N.Y. Insurance Law § 1213: Service of process on superintendent as attorney for unauthorized insurers

§ 1213. Service of process on superintendent as attorney for

unauthorized insurers. (a) The purpose of this section is to subject

certain insurers to the jurisdiction of the courts of this state in

suits by or on behalf of insureds or beneficiaries under certain

insurance contracts. The legislature declares that it is a subject of

concern that many residents of this state hold policies of insurance

issued or delivered in this state by insurers while not authorized to do

business in this state, thus presenting to such residents the often

insuperable obstacle of resorting to distant forums for the purpose of

asserting legal rights under such policies. In furtherance of such state

interest, the legislature herein provides a method of substituted

service of process upon such insurers and declares that in so doing it

exercises its power to protect its residents and to define, for the

purpose of this section, what constitutes doing business in this state,

and also exercises powers and privileges available to the state by

virtue of public law number fifteen, seventy-ninth congress of the

United States, chapter twenty, first session, senate number three

hundred forty, as amended, (15 U.S.C. § 1011) which declares that the

business of insurance and every person engaged therein shall be subject

to the laws of the several states.

(b) (1) Any of the following acts in this state, effected by mail or

otherwise, by an unauthorized foreign or alien insurer:

(A) the issuance or delivery of contracts of insurance to residents of

this state or to corporations authorized to do business therein,

(B) the solicitation of applications for such contracts,

(C) the collection of premiums, membership fees, assessments or other

considerations for such contracts, or

(D) any other transaction of business,

is equivalent to and constitutes its appointment of the superintendent,

and his successors in office, to be its true and lawful attorney upon

whom may be served all lawful process in any proceeding instituted by or

on behalf of an insured or beneficiary arising out of any such contract

of insurance, and shall signify its agreement that such service of

process is of the same legal force and validity as personal service of

process in this state upon such insurer.

(2) Such service of process upon any such insurer in any such

proceeding in any court of competent jurisdiction of this state may be

made by serving the superintendent, any deputy superintendent or any

salaried employee of the department whom the superintendent designates

for such purpose with two copies thereof and the payment to him or her

of a fee of forty dollars. The superintendent shall forward a copy of

such process by registered or certified mail to the defendant at its

last known principal place of business, as designated by the issuer of

such process, and shall keep a record of all process so served upon him

or her. Such service of process under this paragraph is sufficient,

provided notice of such service and a copy of the process are sent

within ten days thereafter by or on behalf of the plaintiff to the

defendant at its last known principal place of business by registered or

certified mail with return receipt requested. The plaintiff shall file

with the clerk of the court in which the action is pending, or with the

judge or justice of such court if there be no clerk, an affidavit of

compliance herewith, a copy of the process, and either a return receipt

purporting to be signed by the defendant or a person qualified to

receive its registered or certified mail in accordance with the rules

and customs of the post office department, or, if acceptance was refused

by the defendant or its agent, the original envelope bearing a notation

by the postal authorities that receipt was refused. Service of process

so made shall be deemed made within the territorial jurisdiction of any

court in this state.

(3) Service of process in any such proceeding shall in addition to the

manner provided in paragraph two of this subsection be valid if served

upon any person within this state who, in this state on behalf of such

insurer, is:

(A) soliciting insurance;

(B) making, issuing or delivering any contract of insurance; or

(C) collecting or receiving any premium, membership fee, assessment or

other consideration for insurance;

provided notice of such service and a copy of such process are sent

within ten days thereafter, by or on behalf of the plaintiff to the

defendant at the last known principal place of business of the

defendant, by registered mail with return receipt requested. The

plaintiff shall file with the clerk of the court in which the action is

pending, or with the judge or justice of such court in case there be no

clerk, an affidavit of compliance herewith, a copy of the process, and

either a return receipt purporting to be signed by the defendant or a

person qualified to receive its registered mail in accordance with the

rules and customs of the post office department; or, if acceptance was

refused by the defendant or its agent the original envelope bearing a

notation by the postal authorities that receipt was refused.

(4) The papers referred to in paragraphs two and three of this

subsection shall be filed within thirty days after the return receipt or

other official proof of delivery, or the original envelope bearing a

notation of refusal, is received by the plaintiff. Service of process

shall be complete when such process and the accompanying papers are

filed pursuant to this section.

(5) Nothing contained in this section shall limit or abridge the right

to serve any process, notice or demand upon any insurer in any other

manner permitted by law.

(c) (1) Before any unauthorized foreign or alien insurer files any

pleading in any proceeding against it, it shall either:

(A) deposit with the clerk of the court in which the proceeding is

pending, cash or securities or file with such clerk a bond with good and

sufficient sureties, to be approved by the court, in an amount to be

fixed by the court sufficient to secure payment of any final judgment

which may be rendered in the proceeding, but the court may in its

discretion make an order dispensing with such deposit or bond if the

superintendent certifies to it that such insurer maintains within this

state funds or securities in trust or otherwise sufficient and available

to satisfy any final judgment which may be entered in the proceeding, or

(B) procure a license to do an insurance business in this state.

(2) The court in any proceeding wherein service is made pursuant to

paragraph two or three of subsection (b) of this section may, in its

discretion, order such postponement as may be necessary to afford the

defendant reasonable opportunity to comply with the provisions of

paragraph one of this subsection and to defend such proceeding.

(3) Nothing in paragraph one of this subsection is to be construed to

prevent an unauthorized foreign or alien insurer from filing a motion to

set aside service made in the manner provided in paragraph two or three

of subsection (b) hereof on the ground (i) that such unauthorized

insurer has not done any act enumerated in paragraph one of subsection

(b) of this section, or (ii) that the person on whom service was made

pursuant to paragraph three of subsection (b) hereof was not doing any

act therein enumerated.

(d) In any action against an unauthorized foreign or alien insurer

upon a contract of insurance issued or delivered in this state to a

resident thereof or to a corporation authorized to do business therein,

if the insurer has failed for thirty days after demand prior to the

commencement of the action to make payment pursuant to the contract, and

it appears to the court that such refusal was vexatious and without

reasonable cause, the court may allow plaintiff a reasonable attorney's

fee and include such fee in any judgment rendered in such action. Such

fee shall not exceed twelve and one-half percent of the amount the court

finds the plaintiff is entitled to recover against the insurer nor be

less than twenty-five dollars. Failure of an insurer to defend any such

action shall be prima facie evidence that its failure to pay was

vexatious and without reasonable cause.

(e) This section shall not apply to any proceeding against any

unauthorized foreign or alien insurer arising out of any contract of

insurance effectuated in accordance with subsection (b) or (c) of

section two thousand one hundred seventeen of this chapter or in

accordance with section two thousand one hundred five of this chapter

where such contract designates the superintendent or his successors in

office the insurer's true and lawful attorney upon whom may be served

all lawful process in any proceeding instituted by or on behalf of an

insured or beneficiary arising out of such contract.

(f) The superintendent shall keep a record of each process served upon

him under this section and pursuant to section one thousand two hundred

twelve of this article, including the date of service. He shall, upon

request made within ten years of such service, issue a certificate under

his seal certifying as to the receipt of the process by an authorized

person, the date and place of service and the receipt of the statutory

fee. Process served upon the superintendent pursuant to this section or

section one thousand two hundred twelve of this article shall be

destroyed by him after a period of ten years from such service.