2023 New York Laws › ISC - Insurance › Article 74 - Rehabilitation, Liquidation, Conservation and Dissolution of Insurers › 7403 - Order of Rehabilitation; Advances From Property/casualty Insurance Security Fund; Termination.

§  7403.  Order  of  rehabilitation;  advances  from property/casualty
insurance security fund; termination. (a) An  order  to  rehabilitate  a
domestic  insurer  shall direct the superintendent and his successors in
office, as rehabilitator, forthwith to take possession of  the  property
of  such  insurer  and to conduct the business thereof, and to take such
steps toward the removal of the causes and conditions  which  have  made
such proceeding necessary as the court shall direct.
* (b)  (1)  If:  (i)  provision  is  made  therefor  in  an  order  to
rehabilitate a domestic insurer, (ii) more than  fifty  percent  of  the
insurer's net direct premiums in the preceding three calendar years were
derived   from  business  in  this  state  which  is  protected  by  the
property/casualty insurance security fund, and (iii)  such  insurer  has
consented  to  rehabilitation,  the commissioner of taxation and finance
shall advance monies of such fund, in such amounts as specified  in  the
court's order, to the rehabilitator to enable the insurer to comply with
any surplus requirement or other requirement of this chapter.
(2)  Before  issuing  such  order,  the court shall determine that the
insurer has the potential and capability, pursuant to a  plan  submitted
by   the   rehabilitator,  of  complying  with  all  surplus  and  other
requirements of this chapter and  repaying  such  advance  to  the  fund
within  two years after termination of the rehabilitation proceeding, at
a rate of interest approved  by  the  superintendent  to  be  determined
annually  which shall not be less than the average rate of return of the
fund as determined by the  superintendent  for  the  preceding  calendar
year.
(3)  The plan shall include: (i) an explanation of the factors leading
to the insurer's condition requiring rehabilitation and  the  procedures
proposed  to  improve  its  condition,  and (ii) a provision for posting
collateral with the rehabilitator as security for the  advance,  to  the
extent that the insurer's assets permit.
(4) The court shall not order any advance to the rehabilitator without
his  specific request or if the insurer's required capital or surplus is
impaired in an amount exceeding the greater of thirty million dollars or
fifteen percent of the insurer's net  direct  premium  writings  in  the
previous  calendar  year.  Total advances to an insurer shall not exceed
the greater of forty million dollars  or  twenty  percent  of  such  net
direct  premium  writings.  No  advance  shall  be made on or after July
first, two thousand which would lower the amount of assets in  the  fund
below one hundred ninety-five million dollars.
(5)  Advances shall, in all respects except as to rate of interest, be
subject to the provisions of section one thousand three hundred seven of
this chapter, provided that in the  event  that  an  insurer  which  has
received  an  advance  pursuant  to  this subsection is subsequently the
subject of an order of liquidation,  the  claim  of  the  fund  for  the
advance and any accrued interest shall be paid to the fund in accordance
with  the  provisions of section seven thousand four hundred thirty-four
of this article.
(6) This subsection shall expire July first,  two  thousand,  provided
that the insurer's obligation to repay to the fund moneys advanced to it
under  this  subsection,  and  the fund's claim for the advance, and any
accrued interest, as a priority over all  non-secured  creditors,  shall
survive such expiration date.
* NB Expired July 1, 2000
(c)  If  at  any  time  the  superintendent  deems  further efforts to
rehabilitate such insurer would be futile, he may  apply  to  the  court
under this article for an order of liquidation.
(d)  The rehabilitator or any interested person upon due notice to the
superintendent, at any time, may apply  for  an  order  terminating  any

rehabilitation   proceeding   and  permitting  such  insurer  to  resume
possession of its property and the conduct of its business, but no  such
order  shall  be  granted  except  when, after a full hearing, the court
shall  determine  that  the  purposes  of the proceeding have been fully
accomplished.