2013 New York Consolidated Laws
ISC - Insurance
Article 61 - (6101 - 6116) RECIPROCAL INSURERS AND LLOYDS UNDERWRITERS
6106 - Subscriber's agreement.

 
    §  6106.  Subscriber's  agreement.  (a)  (1)  Every  subscriber  of an
  authorized  reciprocal  insurer  shall  have  executed  a   subscriber's
  agreement,  and every subscriber executing such a subscriber's agreement
  containing a provision for contingent  liability  of  subscribers  shall
  execute  and  duly  acknowledge the same, in a manner sufficient for the
  acknowledgment of conveyances of real property to  be  recorded  in  the
  state in which such subscriber is domiciled.
    (2)  Every  subscriber's agreement shall be identical in terms, except
  as to the date and the name and address  of  the  subscriber,  with  all
  other  subscriber's  agreements  currently  in force and effect with all
  other subscribers of such reciprocal insurers. However, in the  case  of
  any  reciprocal  insurer authorized pursuant to section six thousand one
  hundred eight of  this  article  to  issue  non-assessable  policies  or
  agreements,  or  having a corporate attorney-in-fact wholly owned by the
  subscribers at such reciprocal insurer, the acceptance of  a  policy  or
  binder of insurance containing the subscriber's agreement printed at the
  end of the standard policy provisions or the binder, as the case may be,
  preceded by the words printed upon the policy or binder:
        "The  acceptance  of  this policy or binder shall constitute
        that insured designated  therein  is  a  subscriber  of  the
        reciprocal  insurer  and  shall constitute the execution and
        delivery by the insured of the subscriber's agreement  which
        is appended to this policy or binder, and hereby made a part
        thereof",
  shall  constitute  the  execution  and  delivery  of  said  subscriber's
  agreement by that insured as fully and to the same extent as though said
  agreement had been signed and acknowledged by that insured.
    (3) Every such subscriber's agreement shall contain in  substance  the
  following provisions:
    (A)  A  designation and appointment of the attorney-in-fact to act for
  and bind the subscriber in all transactions relating to or  arising  out
  of   the   operations  of  such  reciprocal  insurer,  subject  to  such
  limitations as may be lawfully provided.
    (B) An agreement that service of summons or other legal process on the
  attorney-in-fact   or   on   any   other   person   appointed   by   the
  attorney-in-fact  to receive such process, shall, in any action, suit or
  proceeding arising out of any contract, agreement or transaction of such
  reciprocal insurer, be equivalent to personal service of such summons or
  other legal process on each and every subscriber.
    (C)  Unless  the   reciprocal   insurer   is   authorized   to   issue
  non-assessable  policies under section six thousand one hundred eight of
  this  article  an  agreement  for  the  contingent  liability   of   the
  subscriber,  which  shall  state  that  such subscriber agrees to pay on
  demand such subscriber's proportionate share of any assessment  lawfully
  ordered  or  levied  by  the advisory committee or by the superintendent
  under article seventy-four of this chapter.
    (D) A  provision  that  there  shall  be  an  annual  meeting  of  the
  subscribers, in person or by proxy, at a time and place to be determined
  in  accordance  with  such  agreement, of which each subscriber shall be
  duly notified and at which each subscriber shall have power to  vote  in
  person  or  by  proxy  for  all  members of the advisory committee to be
  chosen or appointed at such time, except that in the case of  a  foreign
  reciprocal insurer, the superintendent may permit a modification of such
  provision  provided  that  he  is  satisfied  that  the interests of the
  subscribers are properly protected.
    (E) A provision specifying the  powers  and  duties  of  the  advisory
  committee,  which  shall  include  the  power  and  duty to regulate the
  compensation,  powers  and  duties  of  the  attorney-in-fact,  if   not

  specifically  provided  in  the  subscriber's  agreement, and shall also
  include the power to make regulations  for  the  effective  control  and
  custody  of  the  funds  and  investments  of the reciprocal insurer. In
  addition, the advisory committee of a municipal reciprocal insurer shall
  establish  procedures  to  prevent any conflicts of interest between the
  attorney-in-fact and such insurer. Such procedures shall be submitted to
  and  approved  by  the  superintendent,  who  shall  also  approve   the
  attorney-in-fact for a municipal reciprocal insurer.
    (F) Provisions setting forth the rights, privileges and obligations of
  the  subscriber  as an underwriter, and as a policyholder subject to the
  terms of insurance contracts required or permitted by law to be issued.
    (G) General provisions relating to the operations  of  the  reciprocal
  insurer,  including  the  subscriber's  operating  reserve requirements,
  regulations for the return of savings or dividends, for withdrawals  and
  refunds  and  such  other  matters  as  may be necessary to maintain the
  operation of such reciprocal insurer in compliance with  the  provisions
  of  this  chapter.  In  the case of a municipal reciprocal insurer, such
  agreement shall include procedures to: (i) establish  and  promote  loss
  control,  safety  programs  and  other  methods of risk management; (ii)
  establish equitable risk classifications; and  (iii)  establish  uniform
  recordkeeping and reporting procedures.
    (4)  The  following  provisions  shall  be  contained  in  either  the
  subscriber's agreement or a separate management  agreement  between  the
  attorney-in-fact  and the advisory committee or the attorney-in-fact and
  any person to which its functions have been delegated after approval  of
  the advisory committee:
    (A)  A  provision  that  the  attorney-in-fact  shall  provide written
  notification of, and make all necessary arrangements as provided in  the
  subscriber's  agreement, for the election, in person or by proxy, of the
  members of the advisory committee. The cost of notification, ballot,  or
  proxy  for  any  meeting  of  the advisory committee and for any meeting
  which  may  be  called  for  the  election  shall  be  incurred  by  the
  reciprocal.
    (B)  A  provision  that  the  attorney-in-fact  shall  provide written
  notification to the members of the advisory committee of not  less  than
  ten  days  for  any regular meeting or five days for any special meeting
  called pursuant to subsection (k) of section six  thousand  one  hundred
  five of this article. The cost of such notification shall be incurred by
  the reciprocal.
    (C)  A  provision  that  the  advisory committee may, upon a vote of a
  majority of its members at any regular or special  meeting  thereof  and
  upon  written  notice  to  the  superintendent and the attorney-in-fact,
  recommend termination of the attorney-in-fact for  a  stated  cause  and
  appointment  of a new attorney-in-fact, subject to the provisions of any
  management agreement approved by the superintendent. Termination of  the
  attorney-in-fact  shall require the approval of a two-thirds majority of
  the subscribers present in person or  by  proxy  at  a  special  meeting
  called  for that purpose. The attorney-in-fact shall provide by mail not
  less than thirty days prior written notification of such meeting to  all
  subscribers.   The   mailing   of   notification   shall   include   the
  recommendation  of  termination  and  replacement  as  prepared  by  the
  advisory committee, and any other appropriate documents submitted by the
  attorney-in-fact.  A  copy  of all documents mailed and certification of
  their mailing to all subscribers shall be provided to all members of the
  advisory committee. The cost of notification  and  proxy  for  any  such
  meeting  shall  be incurred by the reciprocal. For reciprocals with less
  than two thousand five hundred subscribers, at least twenty-five percent
  of all subscribers shall be required to constitute  a  quorum.  For  all

  other  reciprocals,  the  greater  of twenty-five hundred subscribers or
  five percent of all subscribers shall constitute a quorum.
    (D)  A  provision  that the attorney-in-fact shall cause all assets of
  the reciprocal and its subscribers to be  invested  in  accordance  with
  investment  guidelines  approved  by the advisory committee and shall be
  properly accounted for on the financial records  of  the  reciprocal  as
  being  held  for or on behalf of the subscribers. All cash assets of the
  reciprocal and its subscribers, not otherwise  invested  in  short  term
  securities  such  as  money  market  funds,  covering policy obligations
  arising out of policies issued or issued  for  delivery  in  the  United
  States shall be held in one or more appropriately identified accounts in
  banks  that  are  members  of the federal reserve system. These accounts
  shall  be  drawn  on  by  the  attorney-in-fact,  or  by  employees   or
  representatives of the reciprocal authorized by the attorney-in-fact for
  all payments on behalf of the reciprocal.
    (E)  A  provision that if the attorney-in-fact is acting for more than
  one reciprocal, separate records and accounts shall  be  maintained  for
  each reciprocal.
    (F)   A  provision  that  the  attorney-in-fact  may  not  assign  its
  responsibilities as detailed in the subscriber's agreement in  whole  or
  part  or enter into management agreements delegating its duties in whole
  or part to another party without the  prior  approval  of  the  advisory
  committee and the superintendent.
    (G) A provision that the attorney-in-fact shall establish and maintain
  underwriting  procedures  and  manuals,  setting  forth  the  rates  and
  conditions for the acceptance or rejection of risks.
    (H) A provision that the attorney-in-fact shall make a report  to  the
  advisory  committee  at  each  regular  meeting  of the committee on the
  financial condition of the  reciprocal  and  all  material  transactions
  during the period since the last meeting.
    (I)  A  provision  that the attorney-in-fact shall annually provide to
  each member of the advisory committee:
    (i) On or before March first of each year, a copy of the  reciprocal's
  annual  statement  and  the  accompanying statement of actuarial opinion
  filed with the superintendent pursuant to section three hundred seven of
  this chapter; and
    (ii) On or before June first of each year, a copy of:
    (I) The certified statement filed with the superintendent pursuant  to
  subsection (f) of section six thousand one hundred five of this article;
  and
    (II)  The  certified annual statement of the reciprocal filed with the
  superintendent pursuant to section three hundred seven of this chapter.
    (J) A provision specifying all  forms  and  amounts  (or  formulas  to
  determine the amounts) of compensation the attorney-in-fact will receive
  for  services  rendered  and, if all or part of the compensation will be
  contingent  upon  the  reciprocal's  profits,  a  provision  that   such
  compensation  shall  not  be  paid  until  at least five years after the
  premiums on liability insurance are earned and at least one  year  after
  the  premiums are earned on any other kind of insurance and, in no event
  shall the compensation  be  paid  until  the  adequacy  of  reserves  on
  outstanding  claims  has been independently verified by the same actuary
  who opined on the latest annual statement filed with the  superintendent
  pursuant to section three hundred seven of this chapter.
    (K)  A  provision that the independent certified public accountant who
  will prepare the annual report required by subsection (f) of section six
  thousand one hundred five of this article and  the  independent  actuary
  who  will prepare the opinion accompanying the annual statement pursuant

  to section three hundred seven of this chapter shall be selected by  the
  attorney-in-fact, subject to the approval of the advisory committee.
    (L) A provision that the books, accounts and records of the reciprocal
  shall  be  maintained  by the attorney-in-fact to clearly and accurately
  disclose the nature  and  details  of  all  transactions  including  all
  information necessary to determine that the compensation received by, or
  owing  to,  the attorney-in-fact is provided in a manner consistent with
  the subscriber's agreement and  any  management  agreement.  The  books,
  accounts and records of the reciprocal shall be the sole property of the
  reciprocal.
    (M) A provision that the attorney-in-fact shall conduct the affairs of
  the reciprocal in accordance with the provisions of this chapter.
    (b) (1) The subscriber's agreement may contain such further provisions
  as  may  be  necessary or proper; but neither the subscriber's agreement
  nor the articles of association, if any,  of  an  authorized  reciprocal
  insurer shall contain any provisions inconsistent with the provisions of
  subsection (a) hereof.
    (2)  The superintendent may, if he finds it necessary to carry out the
  purpose and intent of this article, by regulation  prescribe  additional
  provisions, not inconsistent with any law of this state, to be contained
  in the subscriber's agreement of reciprocal insurers.
    (c)  Every subscriber to a municipal reciprocal insurer shall agree to
  participate  in  a  risk   management   program   established   by   the
  attorney-in-fact.  The  attorney-in-fact of each insurer shall, with the
  approval of the advisory committee, establish, promote and manage a risk
  management program among the subscribers.  Each  program  shall  include
  identifying  and  reducing  risks  through  the  implementation  of loss
  control, safety programs and  other  methods  of  risk  management.  The
  attorney-in-fact  may  enter  into  contracts  with any person, firm, or
  corporation for services necessary to perform and  administer  the  risk
  management  program  or  to perform or administer other functions deemed
  necessary by the advisory committee and approved by the  superintendent.
  An  individual subscriber may enter into contracts with any person, firm
  or corporation for services necessary  to  perform  and  administer  any
  function which that subscriber shall deem necessary.