§ 5902 — Definitions

New York § 5902

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 59: Risk Retention Groups and Purchasing Groups

Text

§ 5902. Definitions. The terms used in this article shall have the\nmeanings set forth in this chapter, except to the extent added or\nmodified by the following:\n (a) "Commissioner" means the commissioner, director or superintendent\nof financial services in any other state.\n (b) "Completed operations liability" means liability arising out of\nthe installation, maintenance, or repair of any product at a site which\nis not owned or controlled by:\n (1) any person who performs that work; or\n (2) any person who hires an independent contractor to perform that\nwork;\nbut shall include liability for activities which are completed or\nabandoned before the date of the occurrence giving rise to the\nliability.\n (c) "Domicile", for purposes of determining the state in which a\npurchasing group is domiciled, means:\n (1) for a corporation, the state in which the purchasing group is\nincorporated; and\n (2) for an unincorporated entity, the state of its principal place of\nbusiness.\n (d) "Financially impaired" means a risk retention group:\n (1) whose admitted assets are less than the sum of its aggregate\nliabilities and the amount of surplus to policyholders required to be\nmaintained by a domestic risk retention group authorized to do the same\nkind or kinds of insurance; or\n (2) whose admitted assets are less than the sum of its aggregate\nliabilities and outstanding capital stock; or\n (3) which is insolvent.\n (e) "Hazardous financial condition" means that, based on its present\nor reasonably anticipated financial condition, a risk retention group,\nalthough not yet financially impaired, is unlikely to be able:\n (1) to meet obligations to policyholders with respect to known claims\nand reasonably anticipated claims; or\n (2) to pay other obligations in the normal course of business.\n (f) "Insolvent" means a risk retention group whose admitted assets are\nless than the aggregate amount of its liabilities.\n (g) "Insurance" means primary insurance, excess insurance,\nreinsurance, excess line insurance, and any other arrangement for\nshifting and distributing risk which is determined to be insurance under\nthe laws of this state.\n (h) "Liability" means legal liability for damages (including costs of\ndefense, legal costs and fees, and other claims expenses) because of\ninjuries to other persons, damage to their property, or other damage or\nloss to such other persons resulting from or arising out of:\n (1) (A) any business (whether profit or nonprofit), trade, product,\nservices (including professional services), premises, or operations; or\n (B) any activity of any state or local government, or any agency or\npolitical subdivision thereof; and\n (2) does not include personal risk liability and an employer's\nliability with respect to its employees other than legal liability under\nthe Federal Employers' Liability Act (45 U.S.C. § 51 et seq.).\n (i) "Located" or "location", for purposes of determining the state in\nwhich a purchasing group is located, shall be defined in regulations\npromulgated by the superintendent which shall not be inconsistent with\nthe Federal Liability Risk Retention Act of 1986 and amendments thereto.\n (j) "Personal risk liability" means liability for damages because of\ninjury to any person, damage to property, or other loss or damage\nresulting from any personal, familial, or household responsibilities or\nactivities, rather than from responsibilities or activities referred to\nin subsection (h) of this section.\n (k) "Plan of operation or feasibility study" means an analysis which\npresents the expected activities and results of a risk retention group\nmaking application to become chartered and licensed as a domestic\nproperty/casualty insurer in this state, including at least the\nfollowing:\n (1) information sufficient to verify that its members are engaged in\nbusinesses or activities similar or related with respect to the\nliability to which such members are exposed by virtue of any related,\nsimilar, or common business, trade, product, services, premises or\noperations;\n (2) for each state in which it intends to operate, the coverages,\ndeductibles, coverage limits, rates, and rating classification systems\nfor each kind of insurance the group intends to offer;\n (3) historical and expected loss experience of the proposed members\nand national experience of similar exposures to the extent that this\nexperience is reasonably available;\n (4) pro forma financial statements and projections;\n (5) appropriate opinions by a qualified, independent casualty actuary,\nincluding a determination of minimum premium or participation levels\nrequired to commence operations and to prevent the development of a\nhazardous financial condition;\n (6) identification of management, underwriting and claims procedures,\nmarketing methods, managerial oversight methods, investment policies and\nreinsurance agreements;\n (7) identification of each state in which the risk retention group has\nobtained, or sought to obtain, a charter and license, and a description\nof its status in each state; and\n (8) such other matters as may be prescribed by the commissioner of the\nstate in which the risk retention group is chartered for liability\ninsurance companies authorized by the insurance laws of the state.\n (l) "Product liability" means liability for damages because of any\npersonal injury, death, emotional harm, consequential economic damage,\nor property damage (including damages resulting from the loss of use of\nproperty) arising out of the manufacture, design, importation,\ndistribution, packaging, labeling, lease, or sale of a product, but does\nnot include the liability of any person for those damages if the product\ninvolved was in the possession of such a person when the incident giving\nrise to the claim occurred.\n (m) "Purchasing group" means any group formed pursuant to the federal\nliability risk retention act of 1986 which:\n (1) has as one of its purposes the purchase of liability insurance on\na group basis;\n (2) purchases such insurance only for its group members and only to\ncover their similar or related liability exposure, as described in\nparagraph three of this subsection;\n (3) is composed of members whose businesses or activities are similar\nor related with respect to the liability to which members are exposed by\nvirtue of any related, similar, or common business, trade, product,\nservices, premises, or operations; and\n (4) is domiciled in any state.\n (n) "Risk retention group" means any corporation or other limited\nliability association formed pursuant to the federal liability risk\nretention act of 1986:\n (1) whose primary activity consists of assuming and spreading all, or\nany portion, of the liability exposure of its group members;\n (2) which is organized for the primary purpose of conducting the\nactivity described under paragraph one of this subsection;\n (3) which:\n (A) is chartered and licensed as a liability insurance company and\nauthorized to engage in the business of insurance under the laws of any\nstate; or\n (B) before January first, nineteen hundred eighty-five, was chartered\nor licensed and authorized to engage in the business of insurance under\nthe laws of Bermuda or the Cayman Islands and, before such date, had\ncertified to the insurance commissioner of at least one state that it\nsatisfied the capitalization requirements of such state, except that any\nsuch group shall be considered to be a risk retention group only if it\nhas been engaged in business continuously since such date and only for\nthe purpose of continuing to provide insurance to cover product\nliability or completed operations liability;\n (4) which does not exclude any person from membership in the group\nsolely to provide for members of such a group a competitive advantage\nover such a person;\n (5) which:\n (A) has as its owners only persons who comprise the membership of the\nrisk retention group and who are provided insurance by such group; or\n (B) has as its sole owner an organization which has as its members\nonly persons who comprise the membership of the risk retention group and\nwhich organization has as its owners only persons who comprise the\nmembership of the risk retention group and who are provided insurance by\nthe risk retention group;\n (6) whose members are engaged in businesses or activities similar or\nrelated with respect to the liability of which such members are exposed\nby virtue of any related, similar, or common business trade, product,\nservices, premises or operations;\n (7) whose activities do not include the provision of insurance other\nthan:\n (A) liability insurance for assuming and spreading all or any portion\nof the liability of its group members; and\n (B) reinsurance with respect to the liability of any other risk\nretention group (or any member of such other risk retention group) which\nis engaged in businesses or activities which meet the requirement\ndescribed in paragraph six of this subsection for membership in the risk\nretention group which provides such reinsurance; and\n (8) the name of which includes the phrase "risk retention group".\n (o) "State" means any state of the United States or the District of\nColumbia.\n (p) "Superintendent" means the superintendent of financial services of\nthis state.\n