2023 New York Laws › ISC - Insurance › Article 41 - Property/casualty Insurance Companies › 4118 - Limitation of Risks; Fidelity and Surety; Fire; Hospital Mutuals.

§  4118.  Limitation  of  risks;  fidelity  and surety; fire; hospital
mutuals. (a) (1) In applying the limitation of section one thousand  one
hundred  fifteen  of  this  chapter to fidelity and surety risks the net
amount of exposure on any one fidelity or surety risk shall,  except  as
provided  in  paragraph  four  hereof, be deemed within the limit of ten
percent if the company is protected in excess of that amount by:
(A) reinsurance in a company authorized to write such business in this
state  or  reinsurance  in  an  accredited  reinsurer,  as  defined   in
subsection (a) of section one hundred seven of this chapter, which is in
such  form as to enable the obligee or beneficiary to maintain an action
thereon against the ceding insurer jointly with the assuming insurer or,
where the commencement or prosecution  of  actions  against  the  ceding
insurer  has been enjoined by any court of competent jurisdiction or any
justice or judge thereof, against the assuming  insurer  alone,  and  to
have  recovery  against  the  assuming  insurer  for  its  share  of the
liability thereunder and in discharge thereof; or
(B) the co-suretyship of any  other  company  authorized  to  do  such
business in this state; or
(C)  a deposit of property with it in pledge or conveyance of property
to it in trust for its protection; or
(D) a conveyance or mortgage of property for its protection; or
(E) in case a suretyship or guaranty obligation was made on behalf  or
on  account of a fiduciary holding property in a trust capacity, by such
a deposit or other disposition of a portion of the property so  held  in
trust  that no future sale, mortgage, pledge or other disposition can be
made thereof except with the consent of  the  insurance  company  or  by
decree or order of a court of competent jurisdiction.
(2)  Notwithstanding the provisions of paragraph one hereof, a company
may execute bonds of  the  kind  commonly  known  as  transportation  or
warehousing  bonds  for  United  States  internal revenue taxes in a net
amount not exceeding twenty percent of  its  surplus  to  policyholders,
determined as provided in paragraph one hereof.
(3)  In  determining  the  net amount of exposure on any one risk, the
following  rules  shall  be  applicable  to  the  kinds  of  obligations
hereinafter described:
(A)  When the penalty of a suretyship obligation exceeds the amount of
a judgment prescribed therein as appealed from and thereby  secured,  or
exceeds the amount of the subject matter in controversy or of the estate
in  the hands of the fiduciary for the performance of whose duties it is
conditioned, the bond may be executed by  such  company  if  the  actual
amount  of  the  judgment or the subject matter in controversy or estate
not subject to supervision or control of the surety, is not in excess of
a limitation of ten percent.
(B) When the penalty of  a  suretyship  obligation  executed  for  the
performance  of a contract exceeds the contract price, the latter amount
shall be taken as the basis for estimating the limit of risk within  the
meaning of this paragraph.
(4)  In addition to any other limitation contained in this chapter, no
authorized company shall  at  any  one  time  be  exposed  to  risks  on
suretyship obligations guaranteeing the deposits of any single financial
institution  in  an aggregate net amount in excess of ten percent of the
surplus to policyholders of such  company,  determined  as  provided  in
paragraph  one  hereof,  unless  it shall be protected in excess of that
amount by security in accordance with the  provisions  of  subparagraphs
(A), (B), (C) and (D) of paragraph one hereof.
(b)  No insurer authorized to write fire insurance in this state shall
expose itself to any loss on any one fire risk, whether located in  this
state or elsewhere, in an amount exceeding ten percent of its surplus to

policyholders,  except that in the case of risks adequately protected by
automatic   sprinklers   or   risks   principally   of   non-combustible
construction and occupancy such insurer may expose itself to any loss on
any  one  risk in an amount not exceeding twenty-five percent of the sum
of its unearned premium reserve and its surplus to policyholders.    Any
risk  or portion of any risk reinsured in an assuming insurer authorized
to write such business in this state or in an accredited  reinsurer,  as
defined  in subsection (a) of section one hundred seven of this chapter,
shall be deducted in determining the limitation of  risk  prescribed  in
this subsection.
(c)  A mutual property/casualty insurance company subject to paragraph
two of subsection (a) of section four thousand one hundred seven of this
article may be permitted to write coverage on any one risk in excess  of
the  limitation  provided by section one thousand one hundred fifteen of
this chapter, based upon criteria approved by the superintendent.