NY Ins L § 6102 (2021)
2021 New York Laws ISC - Insurance Article 61 - Reciprocal Insurers and Lloyds Underwriters 6102 - Organization of Domestic Reciprocal Insurers.

*   §  6102.  Organization  of  domestic  reciprocal  insurers.  (a) Twenty-five or more persons, firms and  corporations,  each  having  the qualifications  of  subscribers  as  prescribed  in  this  article,  may organize a reciprocal insurer to do any one or more of the  basic  kinds of  insurance  set  forth in subsection (a) of section four thousand one hundred one of this chapter or, in the alternative, twenty-five or  more New  York  counties,  towns, cities, villages, district corporations (as defined in paragraph three of section 2.00 of the local finance law), or school districts and boards of cooperative  educational  services,  each having  the qualifications of subscribers as prescribed in this article, may organize statewide municipal reciprocal insurers to provide any  one or  more  of the basic kinds of insurance set forth in subsection (a) of section four thousand one hundred one of this chapter,  except  workers' compensation  and  employers'  liability, fidelity and surety other than official  undertakings  conditioned  for  the  faithful  performance  of official  duties  as referenced in section eleven of the public officers law and required by related provisions of the county, town, and  village laws,  credit  and marine and inland marine (except as authorized by the provisions of paragraph two of subsection (b) of section  four  thousand one  hundred  two  of  this chapter) insurance. Such an insurer shall be called, for purposes of this chapter, a "municipal  reciprocal  insurer" and shall be subject to all the provisions of this chapter applicable to a  reciprocal  insurer,  except  where  the  context otherwise requires. However, any  reciprocal  insurer  authorized  to  do  the  business  of workers'  compensation  insurance shall be deemed to be a mutual carrier within the meaning of the definition of that term in section one hundred six of the workers'  compensation  law  and  shall  be  subject  to  the provisions of article six-A of such law.  (b)  The original subscribers and the attorney-in-fact shall execute a declaration setting forth the following:  (1) the name of such reciprocal insurer, which shall  conform  to  the provisions  of subsection (g) of section one thousand one hundred two of this chapter;  (2) the location of the principal office of such  reciprocal  insurer, which  shall be the same as the principal office of the attorney-in-fact and shall at all times be located in this state;  (3) the kind or kinds of  insurance  business  intended  to  be  done, specified in terms of subsection (a) of section one thousand one hundred thirteen of this chapter;  (4)  the names and addresses of the subscribers so proposing to engage in such business;  (5) the designation and appointment of an attorney-in-fact, which  may be  a person, other than an individual, organized under the laws of this state authorized by the superintendent to act as such for  one  or  more reciprocal insurers; and having its principal office in this state;  (6)  the  names  and  addresses  of  the officers and directors of the attorney-in-fact, if a corporation, or of its members,  if  a  firm,  of whom  a  majority  shall  be  residents  of  this state or of contiguous states;  (7) the designation of an advisory committee,  all  of  whose  members shall be subscribers or officers or directors of subscriber corporations or  members  of  subscriber  firms, to act on behalf of the subscribers, with power to supervise and control the attorney-in-fact and to  control the  investments of the assets of the reciprocal insurer, and such other powers as may be conferred  by  the  articles  of  association  and  the subscriber's agreement;  (8)  a  declaration  (i)  that  all  of  the  invested  assets of such reciprocal insurer, except deposits held by state officials as  required  by  law,  shall  be  held by and in the name of such reciprocal insurer, subject to the control of the advisory committee and to  the  provisions of  this  chapter,  and  (ii)  that  all  monies paid to such reciprocal insurer shall, after deducting any sums payable to the attorney-in-fact, be  held  by such attorney-in-fact in the name of the reciprocal insurer for the uses specified in the subscriber's agreement;  (9) an exact and complete copy of the articles of association, if any, and the subscriber's agreement;  (10) the amount and  kind  of  insurance  for  which  each  subscriber proposes  to  become a policyholder, and the premium specified therefor; and  (11) such other information as the superintendent may require.  (12) in the case  of  a  municipal  reciprocal  insurer,  a  statement electing  whether  or  not the insurer and the contracts of insurance it issues will be subject to the provisions of article seventy-six of  this chapter.  In the event that the municipal reciprocal insurer elects that it and its contracts of insurance will not be subject to  such  article, then every such contract and every subscriber's agreement shall disclose the  lack  of coverage by the property/casualty insurance security fund, the inapplicability of  such  article,  and  provide  for  an  unlimited contingent  several  liability  for  assessment  of  the subscriber. The election whether or not to be  subject  to  the  provisions  of  article seventy-six of this chapter shall be irrevocable.  (c)  Such  declaration  shall be subscribed and affirmed as true under the penalties of perjury by each subscriber and by each  member  of  the advisory  committee,  in  the  manner required for the acknowledgment of conveyances of real property to be recorded in this state, and shall  be filed  in the office of the superintendent. Such articles of association and subscriber's agreement  shall  in  all  respects  conform  with  the requirements of this article.  (d)  If  the  superintendent  finds that such declaration, articles of association and subscriber's agreement are in conformity with law,  that the  subscribers,  the  attorney-in-fact  and the advisory committee are legally qualified, that each individual is a person of good  repute  and that  each  subscriber has a bona fide intention of effecting the amount and kind of insurance therein specified, he may approve such declaration and notify the advisory  committee  to  that  effect;  but  neither  the reciprocal insurer nor its attorney-in-fact shall be authorized to do an insurance  business until such reciprocal insurer has obtained a license as hereinafter provided.  (e) If within one year thereafter the superintendent finds, after such investigation and examination as he may  see  fit  to  make,  that  each subscriber  has deposited in cash with the attorney-in-fact an amount at least equal to the premium specified in such  declaration,  and  that  a fund,  at least equal to the amount of surplus to policyholders required by paragraph one of subsection (a) of section four thousand one  hundred three   of   this   chapter   for   a  newly  organized  domestic  stock property/casualty insurance company doing the  same  kind  or  kinds  of insurance  business,  has been advanced by the subscribers as an initial surplus  to  policyholders,  and   is   in   the   possession   of   the attorney-in-fact  or  invested  subject  to  the control of the advisory committee, and that other requirements of  this  chapter  applicable  to such  reciprocal  insurer  have been complied with, he may issue to such reciprocal insurer a license to  do  business.  Thereafter,  every  such reciprocal  insurer  shall  maintain a surplus to policyholders at least equal  to  the  amount  of  surplus  to  policyholders  required  to  be maintained by such paragraph.  (f) The original subscribers and the attorney-in-fact shall be jointly and  severally liable for the expenses of organization in the event that such reciprocal insurer does not comply with all the requirements for  a license,  and  obtain  a license, to do an insurance business within one year  after the filing of the declaration as specified in subsection (b) hereof. In such event the superintendent may maintain a proceeding under article seventy-four of this chapter  to  liquidate  and  dissolve  such reciprocal insurer.  (g)  (1) A licensed reciprocal insurer may be licensed to do non-basic kinds of insurance as set  forth  in  subsection  (b)  of  section  four thousand one hundred one of this chapter, subject to the requirements of subsection (b) of section four thousand one hundred two of this chapter, except  that  a  municipal  reciprocal insurer may not be licensed to do accident and health, non-cancellable disability, marine  protection  and indemnity, and residual value insurance.  (2)  It  shall  also have an initial surplus to policyholders at least equal to the amount required by  paragraph  one  of  subsection  (a)  of section  four  thousand  one  hundred  three  of  this  chapter  for the organization of a stock property/casualty insurance  company  doing  the same  kinds  of  insurance  and  shall  thereafter maintain a surplus to policyholders at least equal to the amount required to be maintained  by such   paragraph   for  a  similarly  licensed  stock  property/casualty insurance company.  (h) A licensed reciprocal insurer may be licensed (except with respect to  the  kinds  of  insurance  defined  respectively  in  the  following paragraphs  of  subsection  (a)  of  section  one  thousand  one hundred thirteen of this chapter: life insurance (1), annuities  (2)  and  title insurance  (18)) to (i) reinsure risks of every kind or description, and (ii) insure property or risks of every kind or  description  located  or resident  outside of the United States, its territories and possessions, provided such insurer maintains a surplus to policyholders of  at  least thirty-five million dollars. The provisions of this subsection shall not apply to a municipal reciprocal insurer.  (i) The financial requirements of subsections (e) and (g) hereof shall be  reduced by fifty percent for a reciprocal insurer initially licensed to do business in this state  prior  to  July  first,  nineteen  hundred eighty-two.  Such  reduction  shall not apply to the specified financial requirements in order to  write  paragraph  twenty-two,  twenty-four  or twenty-six  of  subsection  (a)  of  section  one  thousand  one hundred thirteen of this chapter.  (j) A municipal reciprocal insurer shall:  (1) comply with all applicable provisions of this chapter;  (2) comply with such additional standards as the superintendent may by regulation prescribe;  (3) not refuse to issue, renew or cancel a policy  for  any  eligible, insurable risk based solely on geographical location;  (4)  not  refuse  to  write coverages afforded by such insurer for any eligible risk in accordance with standards of  insurability  filed  with and approved by the superintendent; and  (5)  establish and promote a risk management program among subscribers to identify and reduce risks by implementation of loss  control,  safety programs and other methods of risk management.  (k)  With respect to a municipal reciprocal insurer, the amount of the initial  surplus  to  policyholders  required  by  the   provisions   of subsection (e) of this section, in order for such an insurer to obtain a license  to  do  business,  may  be  collected  from  the subscribers as follows: within one year from the date a  license  to  do  business  was granted twenty percent shall be so collected, within two years from such  date  forty  percent shall be so collected, within three years from such date sixty percent shall be so collected, within four  years  from  such date  eighty  percent  shall be so collected, and within five years from such  date  one  hundred  percent shall be so collected.   The amount of surplus to policyholders to be maintained by such an insurer during such five year period shall be the amount collected from subscribers pursuant to the schedule contained in this subsection.    * SPECIAL NOTE.--Notwithstanding that Chapter 585 of the Laws of 1984:   Bill sections 2, 3, 5, 6, 7, and 9 of such chapter amend provisions of the former Insurance Law that are not possible to juxtapose at this time due to the highly technical nature of such changes and will need  future corrective  legislation  to  implement  such  provisions  into  the  new Insurance Law as enacted by such Chapter 367 of the Laws of 1984.