§ 7708 — Powers and duties of the corporation

§ 7708. Powers and duties of the corporation. In addition to the\npowers and duties enumerated in other sections of this article, and\nsubject to limitations and exclusions contained in this and other\nsections of this article:\n (a) (1) If a domestic insurer is an impaired or insolvent insurer, the\ncorporation shall, with the approval of the superintendent:\n (A) guarantee, assume, or reinsure, or cause to be guaranteed,\nassumed, or reinsured, the covered policies, or arrange for replacement\nby policies found by the superintendent to be substantially similar to\nsuch covered policies;\n (B) assure payment of the contractual obligations of the impaired or\ninsolvent insurer; and\n (C) provide such moneys, pledges, notes, guarantees or other means as\nare reasonably necessary to discharge such duties.\n (2) The aggregate liability of the corporation under this subsection\nshall not exceed five hundred thousand dollars for all benefits,\nincluding cash values, with respect to any one life or, to the extent\nbenefits are not allocated pursuant to a covered policy to any one life,\nto any one covered policy; provided, however, that (A) the foregoing\nlimitation shall not apply to any group or blanket accident or health\ninsurance or accident and health insurance policy; and (B) the\ncorporation shall be liable under this subsection in an amount not to\nexceed one million dollars for all benefits, including cash values, with\nrespect to any group annuity contract (or portion of any such contract)\nthat does not guarantee annuity benefits with respect to any specific\nindividual identified in the contract and with respect to any funding\nagreement issued to fund benefits under any employee benefit plan.\n (b) (1) If a foreign or alien insurer is an impaired or insolvent\ninsurer, the corporation shall, with the approval of the superintendent:\n (A) guarantee, assume, or reinsure or cause to be guaranteed, assumed,\nor reinsured the covered policies, or arrange for replacement by\npolicies found by the superintendent to be substantially similar to such\ncovered policies;\n (B) assure payment of the contractual obligations of the insolvent\ninsurer; and\n (C) provide such moneys, pledges, notes, guarantees, or other means as\nare reasonably necessary to discharge such duties.\n (2) The aggregate liability of the corporation under this subsection\nshall be the excess over any amount that the superintendent determines\nto be the statutory obligation of the guaranty corporation or\nassociation of the foreign or alien insurer's state of domicile or state\nof entry, but in no event shall the corporation's liability, when added\nto the amount so determined to be available from such other guaranty\ncorporation or association, exceed five hundred thousand dollars for all\nbenefits, including cash values, with respect to any one life, or, to\nthe extent benefits are not allocated pursuant to a covered policy to\nany one life, to any one covered policy; provided, however, that the (A)\nforegoing five hundred thousand dollar limitation shall not apply to any\ngroup or blanket accident or health insurance or accident and health\ninsurance policy; and (B) liability of all such guaranty corporations or\nassociations may in the aggregate equal, but shall not exceed one\nmillion dollars for all benefits, including cash values, with respect to\nany group annuity contract (or portion of any such contract) that does\nnot guarantee annuity benefits with respect to any specific individual\nidentified in the contract and with respect to any funding agreement\nissued to fund benefits under any employee benefit plan.\n (c) (1) The superintendent may, with the approval of the court,\nsuspend cash surrender rights and policy loan rights under any covered\npolicy for an initial period not to exceed one year and for additional\nsuccessive periods, each not to exceed one year, all in addition to any\ncontractual provision for deferral of cash or policy loan values, upon a\nfinding that:\n (A) The amounts which can be assessed under this article are less than\nthe amounts needed to assure full and prompt performance of the impaired\nor insolvent insurer's contractual obligations, or that the economic or\nfinancial conditions as they affect member insurers are sufficiently\nadverse to render the imposition of policy or contract liens to be in\nthe public interest, or\n (B) Such suspension is necessary and proper to effectuate at a\nreasonable cost any guarantee, assumption or reinsurance agreement.\n (2) The obligations of the corporation under subsection (a) or (b) of\nthis section, whichever is applicable, with regard to maintaining in\nforce any policy or contract of group life insurance or group health\ninsurance shall be limited to one hundred eighty days from the date the\nimpaired or insolvent insurer was placed under an order of liquidation,\nrehabilitation or conservation under article seventy-four of this\nchapter, and the corporation shall have no obligation with regard to any\nclaim incurred pursuant to any such policy or contract beyond one\nhundred eighty days from such date, provided (A) that the superintendent\nshall have discretion to extend the period of one hundred eighty days up\nto three hundred sixty-six days with regard to any policy or contract\nwhen he believes circumstances warrant, and\n (B) that the superintendent and the corporation may make such further\nextensions of such period as they mutually agree are warranted.\n (3) If the superintendent or the corporation shall find that at the\ntime a covered annuity contract or funding agreement or a class thereof,\nother than an annuity contract, funding agreement or class thereof which\nfunds a compromise or settlement contained in a judgment or order\nentered pursuant to the provisions of section twelve hundred seven of\nthe civil practice law and rules, was issued by the impaired or\ninsolvent insurer the interest rate guaranteed under such contract or\nagreement or class thereof was clearly excessive, the superintendent may\npetition the court having jurisdiction in this state, upon appropriate\nnotice to and opportunity for submission of comments from the\ncorporation and owners of contracts and agreements proposed to be\naffected, to limit the corporation's obligations under this article with\nrespect to payment of interest to an interest rate which the court finds\nwould have been appropriate and reasonable at the time the contract or\nagreement or class thereof was issued. Nothing in this subsection shall\nlimit the rights of a holder of a contract or agreement so affected as\nagainst the impaired or insolvent insurer.\n (4) Notwithstanding anything to the contrary in this article, under no\ncircumstances shall the corporation have any obligation on account of an\nimpaired or insolvent insurer either to, or which inures to the benefit\nof, any person or firm which at the time the policy, contract or\nagreement was issued or renewed or within ninety days of the date the\ninsurer was determined to be impaired or insolvent, as the case may be,\ndirectly or indirectly owned ten percent or more of or controlled such\nimpaired or insolvent insurer; provided, however, that nothing in this\nsubsection shall relieve the corporation of responsibility with regard\nto contractual obligations of such insurer under certificates of\ninsurance issued to, and inuring solely to the benefit of, the employees\nof such person or firm.\n (d) If the corporation fails to act within a reasonable period of time\nas provided in subsection (a) or (b) of this section, whichever is\napplicable, the superintendent shall have the powers and duties of the\ncorporation under this article with respect to any impaired or insolvent\ninsurer.\n (e) The corporation may render assistance and advice to the\nsuperintendent, upon his request, concerning rehabilitation, payment of\nclaims, continuance of coverage, or the performance of other contractual\nobligations of any impaired or insolvent insurer.\n (f) When any person receives benefits under this article, the\ncorporation shall possess all of the rights under the covered policy\nthat such person had immediately before such receipt to the extent of\nthe benefits received because of this article whether the benefits are\npayments of contractual obligations or continuation of coverage;\nprovided, however, that the corporation shall not have any greater\npriority against the assets of an impaired or insolvent insurer by\nreason of this subsection than is expressly given by section seven\nthousand four hundred thirty-five of this chapter. The corporation may\nrequire an assignment to it, or the execution of any other instrument\nevidencing the corporation's possession, of such rights by any payee,\npolicy or contract owner, beneficiary, insured or annuitant. The receipt\nof such assignment or other instrument, and its validity and\nenforceability by the corporation in accordance with its terms under the\nlaws of the insurer's state of domicile or state of entry, shall be a\ncondition precedent to the receipt of any rights or benefits conferred\nby this article upon such person.\n (g) The contractual obligations of the impaired or insolvent insurer\nfor which the corporation becomes or may become liable shall be no\ngreater than the contractual obligations of the impaired or insolvent\ninsurer would have been in the absence of an impairment or insolvency.\n (h) The corporation may:\n (1) enter into such contracts as are necessary or proper to carry out\nthe provisions and purposes of this article;\n (2) sue or be sued, including taking any legal actions necessary or\nproper for recovery of any unpaid assessments under section seven\nthousand seven hundred nine of this article;\n (3) borrow money to effect the purposes of this article, provided,\nhowever, that the corporation may agree, as a condition of any\nborrowing, that the lender will be subrogated to the rights of the\ncorporation against the impaired or insolvent insurer to the extent of\nthe amount borrowed and interest accruing thereon, and provided further\nthat any note or other evidence of indebtedness of the corporation not\nin default shall be a legal investment for domestic insurers and may be\ncarried as admitted assets;\n (4) employ or retain such persons as are necessary or proper to handle\nthe financial transactions of the corporation, and to perform such other\nfunctions as become necessary or proper under this article;\n (5) with the approval of the superintendent, negotiate and contract\nwith any liquidator, rehabilitator, conservator or ancillary receiver to\ncarry out the powers and duties of the corporation;\n (6) take such legal action as may be necessary to avoid payment of\nimproper claims;\n (7) exercise, for the purposes of this article and to the extent\napproved by the superintendent, the powers of a domestic life, health,\nor property/casualty insurance company, but in no case may the\ncorporation issue insurance policies or contracts or annuity contracts\nother than those issued to perform the contractual obligations of the\nimpaired or insolvent insurer;\n (8) fund a resolution facility established pursuant to section seven\nthousand seven hundred nineteen of this article; and\n (9) exercise all powers necessary or convenient for the purposes of\nthis article.\n