2013 New York Consolidated Laws
ISC - Insurance
Article 61 - (6101 - 6116) 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.