N.Y. Insurance Law § 1211: Mutual insurance corporations; membership and dividends

§ 1211. Mutual insurance corporations; membership and dividends. (a)

Every domestic mutual insurance corporation shall be organized,

maintained and operated for the benefit of its members as a non-stock

corporation. Every policyholder shall be a member of such corporation

and shall, except as provided in subsection (d) hereof, be entitled to

vote at any regular or special meeting of such corporation, to notice

thereof pursuant to the by-laws and to share equitably in dividends

declared by the board of directors. The board of directors may, subject

to limitations in this chapter, from time to time declare a dividend

from the corporation's surplus. No dividend shall be declared or paid if

thereby the company's minimum or other required surplus will be

impaired. In declaring and paying any dividend the board of directors

may make reasonable classifications of policies, and shall declare and

pay such dividend in a manner that is fair and equitable to the

policyholders. Unless otherwise provided in the corporation's charter or

by-laws, each member shall be entitled to one vote at any regular or

special meeting. The charter or by-laws may, with the approval of the

superintendent, provide for distribution of voting power among members

on the basis of the amount of insurance held, number of policies held,

amount of premiums paid by them or on any other basis the superintendent

finds fair and equitable.

(b) A member of any such corporation may vote at any such meeting in

person or by proxy. No proxy or power of attorney given by him, to vote

at any meeting of such corporation, shall be valid or effective after

the next meeting. No person shall directly or indirectly sell or

purchase, or offer to sell or purchase, any proxy or power of attorney

to vote at any such meeting, nor shall any person directly or indirectly

give or receive, or offer to give or receive, any proxy or power of

attorney to vote at any such meeting as an inducement to the negotiation

or making of a contract of insurance or any renewal thereof, to the

settlement of any claim thereunder, or to any other act relating

thereto.

(c) All corporations, their directors and representatives and all

persons, firms or corporations holding property in trust may insure the

same in mutual insurance corporations and by so doing such directors,

representatives or trustees, in their representative capacity, may

assume the liabilities and be entitled to the rights of a member of such

insurer, but shall not be personally liable as individuals upon such

contract of insurance.

(d) The provisions of this section as to members' voting rights and

the election of directors shall not apply to any domestic mutual life

insurance company governed by the provisions of section four thousand

two hundred ten of this chapter, nor shall they require any such company

to hold a meeting of its members.

(e) As to any surety or fidelity bond or like obligation executed by a

mutual property/casualty insurance company as a surety or guarantor, the

principal, and not the obligee, shall be a member of such corporation.