N.Y. Insurance Law § 7003: License; power; filing; fees

§ 7003. License; power; filing; fees. (a) Any captive insurance

company, when permitted by its articles of association or charter, shall

apply to the superintendent for a license to do a captive insurance

business under this article. A captive insurance business consists of

the kinds of insurance set forth in section one thousand one hundred

thirteen and section one thousand one hundred fourteen of this chapter,

provided that:

(1) a pure captive insurance company shall insure, on a primary basis,

only risks of its parent and affiliated companies;

(2) a group captive insurance company shall insure, on a primary

basis, only risks of the industrial insureds that comprise the

industrial insured group;

(3) a pure captive insurance company or a group captive insurance

company shall not be authorized to provide, on a primary basis or as

reinsurance, the kinds of insurance specified in paragraphs one, two,

three, eighteen, twenty-three and twenty-five of subsection (a) of

section one thousand one hundred thirteen of this chapter;

(4) a pure captive insurance company or a group captive insurance

company shall not be authorized to provide, on a primary basis:

(A) workers' compensation and employers' liability insurance; or

(B) any other kind of insurance, including motor vehicle liability

insurance, that is required, under the laws of this state or any

political subdivision of this state, as a demonstration of financial

responsibility for obtaining a license or permit to undertake specific

activities when such requirement must be satisfied by obtaining

insurance coverage from an insurer authorized in this state, up to the

minimum amount of insurance so required under such laws; and

(C) except that subparagraphs (A) and (B) of this paragraph shall not

prohibit a pure captive insurance company from providing primary

indemnity coverage to its parent and affiliated companies for any

insurance or self-insurance program specified in such subparagraphs (A)

or (B), provided the insurance or self-insurance program has qualified

under the applicable state or federal law requiring the program; and

(5) a pure captive insurance company or a group captive insurance

company shall reinsure only risks as set forth in section seven thousand

ten of this article.

Notwithstanding any inconsistent provisions of paragraphs one through

five of this subsection, a pure captive insurance company formed by a

city with a population of one million or more may insure or provide

reinsurance for its parent, statutory subsidiaries and affiliated

companies only for liability related to or arising out of activities in

or near the World Trade Center site in response to the attacks of

September eleventh, two thousand one.

(b) No captive insurance company shall do any captive insurance

business in this state unless:

(1) it first obtains from the superintendent a license authorizing it

to do captive insurance business in this state;

(2) its board of directors holds at least one meeting each year in

this state;

(3) it maintains its principal office and its records in this state;

(4) it utilizes a captive manager resident in this state who is:

(A) licensed as an agent or a broker under the provisions of article

twenty-one of this chapter; or

(B) any other person approved by the superintendent provided that the

approval may be withdrawn by the superintendent, upon notice and

hearing, if the person has:

(i) been guilty of fraudulent or dishonest practices; or

(ii) demonstrated incompetency or untrustworthiness to act in such a

capacity; and

(5) it submits a power of attorney, in accordance with the provisions

of section one thousand two hundred twelve of this chapter, designating

the superintendent as its agent for the purpose of receiving service of

process in any proceeding against it.

(c)(1) Before receiving a license to do a captive insurance business,

a captive insurance company shall file an application for license with

the superintendent for review and approval. Such application shall

include a certified copy of its charter and bylaws, a financial

statement certified by two principal officers, a plan of operation,

which shall include an actuarial report prepared by a qualified

independent actuary, and any other statements or documents required by

the superintendent.

(2) In evaluating the plan of operation, the superintendent shall

consider the following factors:

(A) the amount and liquidity of its assets relative to the risks to be

assumed;

(B) the adequacy of the expertise, experience, and character of the

person or persons who will manage it;

(C) the overall soundness of the plan and the projections contained

therein;

(D) the adequacy of the loss prevention programs of its parent, member

organizations, or industrial insureds as applicable; and

(E) such other factors deemed relevant by the superintendent in

ascertaining whether the proposed captive insurance company will be able

to meet its policy obligations.

(3) Any material filed with the superintendent pursuant to this

subsection shall be given confidential treatment and shall not be

subject to public inspection under article six of the public officers

law, or to discovery under article thirty-one of the civil practice law

and rules, except to the extent the superintendent finds release of

information necessary to protect the public or necessary to initiate any

proceeding or action as provided by this article or except where a court

of competent jurisdiction in an action involving a private litigant and

a captive insurer finds that discovery of same should be allowed upon a

showing that such information is essential to the establishment of the

claim or defense brought or asserted and the party seeking discovery has

demonstrated to the satisfaction of the court that such party is unable

to otherwise obtain the substantial equivalent of the material.

(4) In order to provide for the review of the application submitted

pursuant to this subsection in a timely manner, the superintendent may

engage such other qualified persons and services as may be necessary.

Prior to retaining any such persons and services, the superintendent

shall notify the applicant and provide an estimate of the cost of such

services. The superintendent shall recover such costs in the manner

prescribed in subsection (f) of section two hundred six of the financial

services law.

(5) In the case of a pure captive insurance company formed by a city

with a population of one million or more to insure such city and its

affiliated companies for liability related to or arising out of

activities in or near the World Trade Center site in response to the

attacks of September eleventh, two thousand one, the superintendent, in

addition to the provisions set forth in paragraph two of this

subsection, shall consider such factors as the unique risk insured by

such captive and the source and limits of the premium payments along

with any limitations on the acceptance of claims and the payment of

accepted claims so long as such limitations provide an equitable basis

for the allocation of the assets of such company to pay claims.

(d) Any proposed amendments or revisions to the charter and bylaws of

a captive insurance company shall be filed with the superintendent for

review and approval.

(e) If the superintendent is satisfied that the documents and

statements filed by the captive insurance company comply with the

provisions of this article, a license authorizing it to do a captive

insurance business in this state shall be issued for a term expiring on

June thirtieth. Thereafter, the superintendent may issue a renewal

license for successive one year terms expiring on June thirtieth.