Source: https://dfs.ny.gov/insurance/ogco2010/rg100908.htm
Timestamp: 2020-08-07 01:42:12
Document Index: 675571775

Matched Legal Cases: ['§ 6402', '§ 6402', '§ 6402', '§ 6402', '§ 6402', '§ 6402', '§ 107', '§ 6402', '§ 6402', '§ 1201', '§ 6402', '§ 1106', '§ 6402', '§ 1106', '§ 201', '§ 1102', '§ 107']

OGC Opinion No. 10-09-08: Compliance Requirements of Insurance Law § 6402 and Notification to the New York State Insurance Department Regarding Board of Directors Membership Changes | Department of Financial Services
OGC Op. No. 10-09-08
The Office of General Counsel issued the following opinion on September 17, 2010, representing the position of the New York State Insurance Department.
RE: Compliance Requirements of Insurance Law § 6402 and Notification to the New York State Insurance Department Regarding Board of Directors Membership Changes
1. Must a foreign title insurance corporation comply with the board membership requirements of N.Y. Insurance Law § 6402(e)?
2. What does the New York Insurance Law require foreign title insurance corporations to submit to the Department when there is a change in the insurance company’s board membership?
1. No, a foreign title insurance corporation does not need to comply with the board membership requirements of Insurance Law § 6402(e).
2. A foreign title insurance corporation must submit an NAIC Form 11 Biographical Affidavit of any incoming director to the Property Bureau of the Department.
A. Foreign Insurance Corporations Do Not Need to Comply with Insurance Law § 6402(e)
The inquirer asks whether a foreign title insurance corporation must comply with the board membership requirements set forth in Insurance Law § 6402(e). As a preliminary matter, Insurance Law § 107(a)(21) defines a “foreign insurer” as “any insurer incorporated or organized under the laws of any state . . . other than this state.” 2
Insurance Law § 6402, which applies specifically to title insurance corporations, states in pertinent part:
“In the organization of any such corporation the provisions of section one thousand two hundred one of this chapter shall be superseded or supplemented by the following provisions:
(e) [A title insurance corporation’s] directors shall be natural persons, not less than seven in number, all citizens of the United States, a majority of whom shall be citizens and residents of this state at the time of their election and during their continuance in office.”
Insurance Law § 6402(e) thus modifies the board membership requirements under Insurance Law § 1201 for title insurance corporations that organize and obtain a license to do an insurance business in New York, i.e., domestic insurers. Therefore, the board membership requirements under Insurance Law § 6402(e) do not apply to foreign title insurance corporations.
However, pursuant to Insurance Law § 1106(e), foreign insurers must “comply substantially” with any requirement or limitation applicable to domestic insurers, but only insofar as the Superintendent believes is “reasonably necessary to protect the interests of the people of [New York].” In this instance, other states sufficiently regulate their insurers’ board memberships, and thus the board membership requirement of Insurance Law § 6402(e) is not reasonably necessary to protect the interests of the people of New York. Consequently, Insurance Law § 1106(e) does not require foreign insurers to comply with this domestic insurer requirement.
B. Foreign Insurance Corporations Must Provide the Department with a Biographical Affidavit When There Is a Change in Their Board of Directors’ Membership
The inquirer also asks what information a foreign title insurance corporation must provide to the Department when directors or board members of the corporation change. Although the Insurance Law does not expressly address this question, under Insurance Law § 201, the Superintendent has the “rights, powers and duties . . . expressed or reasonably implied by” the Insurance Law. With reference to Insurance Law §§ 1102(d) and 1102(e)(2), these implied powers include the power to require biographical questionnaires, such as the NAIC Form 11 Biographical Affidavit,2 and fingerprint cards of board members of all insurance companies, including foreign title insurance companies, that are licensed to do insurance business in New York. Office of General Counsel Opinion No. 05-01-01 (January 4, 2005).
The purpose of requiring these documents is to enable the Department to ascertain whether an officer or director of an insurance corporation licensed in this state has been convicted of any crime involving acts of fraud, dishonesty, moral turpitude or untrustworthiness. See Insurance Department Circular Letter No. 6 (2001) (referencing the Insurance Department’s requirement for submission of a biographical questionnaire and fingerprints by licensed insurance corporations). Therefore, when there is a change in the board membership of a foreign title insurance corporation, the corporation must submit an NAIC Form 11 Biographical Affidavit for any incoming board members to the following address:
1 “Foreign insurer” means an insurance corporation organized in a state other than New York, whereas an insurance corporation organized outside of the United States is an “alien insurer” under Insurance Law § 107(a)(5).
2 The Biographical Affidavit can be found on NAIC’s website at: http://www.naic.org/documents/industry_ucaa_form11.pdf.