NY Ins L § 6405 (2021)
2021 New York Laws ISC - Insurance Article 64 - Title Insurance Corporations 6405 - Reserves.

§  6405. Reserves. (a) Every title insurance corporation organized and doing  an  insurance  business  under  this  article  shall   establish, segregate  and  maintain a reinsurance reserve during the period and for the uses and purposes hereinafter provided which shall at all times  and for all purposes be deemed and shall constitute unearned portions of the original  premiums  and  shall be charged as a reserve liability of such corporation in determining its financial condition.  (1) Beginning June first, nineteen hundred forty-five, the  amount  of such  reserve  shall  be  cumulative and shall consist of (i) one dollar fifty cents for each risk assumed under a binder or policy of  insurance or  any  certificate  or  agreement  issued  under  either of them, plus one-eightieth of one percent of the face amount  of  insurance  effected thereby;  and (ii) three percent of the gross fees and premiums received by it for guaranteed certificates  of  title,  guaranteed  searches  and guaranteed  abstracts  of  title  not  included  in  item  (i)  of  this paragraph. That  portion  of  the  reinsurance  reserve  established  as required  by  this  paragraph  more than one hundred eighty months prior shall be released and shall no longer constitute part of the reinsurance reserve and may be used for any corporation purpose.  (2) Beginning January first, nineteen hundred eighty-six,  the  amount of such reserve provided shall consist of (i) one dollar fifty cents for each  risk  assumed  under  a  binder  or  policy  of  insurance  or any certificate or agreement issued under either of them, plus one-eightieth of one percent of the face amount of  insurance  effected  thereby;  and (ii)  three  percent  of  the gross fees and premiums received by it for guaranteed certificates of title,  guaranteed  searches  and  guaranteed abstracts  of  title  not  included in item (i) of this paragraph. "Risk assumed" and "insurance effected", as used in this paragraph, shall  not include  the  face amount of a policy insuring a lender to the extent of the face amount of a policy insuring the owner of  an  interest  in  the same  land  under  an owner's policy which provides that any amount paid under the lender's policy shall reduce the amount of, and  be  deemed  a payment  under,  the  owner's policy. A title insurer shall release from the reinsurance reserve established as required by this paragraph a  sum equal  to  five  percent  of the amount added to the reserve during each year following the year in which the sum was  added,  until  the  entire amount added has been released.  (b)  Every  title  insurance corporation organized or authorized to do business in this state shall on or before March first each year, file  a report  in  such  form as may be prescribed by the superintendent of all unpaid losses and  claims  upon  title  insurance  policies,  guaranteed certificates  of  title, guaranteed searches and guaranteed abstracts of title  (such  policies,  certificates,  searches  and  abstracts   being hereafter  in this section called "guarantees") of which the corporation has received due notice in writing from or on behalf of the  insured  or the guaranteed and keep such records thereof as may be prescribed by the superintendent.  Every  title insurance corporation doing business under this article shall set up and maintain a loss reserve at least equal  to the  aggregate  estimated amounts due or to become due on account of all such unpaid losses and claims.  (c) The reinsurance reserve required by subsection (a) of this section shall be maintained as follows:   Admitted assets of a value at least equal to the amount  required  for such  reserve  shall  be  continuously  held  by  the  corporation  as a segregated reserve fund at all times distinct and separate from all  its other  assets.  Cash paid into such fund shall, unless invested, be kept in legal tender or deposited in a separate account. Securities which are a part of such fund shall be kept separate from all other securities and  shall be clearly identified as securities belonging to  such  fund.  The net  income  and  profits  derived  from  such fund investments shall be transferred to the general assets of the corporation.  Such  corporation shall  at all times keep a separate record of the cash and securities in such fund, giving complete identification of the assets belonging at any time to such fund and showing full particulars  as  to  withdrawals  and additions. No assets of such fund shall be taken or used in satisfaction of any claim against such corporation except as hereinafter provided and such  fund  shall  be  held  solely  for  the purpose of satisfying such claims.  (d)  The  funds  constituting  the  reinsurance  reserve  required  by subsection (a) of this section shall be held in cash or invested only in the   types  of  reserve  investments  that  meet  the  requirements  of paragraphs one, two, and three of subsection (a) of section one thousand four hundred four of this chapter. In no event shall the investment made under such paragraph three exceed  twenty  percent  of  the  reinsurance reserve at preceding year-end.  (e)  If  at  any  time the superintendent finds from the report of any examiner filed pursuant to section three hundred eleven of this  chapter or   otherwise,   after   reasonable  notice  to  and  hearing  of  such corporation, that the value of the cash and investments lawfully in  the reserve  fund  required  to be established, segregated and maintained by subsection (c) of this section is less than the amount  required  to  be maintained  at such time pursuant to subsection (a) of this section, the superintendent shall determine the amount of such impairment and issue a written requisition to such corporation to remove, repair or  make  good such  impairment within such period as he shall designate, not less than thirty nor more than ninety days from the service of  such  requisition. If  at  the expiration of such designated period such impairment has not been removed, repaired or made good, the superintendent shall order such corporation in  writing  to  cease  doing  any  new  business.  If  such corporation,  or any officer thereof, having notice of such order of the superintendent,  shall  thereafter  transact  or  participate   in   the transaction  of any new business, such corporation or person shall be in violation of the provisions of this chapter.  (f) The reinsurance reserve fund required to be maintained pursuant to subsection (c) of this section shall constitute a separate and  distinct trust  fund for the security of holders of guarantees of the corporation as hereinafter provided.  (g) In the event the superintendent, pursuant  to  the  provisions  of article   seventy-four  of  this  chapter,  obtains  an  order  for  the rehabilitation or liquidation of a title insurance corporation, he shall have the power:  (1) to pay out of  such  reinsurance  reserve  fund,  subject  to  the approval of the court, the claims for losses sustained by the holders of guarantees of such corporation pending at the time of the making of such order  or arising subsequently thereto and up to the time reinsurance is effected, and  (2) to negotiate and enter into a contract with one  or  more  solvent corporations  authorized  to  transact  the business of title insurance, subject to the approval  of  the  court,  for  the  reinsurance  of  the obligations  under  such outstanding guarantees in accordance with their terms, covenants and conditions, and  (3) to pay the cost of reinsurance out  of  said  reinsurance  reserve fund of such corporation.  (h) After the payments hereinbefore authorized shall have been made by the  superintendent,  he  shall transfer any balance in said reinsurance reserve fund to the general assets of the corporation in  rehabilitation  or  liquidation. The reinsuring corporation shall segregate and maintain the reinsurance reserve fund acquired from the superintendent under  the terms  of  the  agreement of reinsurance except that on the first day of the  month next succeeding such acquisition and on the first day of each month thereafter, one one-hundred-eightieth of the amount  of  the  said fund  so  acquired  shall  be  released  therefrom  and  shall no longer constitute part of the reinsurance reserve fund so acquired and  may  be used for any corporate purpose of the reinsuring corporation.  (i)  In  the  event  the  superintendent  shall  be unable to effect a contract for reinsurance as provided in subsection (g) of this  section, for the reinsurance of the outstanding guarantees of a title corporation in  rehabilitation  or liquidation, the reinsurance reserve fund of such corporation shall constitute a separate and distinct trust fund for  the payment  therefrom  by the superintendent, on the approval of the court, in the following order of preference, (i) of all expenses of proceedings incurred under this subsection, (ii) of all allowed  claims  for  losses sustained  by  the  holders  of guarantees of such corporation which are unpaid or pending at the time fixed by  the  court  for  the  filing  of claims  and  (iii)  of  all  allowed  claims  for  losses which shall be asserted at any time within twenty years from the date of the  entry  of such  order  of rehabilitation or liquidation and which shall be paid in the order of the date of their allowance by the court.  Any  balance  in the  reinsurance  reserve  fund  of  a title insurance corporation after payment of allowed claims asserted within twenty years from the date  of the  entry  of  the  order  of  rehabilitation  or  liquidation shall be transferred  to  the   general   assets   of   such   corporation.   The superintendent shall keep and retain for such period of twenty years all title  records  of the corporation which he in his discretion shall deem necessary to effectuate the purposes of this trust.  (j) The payments out of the reinsurance reserve fund which shall  have been made by the superintendent on allowed claims for losses which shall have  been  filed  within  the time fixed by the court for the filing of claims in a rehabilitation or liquidation proceeding,  shall  constitute an  allowed  claim  in  favor  of  the  reinsurance reserve fund of such corporation entitled to share with general creditors  in  the  dividends directed  to  be paid and the dividends so paid on such claim shall fall into such reinsurance reserve fund.  (k) In proceedings for the rehabilitation or liquidation  of  a  title insurance  corporation  which shall not have been declared insolvent, no assets of such corporation shall be distributed to the  shareholders  of such  corporation  (i) until all claims allowed in the rehabilitation or liquidation proceedings have  been  paid  in  full,  and  (ii)  if  such distribution  is  within  twenty years from the date of the entry of the order of rehabilitation or liquidation such distribution  shall  not  be made  unless  prior to or at the time of the making of such distribution there shall be transferred  to  the  reinsurance  reserve  fund  general assets  of the corporation sufficient to restore such fund to its amount on the date of the entry of such order. Upon the  expiration  of  twenty years  from  the  date  of  the entry of such order of rehabilitation or liquidation any balance in such reinsurance reserve fund  after  payment of  all  allowed claims asserted within such twenty year period shall be transferred to the general assets of such corporation.