Bill Text: NY A09337 | 2015-2016 | General Assembly | Amended

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Bill Title: Authorizes the superintendent of financial services to suspend crediting of underwriting earnings for a fiscal year for the purpose of accumulating a subscriber's operating reserve.

Spectrum: Slight Partisan Bill (Republican 5-3)

Status: (Engrossed - Dead) 2016-06-14 - substituted by s6789a [A09337 Detail]

Download: New_York-2015-A09337-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                         9337--A
                                                                Cal. No. 816
                   IN ASSEMBLY
                                    February 23, 2016
                                       ___________
        Introduced  by M. of A. McDONALD, STECK, RAIA, FAHY, BRABENEC, PALMESANO
          -- Multi-Sponsored by -- M. of A.  CROUCH,  LOPEZ  --  read  once  and
          referred  to  the  Committee  on  Insurance  -- passed by Assembly and
          delivered to the Senate, recalled from the Senate, vote  reconsidered,
          bill  amended,  ordered reprinted, retaining its place on the order of
          third reading
        AN ACT to amend the insurance law, in relation to authorizing the super-
          intendent of financial services to suspend crediting  of  underwriting
          earnings for a fiscal year for the purpose of accumulating a subscrib-
          er's operating reserve
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. Section 6109  of  the  insurance  law,  subsection  (a)  as
     2  amended  by  chapter  138  of  the  laws  of 1987, is amended to read as
     3  follows:
     4    § 6109. Subscriber's operating reserve. (a) (1) Every subscriber of an
     5  authorized reciprocal  insurer  in  which  subscribers  are  subject  to
     6  contingent liability shall accumulate a minimum operating reserve, to be
     7  credited  to such subscriber on the books and records of such reciprocal
     8  insurer, by authorizing the attorney-in-fact to credit to  such  account
     9  at  the end of the fiscal year of such reciprocal insurer, an amount not
    10  less than one quarter of such subscriber's underwriting earnings  during
    11  such period.
    12    (2) Such accumulation shall be made so long as such subscriber's oper-
    13  ating reserve is less than twice the amount of annual premiums in force.
    14    (3) Notwithstanding the foregoing, the superintendent may, upon appli-
    15  cation from the attorney-in-fact[,]:
    16    (A) approve other methods for accumulating such subscriber's operating
    17  reserve; or
    18    (B) permit the suspension of the accumulation of the operating reserve
    19  for  a  fiscal  year  provided  that  those earnings are returned to the
    20  subscriber in accordance with  subparagraph  (B)  of  paragraph  two  of
    21  subsection (c) of this section.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14124-02-6
        A. 9337--A                          2
     1    (b)  Any  authorized  reciprocal insurer may, pursuant to the terms of
     2  the subscriber's agreement and to any action of its  advisory  committee
     3  authorized  thereunder,  require its subscribers to accumulate subscrib-
     4  er's operating reserves in excess of the minimum specified in subsection
     5  (a)  [hereof]  of this section and may require a longer period of notice
     6  for the withdrawal of all or any part of such reserve than  that  herein
     7  specified.
     8    (c)  (1) No subscriber shall have a secured or preferred claim against
     9  any assets of the reciprocal  insurer  arising  out  of  such  operating
    10  reserve,  but all assets held by such insurer shall be available for the
    11  payment of claims of policyholders  and  creditors  of  such  reciprocal
    12  insurer  in  preference  to  any claim for withdrawal by a subscriber as
    13  such.
    14    (2) Any subscriber's operating reserve accumulated by any such  recip-
    15  rocal insurer shall be maintained at all times, except that:
    16    (A) a subscriber may, upon withdrawal from membership and cancellation
    17  of all insurance contracts held by [him] the subscriber in such insurer,
    18  and after giving to the attorney-in-fact written notice of withdrawal at
    19  least  sixty days in advance, withdraw the amount of [his] the subscrib-
    20  er's operating reserve less such surrender charges as  may  be  deducted
    21  pursuant to the subscriber's agreement; or
    22    (B) where the superintendent has determined that the suspension of the
    23  accumulation  of  the  operating reserve would not be harmful to policy-
    24  holders or the people of this state, the attorney-in-fact  may,  in  the
    25  fiscal  year  following the year for which the suspension of the accumu-
    26  lation of the operating reserve was authorized, return to each subscrib-
    27  er an amount equal to the underwriting earnings that would  have  other-
    28  wise been credited to the subscriber's operating reserve.
    29    (3)  No  [such] withdrawal shall be permitted after an order of liqui-
    30  dation of, or the appointment of a receiver or liquidating trustee  for,
    31  any  such  reciprocal insurer or, notwithstanding any other provision of
    32  law to the contrary, where there is an authorized control level event or
    33  a mandatory control level event as defined in section  thirteen  hundred
    34  twenty-four of this chapter.
    35    § 2. This act shall take effect immediately.