2023 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.