Opinion ID: 516422
Heading Depth: 2
Heading Rank: 1

Heading: Nuts and Bolts of the Uniform Act

Text: 28 The Superintendent of Insurance in New York monitors the financial health of all domestic insurance companies. The Superintendent may seek a liquidation or other appropriate order in a specified district of the New York Supreme Court. N.Y.Ins. Secs. 7417, 7421. Grounds for a liquidation order include insurer insolvency, refusal to cooperate in the Superintendent's regulatory oversight, or a finding that further transaction of business will be hazardous to policyholders, creditors or the public. Id. Secs. 7404, 7402. The liquidation order directs the Superintendent to take possession of the insurer's property and to liquidate the business. 29 The court may direct the Superintendent to manage the insurer's property in the insurer's name or in the name of the Superintendent. The order vests the Superintendent with title to all of the insurer's property and rights to all of the insurer's contracts and rights of action, excluding assets located in reciprocal states that have appointed ancillary receivers. Id. Secs. 7405, 7410(b). A reciprocal state is defined as a state (other than New York) in which in substance and effect the provisions of the [Uniform Act] are in force.... Id. Sec. 7408(b)(6). After ordering the insurance company into liquidation, the court maintains continuing jurisdiction over the liquidation proceedings to ensure that the Superintendent's office properly discharges its duties. 30 When issuing the liquidation order or at any time thereafter, and after an appropriate hearing, the Supreme Court may issue an order declaring the insurer insolvent. Id. Sec. 7432(a). The court may also dissolve the corporate existence of the insurer if certain statutory stated grounds for such an action are present. Id. Sec. 7416. In addition, the court may enjoin the insurer or its agents from interfering with the Superintendent's liquidation and may issue 31 such other injunctions or orders as it deems necessary to prevent interference with the superintendent or the proceeding, or waste of the assets of the insurer, or the commencement or prosecution of any actions, the obtaining of preferences, judgments, attachments or other liens, or the making of any levy against the insurer, its assets or any part thereof. 32 Id. Sec. 7419(b). 33 While the liquidator is collecting the assets of the insurer and protecting the insurer's estate from suits, the liquidator also processes claims made against the insurer's estate. The Act provides that all persons who may have claims against an insurer in liquidation shall present them to the liquidator within four months from the date of the entry of the liquidation order or within such longer time as the court shall prescribe. Id. Sec. 7432. Claims of non-residents may be filed with an ancillary receiver in a reciprocal state. Id. Secs. 7411, 7412. The liquidator's decision to accept or reject a claim is reviewed by the court overseeing the liquidation proceeding. Id. Sec. 7428. 34 New York also operates the Property/Casualty Insurance Security Fund to protect insureds from the potentially devastating effect of a shortfall in the satisfaction of their claims against the insurer. In New York, the fund does not independently process or pay out claims. The fund is used only to pay claims allowed by the court in a [liquidation] proceeding. Id. Secs. 7603, 7602(g). Payments are made by the liquidator. Id. Sec. 7608.