the\nadvisory committee. The cost of notification and proxy for any such\nmeeting shall be incurred by the reciprocal. For reciprocals with less\nthan two thousand five hundred subscribers, at least twenty-five percent\nof all subscribers shall be required to constitute a quorum. For all\nother reciprocals, the greater of twenty-five hundred subscribers or\nfive percent of all subscribers shall constitute a quorum.\n  (D) A provision that the attorney-in-fact shall cause all assets of\nthe reciprocal and its subscribers to be invested in accordance with\ninvestment guidelines approved by the advisory committee and shall be\nproperly accounted for on the financial records of the reciprocal as\nbeing held for or on behalf of the subscribers. All cash assets of the\nreciprocal and its subscribers, not otherwise invested in short term\nsecurities such as money market funds, covering policy obligations\narising out of policies issued or issued for delivery in the United\nStates shall be held in one or more appropriately identified accounts in\nbanks that are members of the federal reserve system. These accounts\nshall be drawn on by the attorney-in-fact, or by employees or\nrepresentatives of the reciprocal authorized by the attorney-in-fact for\nall payments on behalf of the reciprocal.\n  (E) A provision that if the attorney-in-fact is acting for more than\none reciprocal, separate records and accounts shall be maintained for\neach reciprocal.\n  (F) A provision that the attorney-in-fact may not assign its\nresponsibilities as detailed in the subscriber's agreement in whole or\npart or enter into management agreements delegating its duties in whole\nor part to another party without the prior approval of the advisory\ncommittee and the superintendent.\n  (G) A provision that the attorney-in-fact shall establish and maintain\nunderwriting procedures and manuals, setting forth the rates and\nconditions for the acceptance or rejection of risks.\n  (H) A provision that the attorney-in-fact shall make a report to the\nadvisory committee at each regular meeting of the committee on the\nfinancial condition of the reciprocal and all material transactions\nduring the period since the last meeting.\n  (I) A provision that the attorney-in-fact shall annually provide to\neach member of the advisory committee:\n  (i) On or before March first of each year, a copy of the reciprocal's\nannual statement and the accompanying statement of actuarial opinion\nfiled with the superintendent pursuant to section three hundred seven of\nthis chapter; and\n  (ii) On or before June first of each year, a copy of:\n  (I) The certified statement filed with the superintendent pursuant to\nsubsection (f) of section six thousand one hundred five of this article;\nand\n  (II) The certified annual statement of the reciprocal filed with the\nsuperintendent pursuant to section three hundred seven of this chapter.\n  (J) A provision specifying all forms and amounts (or formulas to\ndetermine the amounts) of compensation the attorney-in-fact will receive\nfor services rendered and, if all or part of the compensation will be\ncontingent upon the reciprocal's profits, a provision that such\ncompensation shall not be paid until at least five years after the\npremiums on liability insurance are earned and at least one year after\nthe premiums are earned on any other kind of insurance and, in no event\nshall the compensation be paid until the adequacy of reserves on\noutstanding claims has been independently verified by the same actuary\nwho opined on the latest annual statement filed with the superintendent\npursuant to section three hundred seven of this chapter.\n  (K) A provision that the independent certified public accountant who\nwill prepare the annual report required by subsection (f) of section six\nthousand one hundred five of this article and the independent actuary\nwho will prepare the opinion accompanying the annual statement pursuant\nto section three hundred seven of this chapter shall be selected by the\nattorney-in-fact, subject to the approval of the advisory committee.\n  (L) A provision that the books, accounts and records of the reciprocal\nshall be maintained by the attorney-in-fact to clearly and accurately\ndisclose the nature and details of all transactions including all\ninformation necessary to determine that the compensation received by, or\nowing to, the attorney-in-fact is provided in a manner consistent with\nthe subscriber's agreement and any management agreement. The books,\naccounts and records of the reciprocal shall be the sole property of the\nreciprocal.\n  (M) A provision that the attorney-in-fact shall conduct the affairs of\nthe reciprocal in accordance with the provisions of this chapter.\n  (b) (1) The subscriber's agreement may contain such further provisions\nas may be necessary or proper; but neither the subscriber's agreement\nnor the articles of association, if any, of an authorized reciprocal\ninsurer shall contain any provisions inconsistent with the provisions of\nsubsection (a) hereof.\n  (2) The superintendent may, if he finds it necessary to carry out the\npurpose and intent of this article, by regulation prescribe additional\nprovisions, not inconsistent with any law of this state, to be contained\nin the subscriber's agreement of reciprocal insurers.\n  (c) Every subscriber to a municipal reciprocal insurer shall agree to\nparticipate in a risk management program established by the\nattorney-in-fact. The attorney-in-fact of each insurer shall, with the\napproval of the advisory committee, establish, promote and manage a risk\nmanagement program among the subscribers. Each program shall include\nidentifying and reducing risks through the implementation of loss\ncontrol, safety programs and other methods of risk management. The\nattorney-in-fact may enter into contracts with any person, firm, or\ncorporation for services necessary to perform and administer the risk\nmanagement program or to perform or administer other functions deemed\nnecessary by the advisory committee and approved by the superintendent.\nAn individual subscriber may enter into contracts with any person, firm\nor corporation for services necessary to perform and administer any\nfunction which that subscriber shall deem necessary.\n