§ 7003 — License; power; filing; fees

§ 7003. License; power; filing; fees. (a) Any captive insurance\ncompany, when permitted by its articles of association or charter, shall\napply to the superintendent for a license to do a captive insurance\nbusiness under this article. A captive insurance business consists of\nthe kinds of insurance set forth in section one thousand one hundred\nthirteen and section one thousand one hundred fourteen of this chapter,\nprovided that:\n (1) a pure captive insurance company shall insure, on a primary basis,\nonly risks of its parent and affiliated companies;\n (2) a group captive insurance company shall insure, on a primary\nbasis, only risks of the industrial insureds that comprise the\nindustrial insured group;\n (3) a pure captive insurance company or a group captive insurance\ncompany shall not be authorized to provide, on a primary basis or as\nreinsurance, the kinds of insurance specified in paragraphs one, two,\nthree, eighteen, twenty-three and twenty-five of subsection (a) of\nsection one thousand one hundred thirteen of this chapter;\n (4) a pure captive insurance company or a group captive insurance\ncompany shall not be authorized to provide, on a primary basis:\n (A) workers' compensation and employers' liability insurance; or\n (B) any other kind of insurance, including motor vehicle liability\ninsurance, that is required, under the laws of this state or any\npolitical subdivision of this state, as a demonstration of financial\nresponsibility for obtaining a license or permit to undertake specific\nactivities when such requirement must be satisfied by obtaining\ninsurance coverage from an insurer authorized in this state, up to the\nminimum amount of insurance so required under such laws; and\n (C) except that subparagraphs (A) and (B) of this paragraph shall not\nprohibit a pure captive insurance company from providing primary\nindemnity coverage to its parent and affiliated companies for any\ninsurance or self-insurance program specified in such subparagraphs (A)\nor (B), provided the insurance or self-insurance program has qualified\nunder the applicable state or federal law requiring the program; and\n (5) a pure captive insurance company or a group captive insurance\ncompany shall reinsure only risks as set forth in section seven thousand\nten of this article.\n Notwithstanding any inconsistent provisions of paragraphs one through\nfive of this subsection, a pure captive insurance company formed by a\ncity with a population of one million or more may insure or provide\nreinsurance for its parent, statutory subsidiaries and affiliated\ncompanies only for liability related to or arising out of activities in\nor near the World Trade Center site in response to the attacks of\nSeptember eleventh, two thousand one.\n (b) No captive insurance company shall do any captive insurance\nbusiness in this state unless:\n (1) it first obtains from the superintendent a license authorizing it\nto do captive insurance business in this state;\n (2) its board of directors holds at least one meeting each year in\nthis state;\n (3) it maintains its principal office and its records in this state;\n (4) it utilizes a captive manager resident in this state who is:\n (A) licensed as an agent or a broker under the provisions of article\ntwenty-one of this chapter; or\n (B) any other person approved by the superintendent provided that the\napproval may be withdrawn by the superintendent, upon notice and\nhearing, if the person has:\n (i) been guilty of fraudulent or dishonest practices; or\n (ii) demonstrated incompetency or untrustworthiness to act in such a\ncapacity; and\n (5) it submits a power of attorney, in accordance with the provisions\nof section one thousand two hundred twelve of this chapter, designating\nthe superintendent as its agent for the purpose of receiving service of\nprocess in any proceeding against it.\n (c)(1) Before receiving a license to do a captive insurance business,\na captive insurance company shall file an application for license with\nthe superintendent for review and approval. Such application shall\ninclude a certified copy of its charter and bylaws, a financial\nstatement certified by two principal officers, a plan of operation,\nwhich shall include an actuarial report prepared by a qualified\nindependent actuary, and any other statements or documents required by\nthe superintendent.\n (2) In evaluating the plan of operation, the superintendent shall\nconsider the following factors:\n (A) the amount and liquidity of its assets relative to the risks to be\nassumed;\n (B) the adequacy of the expertise, experience, and character of the\nperson or persons who will manage it;\n (C) the overall soundness of the plan and the projections contained\ntherein;\n (D) the adequacy of the loss prevention programs of its parent, member\norganizations, or industrial insureds as applicable; and\n (E) such other factors deemed relevant by the superintendent in\nascertaining whether the proposed captive insurance company will be able\nto meet its policy obligations.\n (3) Any material filed with the superintendent pursuant to this\nsubsection shall be given confidential treatment and shall not be\nsubject to public inspection under article six of the public officers\nlaw, or to discovery under article thirty-one of the civil practice law\nand rules, except to the extent the superintendent finds release of\ninformation necessary to protect the public or necessary to initiate any\nproceeding or action as provided by this article or except where a court\nof competent jurisdiction in an action involving a private litigant and\na captive insurer finds that discovery of same should be allowed upon a\nshowing that such information is essential to the establishment of the\nclaim or defense brought or asserted and the party seeking discovery has\ndemonstrated to the satisfaction of the court that such party is unable\nto otherwise obtain the substantial equivalent of the material.\n (4) In order to provide for the review of the application submitted\npursuant to this subsection in a timely manner, the superintendent may\nengage such other qualified persons and services as may be necessary.\nPrior to retaining any such persons and services, the superintendent\nshall notify the applicant and provide an estimate of the cost of such\nservices. The superintendent shall recover such costs in the manner\nprescribed in subsection (f) of section two hundred six of the financial\nservices law.\n (5) In the case of a pure captive insurance company formed by a city\nwith a population of one million or more to insure such city and its\naffiliated companies for liability related to or arising out of\nactivities in or near the World Trade Center site in response to the\nattacks of September eleventh, two thousand one, the superintendent, in\naddition to the provisions set forth in paragraph two of this\nsubsection, shall consider such factors as the unique risk insured by\nsuch captive and the source and limits of the premium payments along\nwith any limitations on the acceptance of claims and the payment of\naccepted claims so long as such limitations provide an equitable basis\nfor the allocation of the assets of such company to pay claims.\n (d) Any proposed amendments or revisions to the charter and bylaws of\na captive insurance company shall be filed with the superintendent for\nreview and approval.\n (e) If the superintendent is satisfied that the documents and\nstatements filed by the captive insurance company comply with the\nprovisions of this article, a license authorizing it to do a captive\ninsurance business in this state shall be issued for a term expiring on\nJune thirtieth. Thereafter, the superintendent may issue a renewal\nlicense for successive one year terms expiring on June thirtieth.\n