§ 7713 — Miscellaneous provisions

New York § 7713

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 77: The Life and Health Insurance Company Guaranty Corporation of New York Act

Text

§ 7713. Miscellaneous provisions. (a) Nothing in this article shall be\nconstrued to reduce the liability for unpaid assessments of the insureds\nof an impaired or insolvent insurer operating under a plan with\nassessment liability.\n (b) The corporation shall maintain records of all negotiations and\nmeetings in which the corporation or its representatives are involved to\ndiscuss the activities of the corporation in carrying out its powers and\nduties under section seven thousand seven hundred eight of this article,\nexcept to the extent otherwise provided by or pursuant to the plan of\noperation. Records of such negotiations or meetings shall be made public\nonly upon the termination of a liquidation, rehabilitation or\nconservation proceeding involving the impaired or insolvent insurer,\nupon the termination of the impairment or insolvency of the insurer, or\nupon the order of a court of competent jurisdiction. Nothing in this\nsubsection shall limit the duty of the corporation to render a report of\nits activities under section seven thousand seven hundred fourteen of\nthis article.\n (c) (1) During an article seventy-four rehabilitation proceeding,\nassets of the impaired or insolvent insurer which are determined by the\nsuperintendent to be currently available may be used to continue all\ncovered policies, and pay all contractual obligations, of the impaired\nor insolvent insurer that would otherwise be covered by the corporation\nunder section seven thousand seven hundred eight of this article. The\ncorporation shall, subsequent to the termination of the article\nseventy-four rehabilitation proceeding and within a reasonable time\nafter the commencement of a liquidation proceeding under article\nseventy-four of this chapter reimburse the estate of the impaired or\ninsolvent insurer for such portion of the amount of assets so used to\nthe extent necessary to pay class one, two and three claims pursuant to\nparagraph one, two or three of subsection (a) of section seven thousand\nfour hundred thirty-five of this chapter. The corporation shall have a\nclaim against the estate of the impaired or insolvent insurer equal to\nthe full amount of such reimbursement, consistent with the provisions of\nparagraph four of subsection (a) of section seven thousand four hundred\nthirty-five of this chapter.\n (2) During an article seventy-four rehabilitation proceeding, assets\nof the impaired or insolvent insurer which are determined by the\nsuperintendent to be currently available may be used to continue covered\npolicies, and pay contractual obligations, of the impaired or insolvent\ninsurer, other than the covered policies and contractual obligations\nthat are covered by the corporation under section seven thousand seven\nhundred eight of this article, if a corporation, association or other\norganization which performs or will perform functions similar to those\nof the corporation enters into an agreement satisfactory to the\nsuperintendent prior to such use of such assets to repay the amount of\nsuch assets subsequent to the termination of the article seventy-four\nrehabilitation proceeding and within a reasonable time after the\ncommencement of a liquidation proceeding under article seventy-four of\nthis chapter.\n (d) In addition to the duties and powers enumerated elsewhere in this\nchapter, and subject to the limitations and exclusions contained in this\nand other sections of this chapter, upon the commencement of a\nproceeding under article seventy-four of this chapter with respect to\nany impaired or insolvent domestic insurer, the superintendent may\nrequest and receive from the corporation, and the corporation shall lend\nto the superintendent upon such request, an amount not to exceed five\nhundred thousand dollars as determined by the superintendent to be\nnecessary on an emergency basis for use by the superintendent, as\nliquidator or rehabilitator, in the administration of the affairs of\nsuch impaired or insolvent insurer. To the extent it deems necessary or\nappropriate to carry out its duties under this section, the corporation\nmay borrow such amount in accordance with subsection (h) of section\nseven thousand seven hundred eight of this article and may assess member\ninsurers for the purpose of repaying such borrowing. Such assessments\nagainst each member insurer shall be in the proportion that the premiums\nreceived by such insurer on business in this state in all accounts for\nthe calendar year preceding the assessment bear to such premiums\nreceived on business in this state in all accounts for such calendar\nyear by all assessable member insurers. The corporation shall have a\nclaim against the estate of such impaired or insolvent insurer equal to\nthe amount loaned to the superintendent in accordance with this\nsubsection, together with interest thereon at the maximum rate allowed\nby subdivision one of section 5-501 of the general obligations law, and\nsuch claim shall be treated as a class one claim under section seven\nthousand four hundred thirty-five of this chapter.\n (e) The corporation shall have a claim against the impaired or\ninsolvent insurer for all amounts expended by the corporation for the\npurposes of carrying out its obligations under this article.\n (f) (1) Prior to the termination of any proceeding under article\nseventy-four of this chapter, the court may take into consideration the\ncontributions of the respective parties, including the corporation, the\nshareholders and policyholders of the impaired or insolvent insurer, and\nany other party with a bona fide interest, in making an equitable\ndistribution of the ownership rights of such impaired or insolvent\ninsurer. In such a determination, consideration shall be given to the\nwelfare of the policyholders of the continuing or successor insurer.\n (2) No distribution to shareholders, if any, of an impaired or\ninsolvent insurer shall be made, and no rehabilitation proceeding shall\nbe terminated (except by a final order of liquidation), until and unless\nthe total amount of valid claims of the corporation for all funds\nexpended in carrying out its powers and duties under section seven\nthousand seven hundred eight of this article with respect to such\ninsurer, together with interest thereon, have been fully recovered by\nthe corporation or an arrangement satisfactory to the corporation has\nbeen made for their recovery. Such interest shall be at a rate which, in\nthe opinion of the court, fairly compensates the corporation for the use\nof such funds, but in no event shall such rate be in excess of the\nmaximum rate allowed by subdivision one of section 5-501 of the general\nobligations law at the time such funds were expended.\n (g) (1) If an order for liquidation or rehabilitation of an insurer\ndomiciled in this state has been entered, the receiver appointed under\nsuch order shall have a right to recover on behalf of the insurer, from\nany parent corporation or holding company or person who otherwise\ncontrolled the insurer, the amount of distributions (other than\ndistributions of shares of the same class of stock) paid by the insurer\non its capital stock, made at any time during the five years preceding\nthe petition for liquidation, conservation or rehabilitation, as the\ncase may be, subject to the limitations of paragraphs two, three and\nfour of this subsection.\n (2) No such distribution shall be recoverable if the insurer shows\nthat when paid, such distribution was reasonable and that the insurer\ndid not know and could not reasonably have known that such distribution\nmight adversely affect the ability of the insurer to fulfill its\ncontractual obligations. Notice to the superintendent pursuant to\nsubsection (a) of section four thousand two hundred seven of this\nchapter and the lack of a prior objection by the superintendent to such\ndistributions shall not constitute evidence to support the showing of\nreasonableness which would prevent the recovery of such distribution.\n (3) Any person who was a parent corporation or holding company or a\nperson who otherwise controlled the insurer at the time such\ndistributions were paid shall be liable up to the amount of\ndistributions such persons received. Any person who was a parent\ncorporation or holding company or a person who otherwise controlled the\ninsurer at the time such distributions were declared shall be liable up\nto the amount of distributions he would have received if they had been\npaid immediately. If two or more persons are liable with respect to the\nsame distribution, they shall be jointly and severally liable.\n (4) The maximum amount recoverable under this subsection shall be the\namount needed in excess of all other available assets of the impaired or\ninsolvent insurer to pay the contractual obligations of the impaired or\ninsolvent insurer and to reimburse the corporation for such payments and\nfor all other claims the corporation may have pursuant to subsection (c)\nof this section.\n (5) To the extent that any person liable under paragraph three of this\nsubsection is insolvent or otherwise fails to pay claims due from it\npursuant to such paragraph, its parent corporation or holding company or\nperson who otherwise controlled it at the time the distribution was\npaid, shall be jointly and severally liable for any resulting deficiency\nin the amount recovered from such parent corporation or holding company\nor person who otherwise controlled it.\n