§ 4111 — Mutual companies; assessments

§ 4111. Mutual companies; assessments. (a) Except as provided in\nsection four thousand one hundred thirteen of this article, every\ndomestic mutual property/casualty insurance company shall in its by-laws\nand policies prescribe the contingent mutual liability of its members\nfor the payment of assessments, in such a way that each member shall be\nliable to pay the member's proportionate share, subject to the\nlimitations hereinafter specified, of the amount of any assessment or\nassessments permitted for any purpose under any provisions of this\nchapter or necessary to make good an impairment of the minimum surplus\nof such company. The contingent liability of a member may be limited to\nan amount not less than one additional annual premium on each policy\nheld by a member. The aggregate amount of all assessments whether levied\nby the board of directors of such insurer or by the superintendent as\nliquidator or rehabilitator of the insurer, or otherwise, shall be no\ngreater amount than that specified in the by-laws and policies. Except\nas provided in section four thousand one hundred thirteen of this\narticle, no such insurance company shall make, issue or deliver any\npolicy of insurance, which does not prescribe the contingent liability\nof the policyholder in clear and explicit language printed in type not\nsmaller than eight point.\n (b) If any domestic mutual property/casualty insurance company does\nnot have admitted assets at least equal in amount to the aggregate of\nits liabilities and its minimum surplus as required by the provisions of\nthis chapter, and if such impairment is not otherwise made good, the\nboard of directors of the company may, with the approval of the\nsuperintendent and within such time as he prescribes, order an\nassessment in the manner specified in the by-laws for an amount which\nwill provide sufficient funds to make good the impairment, except that\nno member shall be liable for an assessment exceeding the limit\nspecified in his policy in accordance with subsection (a) hereof. All\norders of assessment made by the board of directors shall be filed with\nthe superintendent and shall not take effect unless and until approved\nby him. The superintendent may refuse any such approval if, in his\njudgment, refusal will best promote the interests of the policyholders\nand creditors of the company, and of the insuring public. Every\nassessment shall be made upon all members liable to assessment therefor\nin the proportion hereinafter specified. Every person, firm or\ncorporation who or which was a member of such company at any time during\none year prior to the making of an order of assessment by the board of\ndirectors shall be liable to pay and shall pay the member's\nproportionate share of any assessment which may be made in accordance\nwith law, if the member is notified of the assessment within one year\nafter making of an order of assessment. A member's proportionate part of\nany assessment shall be determined by applying to the premium earned on\nthe member's policy or policies in force during a period of one year\nnext preceding the order of assessment the ratio of the total assessment\nto the total premiums earned during such period on all policies subject\nto assessment.\n (c) Unless specifically authorized by the provisions of this chapter\nto issue non-assessable policies in this state, no foreign mutual\nproperty/casualty insurance company shall be or continue to be\nauthorized to do business in this state unless its by-laws and policies\nissued in this state contain provisions for the levying and collection\nof assessments upon members, at least for the payment of losses and\nexpenses, which conform in substance to subsection (b) hereof.\n (d) In the case of a mutual property/casualty insurance company\nsubject to paragraph two of subsection (a) of section four thousand one\nhundred seven of this article, an assessment authorized by this section\nshall be made when, in addition to the grounds set forth in this\nsection, if the ratio of net premium writings to surplus as regards\npolicyholders is four to one or greater, based upon the last annual\nstatement or any quarterly statement projected on an annual basis,\nsubject to the approval of the superintendent, and if, at any time, upon\nexamination, the superintendent determines that an assessment should be\nmade pursuant to subsection (b) hereof or this subsection the\nsuperintendent shall make an appropriate order that the assessment be\nmade.\n