N.Y. Insurance Law § 7603: Property/casualty insurance security fund

§ 7603. Property/casualty insurance security fund. (a) (1) The

property/casualty insurance security fund shall be used in the payment

of allowed claims remaining unpaid, in whole or in part, by reason of

the inability due to insolvency of an authorized insurer to meet its

insurance obligations under policies:

(A) on account of claims from motor vehicle accidents as defined in

subsection (f) of section seven thousand six hundred two of this

article,

(B) for all of the kinds of insurance specified in paragraphs four

through fourteen, sixteen, nineteen through twenty-one, twenty-four and

subparagraphs (A) and (B) of paragraph twenty-six of subsection (a) of

section one thousand one hundred thirteen of this chapter with respect

to coverage of property or risks located or resident in this state, or

outside this state but within the United States, its possessions and

territories, and Canada,

(C) for the kind of insurance providing disability benefits pursuant

to article nine of the workers' compensation law issued by an authorized

insurer licensed under article forty-one, sixty-one or sixty-six of this

chapter with respect to coverage of risks located or resident in this

state,

(D) in the kind of insurance providing workers' compensation insurance

pursuant to subsection (j) of section three thousand four hundred twenty

of this chapter,

(E) for the insurance provided by the medical malpractice insurance

association,

(F) for the insurance provided pursuant to subdivision two-a of

section seventy-six of the workers' compensation law if and when

operative,

(G) for the kinds of credit insurance as defined in subparagraphs (B)

and (C) of paragraph seventeen of subsection (a) of section one thousand

one hundred thirteen of this chapter, and

(H) any obligation for the return of unearned premiums on any policy

specified in subparagraphs (A), (B), (C), (D), (E), (F) and (G) hereof,

which shall, for the purposes of this article, be deemed to include the

obligations of an insurer and the medical malpractice insurance

association under medical malpractice claims-made policies to pay to

successor entities the actuarially appropriate amounts for the provision

of coverage to comply with the requirements of subsections (b), (c) and

(d) of section three thousand four hundred thirty-six and paragraphs

two, three and four of subsection (f) of section five thousand five

hundred four of this chapter.

(2) No payment from the property/casualty insurance security fund

shall be made to any person who owns or controls ten percent or more of

the voting securities of the insolvent insurer and no payment on any one

claim shall exceed one million dollars, provided that the amount of

payment on a claim and the aggregate for all claims shall be further

limited by the provisions of paragraph two of subsection (g) of section

seven thousand six hundred two of this article.

(b) (1) Contributions to the property/casualty insurance security fund

shall be determined on the basis of net direct written premiums on

policies insuring property or risks located or resident in this state.

(2) Every insurer shall pay into such fund, upon filing each quarterly

return pursuant to section seven thousand six hundred five of this

article, one-half of one percent of its net direct written premiums as

shown for the period covered by such return.

(c) (1) Whenever the superintendent determines, pursuant to section

seven thousand six hundred six of this article, that the net value of

the property/casualty insurance security fund is at least one hundred

fifty million dollars, no further contributions shall be made after the

fund year in which the determination is first made, but if thereafter

the superintendent determines that payments made from the fund by the

commissioner to the superintendent acting as liquidator, rehabilitator

or conservator have reduced the net value to an amount less than such

amount, the superintendent shall cause contributions to be resumed until

the end of the fund year in which he first determines that such net

value exceeds such amount.

(2) If contributions are so resumed, they shall be apportioned:

(A) ratably among those kinds of insurance as to which the

commissioner made payments during the fund year in which the net value

of the property/casualty insurance security fund was reduced below such

amount, and

(B) among insurers in accordance with their respective amounts of net

direct premiums written in each such kind of insurance.

(d) (1) All income earned on moneys in the fund (after deducting any

amounts paid for allowed claims and administrative expenses during the

preceding year) shall be credited, upon certification by the

superintendent to the commissioner, to the general fund of the state

treasury; except that with respect to all such income earned on or after

July first, nineteen hundred seventy-nine such moneys shall be

distributed annually in the following manner:

(A) Pursuant to regulations of the superintendent, the deficit from

the operations of the New York property insurance underwriting

association shall be credited with such income earned, upon

certification by the superintendent to the commissioner, in a sum not

exceeding such total income earned or the sum of fifteen million dollars

whichever is the lesser in any one year. Such credit shall be in lieu of

a transfer of such funds to the general fund of the state treasury.

(B) Any balance of earned income shall be credited, upon certification

by the superintendent to the commissioner, to the general fund of the

state treasury; but only when the value of the fund exceeds the sum of

two hundred forty million dollars.

(2) The superintendent, after consultation with the commissioner, may

by regulation provide for contributions to be made in the form of

acceptable securities, and for the management and disposition of such

securities. The income from such securities shall be included in the

distribution outlined in paragraph one hereof.

(3) The superintendent is authorized to use the income earned on the

moneys of the fund to offset the deficit of the New York property

insurance underwriting association in accordance with subsection (d) of

section five thousand four hundred five of this chapter, provided that

any income earned on the moneys of the fund which in any one year

exceeds fifteen million dollars or which the superintendent has not

utilized for the purposes of such subsection shall be credited to the

corpus of the fund until the superintendent determines that its net

value is two hundred forty million dollars, and thereafter shall be

credited, upon certification by the superintendent to the commissioner,

to the general fund of the state treasury.

(e) (1) (A) Notwithstanding any other provision of law to the

contrary, the superintendent shall annually no later than November first

in each year submit to the director of the budget a request for an

appropriation of ninety million dollars. The governor shall include such

amount in a budget bill for the next state fiscal year. The state

comptroller shall encumber the amount so appropriated before the end of

the fiscal year for which any such appropriation is made. If for any

fiscal year commencing on or after April first, nineteen hundred

eighty-three, the governor fails to submit a budget bill containing an

appropriation in the amount requested by the superintendent or the

legislature fails to appropriate the amount in a budget bill submitted

by the governor for such fiscal year, the amount appropriated for and

encumbered during the preceding fiscal year shall be payable forthwith

to the fund on July first of such year in the manner prescribed by law,

provided, however, that such amount shall not exceed the amount of

moneys transferred to the general fund from the fund pursuant to the

provisions of chapter fifty-five of the laws of nineteen hundred

eighty-two.

(B) Any appropriation made to the fund pursuant to this section shall

be included as an asset for the purposes of computing the value or net

value of the fund pursuant to this section.

(C) Any transfer of moneys from the fund to the general fund in

accordance with the provisions of chapter fifty-five of the laws of

nineteen hundred eighty-two is deemed a proper and prudent legal

undertaking for any state officer with the responsibility for the

custody or the investment of the assets of the fund, notwithstanding any

other provision of law to the contrary.

(2) Upon certification by the superintendent that further sums, not

exceeding fifty million dollars in the aggregate, are required by the

public motor vehicle liability security fund to meet its obligations and

accomplish the purposes of this article the commissioner shall transfer

from the assets of the property/casualty insurance security fund to the

public motor vehicle liability security fund amounts to be specified by

the superintendent. Such sums, not exceeding fifty million dollars in

the aggregate, shall be a liability of the public motor vehicle

liability security fund and shall be repaid to the property/casualty

insurance security fund pursuant to a plan of repayment to be prescribed

by the superintendent which may provide for an increase in the level of

payments into the fund provided for in subsection (b) of section seven

thousand six hundred four of this article.