N.Y. Insurance Law § 1209: Management and by-laws of mutual insurance corporations

§ 1209. Management and by-laws of mutual insurance corporations. (a)

The management of the business and affairs of a domestic mutual

insurance corporation shall be vested in a board of directors.

(b) Such corporation shall have not less than seven directors. The

directors, except as provided in section four thousand two hundred ten

of this chapter, shall be elected at the annual meetings of the members,

and all except four of the directors of such corporation, elected after

the organization of the corporation is completed and it has been

licensed to issue insurance policies, must be members of the corporation

or officers of member corporations. At any time after the first annual

meeting, the directors may be divided into not exceeding three groups as

nearly equal as possible, and thereafter the directors in one group only

or their successors shall be elected annually as provided in the

by-laws. The board of directors of such corporation shall hold regular

meetings at least four times in each calendar year. At least one of such

meetings shall be held within this state and the other meetings may be

held elsewhere.

(c) The board of directors of such corporation shall elect such

officers as are provided for in the by-laws. At least one principal

officer shall be a director, but the number of officers and salaried

employees who are directors shall at all times be less than a quorum of

the board of directors, as prescribed in the charter or by-laws.

(d) The by-laws of any such corporation organized after January first,

nineteen hundred forty may be adopted at a directors' meeting held after

receipt from the superintendent of a certificate of incorporation and

before the issuance of a license to do an insurance business. The

by-laws, except as to corporations which elect their directors pursuant

to the provisions of section four thousand two hundred ten of this

chapter, may thereafter be made or amended only by a majority vote of

all members present in person or by proxy at any annual meeting or other

stated or special meeting called for such purpose, except that the board

of directors of any mutual insurance corporation may amend its by-laws

as to any provisions which do not impair the members' rights or enlarge

their obligations under insurance policies. The by-laws of any domestic

mutual insurance corporation which elects its directors pursuant to the

provisions of such section may be amended by the board of directors. No

by-law or amendment or repeal of a by-law of any domestic mutual

insurance corporation shall be effective until approved by the

superintendent. The superintendent may refuse such approval if he finds

that such by-law, amendment or repeal does not conform with the

requirements of law, or is not equitable to the corporation's

policyholders, or is inconsistent with its objects and purposes.

(e) No domestic mutual insurance corporation, except a domestic mutual

insurance company organized before January first, nineteen hundred forty

to do only marine protection and indemnity insurance, shall enter into

any agreement under which any person, partnership or corporation agrees

to pay all or a portion of the expenses of management of such insurance

corporation in consideration of an agreement to pay him either

commissions on premiums due the insurance corporation or any other

compensation for his services.

(f) No domestic mutual insurance corporation, except a domestic mutual

insurance company organized before January first, nineteen hundred forty

to do only marine protection and indemnity insurance, shall enter into

any agreement with any of the officers or directors, or with any firm or

corporation in which any such officer or director is pecuniarily

interested directly or indirectly, whereby the insurance corporation

agrees to pay, for the acquisition of business, any commission or other

compensation which under the agreement is increased or diminished by the

amount of such business or by the insurance corporation's earnings on

such business. Notwithstanding the foregoing, and upon application by a

domestic mutual insurance corporation, the superintendent may permit the

insurance corporation to enter into such an agreement with a firm or

corporation that is a licensed insurance producer if the superintendent

determines that: (1) the insurance corporation's policyholders will not

be adversely affected; (2) the officer or director has no pecuniary

interest directly in the insurance producer; and (3) any benefit to the

officer or director that accrues as a result of the agreement would not

be material in relation to the insurance corporation's overall premium

volume. Any such agreement approved by the superintendent shall be

subject to annual reviews and, where the superintendent determines such

agreement no longer conforms to this subsection, the superintendent

shall revoke his or her prior approval.