2023 New York Laws › ISC - Insurance › Article 70 - Captive Insurance Companies › 7003 - License; Power; Filing; Fees.

§  7003.  License;  power;  filing;  fees.  (a)  Any captive insurance
company, when permitted by its articles of association or charter, shall
apply to the superintendent for a license  to  do  a  captive  insurance
business  under  this  article. A captive insurance business consists of
the kinds of insurance set forth in section  one  thousand  one  hundred
thirteen  and section one thousand one hundred fourteen of this chapter,
provided that:
(1) a pure captive insurance company shall insure, on a primary basis,
only risks of its parent and affiliated companies;
(2) a group captive insurance  company  shall  insure,  on  a  primary
basis,   only  risks  of  the  industrial  insureds  that  comprise  the
industrial insured group;
(3) a pure captive insurance company  or  a  group  captive  insurance
company  shall  not  be  authorized to provide, on a primary basis or as
reinsurance, the kinds of insurance specified in  paragraphs  one,  two,
three,  eighteen,  twenty-three  and  twenty-five  of  subsection (a) of
section one thousand one hundred thirteen of this chapter;
(4) a pure captive insurance company  or  a  group  captive  insurance
company shall not be authorized to provide, on a primary basis:
(A) workers' compensation and employers' liability insurance; or
(B)  any  other  kind  of insurance, including motor vehicle liability
insurance, that is required,  under  the  laws  of  this  state  or  any
political  subdivision  of  this  state, as a demonstration of financial
responsibility for obtaining a license or permit to  undertake  specific
activities   when  such  requirement  must  be  satisfied  by  obtaining
insurance coverage from an insurer authorized in this state, up  to  the
minimum amount of insurance so required under such laws; and
(C)  except that subparagraphs (A) and (B) of this paragraph shall not
prohibit  a  pure  captive  insurance  company  from  providing  primary
indemnity  coverage  to  its  parent  and  affiliated  companies for any
insurance or self-insurance program specified in such subparagraphs  (A)
or  (B),  provided the insurance or self-insurance program has qualified
under the applicable state or federal law requiring the program; and
(5) a pure captive insurance company  or  a  group  captive  insurance
company shall reinsure only risks as set forth in section seven thousand
ten of this article.
Notwithstanding  any inconsistent provisions of paragraphs one through
five of this subsection, a pure captive insurance company  formed  by  a
city  with  a  population  of  one million or more may insure or provide
reinsurance  for  its  parent,  statutory  subsidiaries  and  affiliated
companies  only for liability related to or arising out of activities in
or near the World Trade Center  site  in  response  to  the  attacks  of
September eleventh, two thousand one.
(b)  No  captive  insurance  company  shall  do  any captive insurance
business in this state unless:
(1) it first obtains from the superintendent a license authorizing  it
to do captive insurance business in this state;
(2)  its  board  of  directors holds at least one meeting each year in
this state;
(3) it maintains its principal office and its records in this state;
(4) it utilizes a captive manager resident in this state who is:
(A) licensed as an agent or a broker under the provisions  of  article
twenty-one of this chapter; or
(B)  any other person approved by the superintendent provided that the
approval may  be  withdrawn  by  the  superintendent,  upon  notice  and
hearing, if the person has:
(i) been guilty of fraudulent or dishonest practices; or
(ii)  demonstrated  incompetency or untrustworthiness to act in such a
capacity; and
(5)  it submits a power of attorney, in accordance with the provisions
of section one thousand two hundred twelve of this chapter,  designating
the  superintendent as its agent for the purpose of receiving service of
process in any proceeding against it.
(c)(1) Before receiving a license to do a captive insurance  business,
a  captive  insurance company shall file an application for license with
the superintendent for  review  and  approval.  Such  application  shall
include  a  certified  copy  of  its  charter  and  bylaws,  a financial
statement certified by two principal  officers,  a  plan  of  operation,
which  shall  include  an  actuarial  report  prepared  by  a  qualified
independent actuary, and any other statements or documents  required  by
the superintendent.
(2)  In  evaluating  the  plan  of operation, the superintendent shall
consider the following factors:
(A) the amount and liquidity of its assets relative to the risks to be
assumed;
(B) the adequacy of the expertise, experience, and  character  of  the
person or persons who will manage it;
(C)  the  overall  soundness of the plan and the projections contained
therein;
(D) the adequacy of the loss prevention programs of its parent, member
organizations, or industrial insureds as applicable; and
(E) such other  factors  deemed  relevant  by  the  superintendent  in
ascertaining whether the proposed captive insurance company will be able
to meet its policy obligations.
(3)  Any  material  filed  with  the  superintendent  pursuant to this
subsection shall be  given  confidential  treatment  and  shall  not  be
subject  to  public  inspection under article six of the public officers
law, or to discovery under article thirty-one of the civil practice  law
and  rules,  except  to  the  extent the superintendent finds release of
information necessary to protect the public or necessary to initiate any
proceeding or action as provided by this article or except where a court
of competent jurisdiction in an action involving a private litigant  and
a  captive insurer finds that discovery of same should be allowed upon a
showing that such information is essential to the establishment  of  the
claim or defense brought or asserted and the party seeking discovery has
demonstrated  to the satisfaction of the court that such party is unable
to otherwise obtain the substantial equivalent of the material.
(4) In order to provide for the review of  the  application  submitted
pursuant  to  this subsection in a timely manner, the superintendent may
engage such other qualified persons and services as  may  be  necessary.
Prior  to  retaining  any  such persons and services, the superintendent
shall notify the applicant and provide an estimate of the cost  of  such
services.  The  superintendent  shall  recover  such costs in the manner
prescribed in subsection (f) of section two hundred six of the financial
services law.
(5) In the case of a pure captive insurance company formed by  a  city
with  a  population  of  one million or more to insure such city and its
affiliated  companies  for  liability  related  to  or  arising  out  of
activities  in  or  near  the World Trade Center site in response to the
attacks of September eleventh, two thousand one, the superintendent,  in
addition   to  the  provisions  set  forth  in  paragraph  two  of  this
subsection, shall consider such factors as the unique  risk  insured  by
such  captive  and  the  source and limits of the premium payments along
with any limitations on the acceptance of  claims  and  the  payment  of

accepted  claims  so long as such limitations provide an equitable basis
for the allocation of the assets of such company to pay claims.
(d)  Any proposed amendments or revisions to the charter and bylaws of
a captive insurance company shall be filed with the  superintendent  for
review and approval.
(e)  If  the  superintendent  is  satisfied  that  the  documents  and
statements filed by  the  captive  insurance  company  comply  with  the
provisions  of  this  article,  a license authorizing it to do a captive
insurance business in this state shall be issued for a term expiring  on
June  thirtieth.  Thereafter,  the  superintendent  may  issue a renewal
license for successive one year terms expiring on June thirtieth.