N.Y. Insurance Law § 7709: Assessments

§ 7709. Assessments. (a) For the purpose of providing the funds

necessary to carry out the powers and duties of the corporation, the

board of directors shall assess the member insurers, separately for each

account, at such time and for such amounts as the board finds necessary

in accordance with the provisions of paragraph three of subsection (c)

of this section. Assessments shall be due on the date set by the board

which shall be not less than thirty days nor more than sixty days after

prior written notice to the member insurers. Assessments shall accrue

interest at the maximum rate allowed by subdivision one of section 5-501

of the general obligations law on and after the due date.

(b) There shall be three classes of assessments, as follows:

(1) Class A assessments shall be made for the purpose of meeting

administrative costs and other general expenses.

(2) Class B assessments shall be made to the extent necessary to carry

out the powers and duties of the corporation under section seven

thousand seven hundred eight of this article with regard to an impaired

or insolvent domestic insurer.

(3) Class C assessments shall be made to the extent necessary to carry

out the powers and duties of the corporation under section seven

thousand seven hundred eight of this article with regard to an impaired

or insolvent foreign or alien insurer.

(c) (1) The amount of any class A assessment shall be determined by

the board and may be made on a non pro rata basis. Such assessment shall

be credited against future impairment or insolvency assessments. The

maximum such assessment against any member insurer in any calendar year

shall be determined, in accordance with the table set forth below, on

the basis of its admitted assets as shown on its annual statement

required by this chapter for the year next preceding the date of such

assessment:

Companies with Admitted Assets of Maximum Assessment

Up to $50,000,000 $200

$50,000,000 to $1,000,000,000 $1000

$1,000,000,000 or more $2000

(2) The amount of any class B or class C assessment, except for

assessments related to long-term care insurance, shall be allocated for

assessment purposes among the accounts in the proportion that the

premiums received by the impaired or insolvent insurer on the policies

or contracts covered by each account for the last calendar year

preceding the assessment in which the impaired or insolvent insurer

received premiums bears to the premiums received by such insurer for

such calendar year on all covered policies. The amount of any class B or

class C assessment for long-term care insurance written by the impaired

or insolvent insurer shall be allocated according to a methodology

included in the plan of operation and approved by the superintendent.

The methodology shall provide for fifty percent of the assessment to be

allocated to health insurance company member insurers and fifty percent

to be allocated to life insurance company member insurers; provided,

however, that a property/casualty insurer that writes health insurance

shall be considered a health insurance company member for this purpose.

Class B and class C assessments against member insurers for each account

shall be in the proportion that the premiums received on business in

this state by each assessed member insurer on policies covered by each

account for the three calendar years preceding the assessment bears to

such premiums received on business in this state for such calendar years

by all assessed member insurers. Class B and Class C assessments against

member insurers for the health insurance account shall be further

reduced for not-for-profit member insurers pursuant to a methodology

included in the plan of operation and approved by the superintendent.

Such methodology shall reduce the assessments imposed on not-for-profit

member insurers in an amount that, when accounting for appropriate

factors, including the value of the tax credits and a factor for the

time value of money, results in a percentage of net assessments to

premiums that is equivalent for not-for-profit member insurers and

for-profit member insurers.

(3) Assessments for funds to meet the requirements of the corporation

with respect to an impaired or insolvent insurer shall be made within a

reasonable time after deemed necessary by the superintendent to

implement the purposes of this article. Classification of assessment

under subsection (b) of this section and computation of assessments

under this subsection shall be made with a reasonable degree of

accuracy, recognizing that exact determinations may not always be

possible.

(d) The corporation may abate or defer, in whole or in part, the

assessment of a member insurer if, in the opinion of the board, payment

of the assessment would endanger the ability of the member insurer to

fulfill its contractual obligations. In the event an assessment against

a member insurer is abated, or deferred in whole or in part, the amount

by which such assessment is abated or deferred may be assessed against

the other member insurers in a manner consistent with the basis for

assessments set forth in this section.

(e) (1) With respect to a member insurer that is a domestic insurer

and is subject to an order of rehabilitation under article seventy-four

of this chapter as of March first, two thousand twelve, the total

assessment against all member insurers for impairments and insolvencies,

less the amount of refunds (not including interest) to member insurers

pursuant to subsection (f) of this section, shall be five hundred

fifty-eight million dollars; provided, however, that such five hundred

fifty-eight million dollar total shall be subject to reduction in an

amount, if any, determined by the superintendent, on a date not earlier

than twelve months after the entry of an order of liquidation with

respect to such domestic insurer, to be not needed for the corporation

to be able to pay its obligations and reasonable expenses in connection

with the liquidation of such domestic insurer, but in no event shall

such reduction exceed fifty-eight million dollars.

(2) The total of all assessments upon a member insurer for each

account shall not in any one calendar year exceed two percent of such

insurer's premiums received in this state during the calendar year

preceding the assessment on the policies covered by the account. If the

maximum assessment, together with the other assets of the corporation in

either account, does not provide in any one year in either account an

amount sufficient to carry out the responsibilities of the corporation,

the necessary additional funds shall be assessed as soon thereafter as

permitted by this article.

(f) The board may, by an equitable method as established in the plan

of operation, refund to member insurers, by retirement of certificates

of contribution in proportion to the contribution of each insurer to

that account, the amount by which the assets of the account exceed the

amount the board finds necessary to carry out during the coming year the

obligations of the corporation with regard to that account, including

assets accruing from net realized capital gains and income from

investments. A reasonable amount may be retained in any account to

provide funds for the continuing expenses of the corporation and for

future losses if refunds are impractical.

(g) It shall be proper for any member insurer, in determining its

premium rates and policy owner dividends as to any kind of insurance

within the scope of this article, to consider the amount reasonably

necessary to meet its assessment obligations under this article with

respect to insurers which have become impaired or insolvent.

(h) The corporation shall issue to each insurer paying an assessment

under this article, other than a class A assessment, a certificate of

contribution, in a form prescribed by the superintendent, for the amount

of the assessment so paid. All outstanding certificates shall be of

equal dignity and priority irrespective of amounts or dates of issue. A

certificate of contribution may be shown by the insurer in its financial

statement as an asset in such form and for such amount, if any, and

period of time as the superintendent may approve.