NY State Senate Bill 2017-S8025

Senate Bill S8025

2017-2018 Legislative Session

Relates to the administrative supervision of insurers deemed to be in a hazardous financial condition

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Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 20, 2018	referred to insurance

2017-S8025 (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §1123, amd §§1309, 1310, 1311, 1312 & 1104, Ins L

2017-S8025 (ACTIVE) - Summary

Enacts provisions to provide for the administrative supervision of insurers deemed to be in a hazardous financial condition.

2017-S8025 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S8025

SPONSOR: SEWARD
 
TITLE OF BILL:  An act to amend the insurance law, in relation to
administrative supervision and insurers deemed to be in a hazardous
financial condition (Part A); and to amend the insurance law, in
relation to revocation or suspension of licenses (Part B) 1. 
PURPOSE OF
THE BILL:

This bill would amend the Insurance Law to conform to the laws of other
states (1) by authorizing the Superintendent to order an insurer into an
administrative supervision proceeding and (2) by making technical chang-
es necessary to conform New York law to the NAIC accreditation standard
for hazardous financial conditions

2. 
SUMMARY OF PROVISIONS:

Part A of the proposal adds a new section 1123 to the Insurance Law to
enhance the Superintendent's authority to address the challenges posed
by troubled insurers. Under the proposal, the Superintendent would have
the explicit authority to order an insurer into an "administrative

supervision" proceeding with the following features:

a. The Superintendent could bring an insurer under administrative super-
vision in order to remedy any of the conditions which would provide
grounds for a proceeding under Article 74 (e.g., insolvency, hazard to
policyholders, failure to cooperate with an examination, etc.);

b. The insurer would have the right to an administrative appeal of that
determination;

c. The administrative supervision proceeding would last for 180-days and
renew at the Superintendent's determination;

d. The insurer would have the right to challenge the Superintendent's
determination to continue the administrative supervision proceeding;

e. The Superintendent would appoint an administrative supervisor to
oversee the proceeding;

f. During administrative supervision, the Superintendent could prohibit
the insurer from undertaking certain activities, including writing new
insurance, disposing of assets, and increasing employees' salaries;

g. The costs of the proceeding would be borne by the insurer; and

h. The proceeding would be confidential, unless the Superintendent
determines otherwise in the public interest.

Part B of the proposal would amend Insurance Law section 1104(a) to make
technical changes and would amend section 1104(c) to permit the Super-
intendent to take certain actions against an insurer if the Superinten-
dent determines that the insurer's surplus to policyholders is not
adequate in relation to the insurer's outstanding liabilities or to its
financial needs or if the Superintendent otherwise determines that the
continued operation of the insurer might be deemed to be hazardous to
the insurer's policyholders, creditors, or to the general public. It
also would amend section 1104(c) to set forth the standards that the
Superintendent may consider when determining whether the continued oper-
ation of an insurer might be deemed to be hazardous to its policyhold-
ers, creditors, or to the general public.

3. 
LEGISLATIVE HISTORY:

None.

4. 
JUSTIFICATION:

Part A: Presently, the Superintendent is empowered to demand that a
troubled insurer undertake remediation of financial or other conditions
that threaten the insurer's solvency. The responsibility to remediate,
however, relies on the insurer's consent. In some instances, the great-
est threat to solvency, financial turmoil, or compliance with New York
law, is the management, which may never give the Superintendent its
consent. As a result, in such circumstances, the Superintendent is
compelled to commence a rehabilitation or liquidation proceeding in
court under Article 74 of the Insurance Law. The Article 74 process -
which is public - usually terminates the insurer's operations and may
result in delay and even harm to policyholders and the public. A process
by which the Superintendent is permitted to take greater control of an
insurer's affairs would provide the degree of flexibility that is often
necessary to avoid an Article 74 proceeding and the potential concom-
itant harm.

The National Association of Insurance Commissioners recognized the need
for such flexibility and developed and published an "Administrative
Supervision Model Act." That model act explicitly grants an insurance
commissioner the right at his or her discretion to install an adminis-
trative supervisor and limit the insurer's ability to undertake certain
activities. Once imposed, the insurer has the right to challenge the
administrative supervision order at an administrative hearing subject to
review in an Article 78 proceeding, and will be released from adminis-
trative supervision if the conditions which gave rise to the order no
longer exist. The National Association of Insurance Commissioners
reports that since the model act's publication in the 1990's, 20 states
have adopted the model and another 11 have enacted or adopted related
legislation or regulations. This proposal provides the statutory changes
for New York to do so as well.

Part B: Sections 3 and 4B of the National Association of Insurance
Commissioners' ("NAIC's") Model Regulation to Define Standards and
Commissioner's Authority for Companies Deemed to be in Hazardous Finan-
cial Condition (the "NAIC model") currently is an NAIC accreditation
standard. The purpose of the accreditation program is for state insur-
ance regulatory agencies to meet certain minimum standards in order to
promote effective insurer financial solvency regulation.

While Insurance Law section 1104(c) sets forth factors the Superinten-
dent must consider when making a determination as to whether an insur-
er's surplus to policyholders is not adequate in relation to the insur-
er's outstanding liabilities or to its financial needs, it is not
identical to the standards set forth in Section 3 of the NAIC model and
there are a number of standards in the NAIC model that are not addressed
in the Insurance Law. In addition, the Insurance Law does not contain
language that lists specific actions the Superintendent may order an
insurer to take that is similar to the actions listed in Section 4B of
the NAIC model.
Furthermore, Section 4B(10) of the NAIC model, which pertains to order-
ing an insurer to correct corporate governance practice deficiencies, is
an additional significant element necessary for accreditation starting
January 1, 2017, and conformance therewith is necessary for the Depart-
ment of Financial Services ("Department") to maintain its NAIC accredi-
tation status.

This bill would amend Insurance Law section 1104 to bring the Department
into compliance with the NAIC model and ensure that it continues to
maintain its NAIC accreditation status. The bill also would broaden the
Superintendent's authority to take additional actions to protect policy-
holders, creditors, and the general public, when the insurer is in a
hazardous financial condition, without having to put the insurer into
rehabilitation or liquidation.  Finally, the bill would repeal language
in section 1104(d) that refers to a reporting requirement in former
Insurance Law section 334, which the Legislature repealed in 1998 as
Chapter 579.

5. 
FISCAL IMPLICATIONS:

None

6. 
EFFECTIVE DATE:
Immediately.

2017-S8025 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8025
 
                             I N  S E N A T E
 
                              March 20, 2018
                                ___________
 
 Introduced  by Sen. SEWARD -- (at request of the Department of Financial
   Services) -- read twice and ordered printed, and when  printed  to  be
   committed to the Committee on Insurance
 
 AN  ACT to amend the insurance law, in relation to administrative super-
   vision and insurers deemed to be in a  hazardous  financial  condition
   (Part A); and to amend the insurance law, in relation to revocation or
   suspension of licenses (Part B)
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. This act enacts into law major  components  of  legislation
 relating  to  administrative  supervision and insurers deemed to be in a
 hazardous financial condition, the national  association  of  registered
 agents  and  brokers, and technical amendments. Each component is wholly
 contained within a Part identified as Parts A through B.  The  effective
 date  for  each  particular  provision contained within such Part is set
 forth in the last section of such Part.   Any provision in  any  section
 contained within a Part, including the effective date of the Part, which
 makes  a  reference  to a section "of this act", when used in connection
 with that particular component, shall be deemed to mean and refer to the
 corresponding section of the Part in which it is found. Section three of
 this act sets forth the general effective date of this act.
 
                                  PART A
 
   Section 1. Legislative findings. In order to increase the authority of
 the superintendent of financial services to respond to the harm posed by
 impaired insurers in this state, the legislature finds that it is in the
 best interest of the people of this state  to  enact  an  administrative
 supervision  statute.  The  superintendent of financial services has the
 right and responsibility to enforce the insurance law and the  authority
 to  seek  redress  against  any person responsible for the impairment or
 insolvency of the insurer, and  nothing  in  this  act  is  intended  to
 restrict or limit such right, responsibility, or authority.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD14402-01-8

 S. 8025                             2
 
   § 2. The insurance law is amended by adding a new section 1123 to read
 as follows:
   §  1123.  ADMINISTRATIVE  SUPERVISION.   (A)(1) THE SUPERINTENDENT MAY
 ISSUE AN ORDER PLACING A DOMESTIC INSURER  UNDER  ADMINISTRATIVE  SUPER-
 VISION  IF  THE SUPERINTENDENT DETERMINES THAT ONE OR MORE OF THE CONDI-
 TIONS SET FORTH IN SUBSECTION (C) OF THIS SECTION EXISTS.  UPON  SUCH  A
 DETERMINATION, THE SUPERINTENDENT SHALL FURNISH THE INSURER WITH A WRIT-
 TEN LIST OF REQUIREMENTS TO ABATE THE CONDITION OR CONDITIONS WITHIN THE
 TIME SPECIFIED IN THE ORDER, WHICH SHALL BE SIXTY DAYS OR ANOTHER PERIOD
 OF  TIME  AS  DESIGNATED BY THE SUPERINTENDENT. THE DOMESTIC INSURER MAY
 CHALLENGE THE ORDER BY REQUESTING AN ADMINISTRATIVE HEARING PURSUANT  TO
 THE ADJUDICATORY PROCEEDING RULES IN ARTICLE THREE OF THE STATE ADMINIS-
 TRATIVE  PROCEDURE  ACT.  UPON ISSUANCE OF THE ORDER, THE SUPERINTENDENT
 SHALL ADVISE SUCH DOMESTIC INSURER OF ITS RIGHT  TO  REQUEST  A  HEARING
 CHALLENGING  THE  ORDER PURSUANT TO THE ADJUDICATORY PROCEEDING RULES IN
 ARTICLE THREE OF THE STATE ADMINISTRATIVE PROCEDURE ACT AND  REGULATIONS
 PROMULGATED BY THE SUPERINTENDENT.
   (2)  IF,  AT  THE END OF THE PERIOD SPECIFIED IN THE ORDER, THE SUPER-
 INTENDENT DETERMINES THAT THE CONDITION OR CONDITIONS THAT GAVE RISE  TO
 THE  ORDER  STILL EXISTS OR EXIST, THEN ADMINISTRATIVE SUPERVISION SHALL
 CONTINUE. THE INSURER MAY REQUEST A HEARING TO CHALLENGE THE SUPERINTEN-
 DENT'S DETERMINATION TO CONTINUE ADMINISTRATIVE SUPERVISION.
   (3) IF THE SUPERINTENDENT DETERMINES THAT THE CONDITION OR  CONDITIONS
 THAT  GAVE RISE TO ADMINISTRATIVE SUPERVISION NO LONGER EXISTS OR EXIST,
 THEN THE SUPERINTENDENT SHALL RELEASE THE INSURER FROM SUPERVISION.
   (B) (1) AN INSURER MAY BE SUBJECT TO ADMINISTRATIVE SUPERVISION BY THE
 SUPERINTENDENT IF UPON EXAMINATION OR ANY OTHER TIME IT APPEARS  IN  THE
 SUPERINTENDENT'S DISCRETION THAT:
   (A)  THE  INSURER'S  CONDITION RENDERS THE CONTINUANCE OF ITS BUSINESS
 HAZARDOUS TO THE PUBLIC OR TO ITS INSUREDS;
   (B) THE INSURER HAS OR APPEARS TO HAVE EXCEEDED ITS  POWERS,  AS  THAT
 TERM  IS  DEFINED IN PARAGRAPH TWO OF THIS SUBSECTION, GRANTED UNDER ITS
 CHARTER AND APPLICABLE LAW;
   (C) THE INSURER HAS FAILED TO COMPLY WITH THE APPLICABLE PROVISIONS OF
 THIS CHAPTER;
   (D) THE BUSINESS OF THE INSURER IS BEING CONDUCTED FRAUDULENTLY; OR
   (E) THE INSURER GIVES ITS CONSENT.
   (2) THE TERM "EXCEEDED ITS POWERS"  MEANS  ANY  ONE  OR  MORE  OF  THE
 FOLLOWING CONDITIONS:
   (A)  THE  INSURER  HAS  REFUSED  TO  PERMIT  EXAMINATION OF ITS BOOKS,
 PAPERS, ACCOUNTS, RECORDS OR AFFAIRS BY THE SUPERINTENDENT, HIS  OR  HER
 DEPUTIES, EMPLOYEES OR DULY COMMISSIONED EXAMINERS;
   (B)  A  DOMESTIC INSURER HAS UNLAWFULLY REMOVED FROM THIS STATE BOOKS,
 PAPERS, ACCOUNTS OR RECORDS NECESSARY FOR AN EXAMINATION OF THE INSURER;
   (C) THE INSURER HAS FAILED TO  PROMPTLY  COMPLY  WITH  THE  APPLICABLE
 FINANCIAL REPORTING STATUTES OR RULES AND DEPARTMENTAL REQUESTS RELATING
 THERETO;
   (D)  THE  INSURER  HAS NEGLECTED OR REFUSED TO OBSERVE AN ORDER BY THE
 SUPERINTENDENT TO MAKE GOOD, WITHIN THE  TIME  PRESCRIBED  BY  LAW,  ANY
 PROHIBITED DEFICIENCY IN ITS CAPITAL, CAPITAL STOCK OR SURPLUS;
   (E)  THE INSURER IS CONTINUING TO TRANSACT INSURANCE OR WRITE BUSINESS
 AFTER ITS LICENSE HAS BEEN REVOKED OR SUSPENDED BY THE SUPERINTENDENT;
   (F) THE INSURER, BY CONTRACT OR OTHERWISE, HAS UNLAWFULLY  OR  HAS  IN
 VIOLATION  OF AN ORDER OF THE SUPERINTENDENT OR HAS WITHOUT FIRST HAVING
 OBTAINED WRITTEN APPROVAL OF THE SUPERINTENDENT IF APPROVAL IS  REQUIRED
 BY  LAW:  (I)  TOTALLY REINSURED ITS ENTIRE OUTSTANDING BUSINESS OR (II)

 S. 8025                             3
 
 MERGED OR CONSOLIDATED SUBSTANTIALLY ITS  ENTIRE  PROPERTY  OR  BUSINESS
 WITH ANOTHER INSURER;
   (G)  THE INSURER ENGAGED IN ANY TRANSACTION IN WHICH IT IS NOT AUTHOR-
 IZED TO ENGAGE UNDER THE LAWS OF THIS STATE; OR
   (H) THE INSURER REFUSED TO COMPLY WITH A LAWFUL ORDER  OF  THE  SUPER-
 INTENDENT.
   (3)  THE  TERM "CONSENT" MEANS AGREEMENT TO ADMINISTRATIVE SUPERVISION
 BY THE INSURER.
   (C) DURING THE PERIOD OF SUPERVISION, THE SUPERINTENDENT MAY  PROHIBIT
 THE INSURER FROM ENGAGING IN ANY OF THE FOLLOWING ACTIVITIES WITHOUT THE
 SUPERINTENDENT'S PRIOR APPROVAL:
   (1)  DISPOSING  OF, CONVEYING, OR ENCUMBERING ANY OF ITS ASSETS OR ITS
 BUSINESS IN FORCE;
   (2) WITHDRAWING ANY FUNDS FROM ITS BANK ACCOUNTS;
   (3) LENDING ANY OF ITS FUNDS;
   (4) INVESTING ANY OF ITS FUNDS;
   (5) PAYING ANY CLAIMS;
   (6) TRANSFERRING ANY OF ITS PROPERTY;
   (7) INCURRING ANY DEBT, OBLIGATION, OR LIABILITY;
   (8) MERGING OR CONSOLIDATING WITH ANOTHER COMPANY;
   (9) APPROVING NEW PREMIUMS OR RENEWING ANY POLICIES;
   (10) ENTERING INTO ANY NEW REINSURANCE CONTRACT OR TREATY;
   (11) TERMINATING, SURRENDERING, FORFEITING, CONVERTING, OR LAPSING ANY
 INSURANCE POLICY, CERTIFICATE, OR CONTRACT,  EXCEPT  FOR  NONPAYMENT  OF
 PREMIUMS DUE;
   (12) RELEASING, PAYING, OR REFUNDING PREMIUM DEPOSITS, ACCRUED CASH OR
 LOAN VALUES, UNEARNED PREMIUMS, OR OTHER RESERVES ON ANY INSURANCE POLI-
 CY, CERTIFICATE, OR CONTRACT;
   (13) MAKING ANY MATERIAL CHANGE IN MANAGEMENT; OR
   (14)  INCREASING SALARIES AND BENEFITS OF OFFICERS OR DIRECTORS OR THE
 PAYMENT OF BONUSES, DIVIDENDS, OR OTHER PAYMENTS.
   (D) THE SUPERINTENDENT MAY APPOINT AS  ADMINISTRATIVE  SUPERVISOR,  AT
 THE  INSURER'S  EXPENSE, ONE OR MORE PERSONS NOT EMPLOYED BY ANY INSURER
 OR INTERESTED IN SUCH INSURER, EXCEPT AS A POLICYHOLDER.
   (E) DURING THE PERIOD OF ADMINISTRATIVE SUPERVISION,  AN  INSURER  MAY
 CONTEST AN ACTION TAKEN OR PROPOSED TO BE TAKEN BY THE SUPERINTENDENT OR
 BY  THE  ADMINISTRATIVE  SUPERVISOR  ON  THE  GROUNDS THAT THE ACTION OR
 PROPOSED ACTION WOULD NOT RESULT  IN  IMPROVING  THE  CONDITION  OF  THE
 INSURER.  DENIAL  OF  THE  INSURER'S REQUEST UPON RECONSIDERATION MAY BE
 CHALLENGED BY THE INSURER BY REQUESTING AN ADMINISTRATIVE HEARING PURSU-
 ANT TO THE ADJUDICATORY PROCEEDING RULES IN ARTICLE THREE OF  THE  STATE
 ADMINISTRATIVE PROCEDURE ACT.
   (F)  (1)  THE  EXPENSES OF ADMINISTRATIVE SUPERVISION PURSUANT TO THIS
 SECTION SHALL BE BORNE AND PAID BY THE INSURER SO SUPERVISED.
   (2) IN THE EVENT THAT AN INSURER BECOMES SUBJECT TO A PROCEEDING UNDER
 ARTICLE SEVENTY-FOUR OF THIS CHAPTER WITHIN ONE YEAR OF THE  SUPERINTEN-
 DENT  RELEASING THE INSURER FROM ADMINISTRATIVE SUPERVISION, ALL ACCRUED
 AND OUTSTANDING EXPENSES  INCURRED  IN  CONNECTION  WITH  ADMINISTRATIVE
 SUPERVISION  SHALL BE TREATED AS ACTUAL AND NECESSARY COSTS AND EXPENSES
 OF THE ADMINISTRATION OF SUCH PROCEEDING UNDER ARTICLE  SEVENTY-FOUR  OF
 THIS CHAPTER.
   (G)  ALL  MATTERS PERTAINING TO A PROCEEDING OR DETERMINATION PURSUANT
 TO THIS SECTION SHALL BE CONFIDENTIAL AND NOT  SUBJECT  TO  SUBPOENA  OR
 PUBLIC  INSPECTION  UNDER  ARTICLE SIX OF THE PUBLIC OFFICERS LAW OR ANY
 OTHER STATUTE, EXCEPT  TO  THE  EXTENT  THAT  THE  SUPERINTENDENT  FINDS
 RELEASE OF INFORMATION NECESSARY TO PROTECT THE PUBLIC.

 S. 8025                             4
 
   (H)  NOTHING  IN  THIS  SECTION  SHALL  BE CONSTRUED AS PRECLUDING THE
 SUPERINTENDENT FROM INITIATING JUDICIAL PROCEEDINGS TO PLACE AN  INSURER
 IN    REHABILITATION,    LIQUIDATION,   CONSERVATION,   OR   DISSOLUTION
 PROCEEDINGS.
   § 3. Subsection (a) of section 1309 of the insurance law is amended to
 read as follows:
   (a)  Whenever  the  superintendent finds from a financial statement or
 report on examination that an authorized insurer is unable  to  pay  its
 outstanding  lawful  obligations as they mature in the regular course of
 business, as shown by an excess of required reserves and  other  liabil-
 ities  over  admitted  assets, or by its not having sufficient assets to
 reinsure all outstanding risks with other  solvent  authorized  assuming
 insurers  after  paying  all  accrued claims owed, such insurer shall be
 deemed insolvent and the superintendent may proceed against it  pursuant
 to  the  provisions of article seventy-four of this chapter OR MAY PLACE
 THE INSURER UNDER ADMINISTRATIVE SUPERVISION  PURSUANT  TO  SECTION  ONE
 THOUSAND ONE HUNDRED TWENTY-THREE OF THIS CHAPTER.
   § 4. Subsection (a) of section 1310 of the insurance law is amended to
 read as follows:
   (a) Whenever the superintendent finds from a financial statement, or a
 report  on examination, of any domestic stock insurer that [(i)] (1) the
 admitted assets are less than the aggregate amount  of  its  liabilities
 and  outstanding  capital stock or [(ii)] (2) the admitted assets of any
 such insurer [which] THAT is required to maintain a minimum  surplus  to
 policyholders  are less than the aggregate amount of its liabilities and
 the amount of its minimum surplus to policyholders, [he] THE SUPERINTEN-
 DENT shall determine the amount of the impairment and order the  insurer
 to  eliminate  the impairment within such period as [he] THE SUPERINTEN-
 DENT designates, not more than ninety  days  from  the  service  of  the
 order.  [He]  THE SUPERINTENDENT may also order the insurer not to issue
 any new policies while the  impairment  exists.  If  the  impairment  as
 determined  by the provisions of [item (i) hereof] PARAGRAPH ONE OF THIS
 SUBSECTION equals  or  exceeds  twenty-five  percent  of  the  insurer's
 outstanding  capital  stock, or as determined by the provisions of [item
 (i) or (ii) hereof] PARAGRAPH ONE OR TWO OF THIS SUBSECTION is such that
 the insurer does not have the minimum  capital  or  minimum  surplus  to
 policyholders required by this chapter, and if at the expiration of such
 designated  period,  such  insurer  has not satisfied the superintendent
 that such impairment has been eliminated, the superintendent may proceed
 against the insurer pursuant to the provisions of  article  seventy-four
 of  this  chapter  on  the  ground  that  its condition is such that its
 further transaction of business will be hazardous to  its  policyholders
 or  its  creditors  or  the  public  OR THE SUPERINTENDENT MAY PLACE THE
 INSURER UNDER ADMINISTRATIVE SUPERVISION PURSUANT TO SECTION  ONE  THOU-
 SAND ONE HUNDRED TWENTY-THREE OF THIS CHAPTER.
   § 5. Subsection (c) of section 1311 of the insurance law is amended to
 read as follows:
   (c) If the impairment so determined is such that such insurer does not
 have the minimum surplus required for item (iii) of subsection (a) here-
 of,  and  if  when  such  designated  period expires the insurer has not
 satisfied the superintendent that such impairment has  been  eliminated,
 THEN the superintendent may proceed against such insurer pursuant to the
 provisions  of  article  seventy-four of this chapter on the ground that
 its further transaction of business will be hazardous to its policyhold-
 ers, its creditors or the public OR THE  SUPERINTENDENT  MAY  PLACE  THE

 S. 8025                             5
 
 INSURER  UNDER ADMINISTRATIVE SUPERVISIONS PURSUANT TO SECTION ONE THOU-
 SAND ONE HUNDRED TWENTY-THREE OF THIS CHAPTER.
   §  6.  Paragraph  2 of subsection (c) of section 1312 of the insurance
 law is amended to read as follows:
   (2) If at the expiration of such designated period  such  insurer  has
 not  satisfied  the  superintendent that such impairment has been elimi-
 nated, the superintendent may proceed against such insurer  pursuant  to
 the  provisions  of  article  seventy-four of this chapter as an insurer
 whose condition is such that its further transaction of business in  the
 United  States  will be hazardous to its policyholders, its creditors or
 the public in the United States OR  THE  SUPERINTENDENT  MAY  PLACE  THE
 INSURER  UNDER  ADMINISTRATIVE SUPERVISION PURSUANT TO SECTION ONE THOU-
 SAND ONE HUNDRED TWENTY-THREE OF THIS CHAPTER.
   § 7. This act shall take effect immediately.
 
                                  PART B
 
   Section 1. Section 1104 of the insurance law, the section  heading  as
 amended  and subsections (c) and (d) as added by chapter 235 of the laws
 of 1989, the opening paragraph of subsection (c) as amended  by  chapter
 598 of the laws of 2000, is amended to read as follows:
   §  1104.  Revocation  or suspension of license; restriction of license
 authority or limitation on premiums written.  (a) The superintendent may
 revoke any license, CERTIFICATE OF AUTHORITY, OR REGISTRATION issued  to
 any  foreign  or alien insurer to do an insurance business in this state
 if, after notice to and hearing, [he] THE SUPERINTENDENT finds that such
 insurer has failed to comply with any requirement imposed upon it by the
 provisions of this chapter and if in [his] THE SUPERINTENDENT'S judgment
 such revocation is reasonably necessary to protect the interests of  the
 people  of this state. The superintendent may, in his OR HER discretion,
 reinstate any such license, CERTIFICATE OF AUTHORITY, OR REGISTRATION if
 [he] THE SUPERINTENDENT finds that a ground for such revocation no long-
 er exists.
   (b) The superintendent shall revoke the certificate  of  authority  of
 any corporation or agent convicted of violating section two thousand six
 hundred three of this chapter.
   (c) [The] (1) NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER, THE
 superintendent may [suspend the license, restrict the license authority,
 or  limit  the  amount of premiums written in this state of any accident
 and  health  insurance  company,  property/casualty  insurance  company,
 co-operative property/casualty insurance company, title insurance compa-
 ny,  mortgage  guaranty  insurance  company,  reciprocal insurer, Lloyds
 underwriters or nonprofit property/casualty insurance company] TAKE  ONE
 OR  MORE  OF THE ACTIONS SPECIFIED IN SUBPARAGRAPH (B) OF PARAGRAPH FOUR
 OF THIS SUBSECTION AGAINST AN INSURER, except those insurers subject  to
 the  provisions  of subsection (c) of section two thousand three hundred
 forty-three of this chapter, if after a  hearing  on  a  record,  unless
 waived  by the affected insurer, the superintendent determines that such
 insurer's surplus to policyholders is not adequate in  relation  to  the
 insurer's  outstanding  liabilities  or to its financial needs OR IF THE
 SUPERINTENDENT OTHERWISE DETERMINES THAT THE CONTINUED OPERATION OF  THE
 INSURER  MIGHT BE DEEMED TO BE HAZARDOUS TO THE INSURER'S POLICYHOLDERS,
 CREDITORS, OR TO THE GENERAL PUBLIC.
   (2) All matters pertaining to a proceeding or  determination  pursuant
 to  this subsection shall be confidential and not subject to subpoena or
 public inspection under article six of the public officers  law  or  any

 S. 8025                             6
 
 other  statute,  except  to  the  extent  that  the superintendent finds
 release of information necessary to  protect  the  public.  The  hearing
 shall be initiated within twenty days after written notice to the insur-
 er. Any determination pursuant to this subsection shall contain findings
 specifying  the  factors  deemed significant in regard to the particular
 insurer, and shall set forth  the  reasons  supporting  the  suspension,
 restriction or limitation ordered by the superintendent.
   (3)  The  SUPERINTENDENT  MAY CONSIDER THE following factors [shall be
 considered by the superintendent] in making [such] A determination AS TO
 WHETHER AN INSURER'S SURPLUS TO POLICYHOLDERS IS ADEQUATE IN RELATION TO
 THE INSURER'S OUTSTANDING LIABILITIES OR TO ITS FINANCIAL NEEDS:
   [(1)] (A) the size of the insurer as measured by its admitted  assets,
 capital and surplus to policyholders, reserves, premium writings, insur-
 ance in force and other appropriate criteria, with such surplus to poli-
 cyholders  for  foreign insurers adjusted in accordance with section one
 thousand four hundred thirteen of this chapter;
   [(2)] (B) the extent to which the insurer's  business  is  diversified
 among the several kinds of insurance;
   [(3)]  (C) the number and size of risks insured in each kind of insur-
 ance and the insurer's loss experience in regard to such risks;
   [(4)] (D) the extent  of  geographical  dispersion  of  the  insurer's
 risks;
   [(5)] (E) the nature and extent of the insurer's reinsurance program;
   [(6)]  (F) the quality, diversification and liquidity of the insurer's
 investment portfolio;
   [(7)] (G) the recent past and projected future trends in regard to the
 insurer's loss experience and in the size of the  insurer's  surplus  to
 policyholders;
   [(8)]  (H) the surplus to policyholders maintained by other comparable
 insurers;
   [(9)] (I) the adequacy of the insurer's reserves; and
   [(10)] (J) the quality and liquidity of  investments  in  subsidiaries
 made pursuant to this chapter.
   (4)  (A)  THE  SUPERINTENDENT  MAY  CONSIDER  THE FOLLOWING STANDARDS,
 EITHER SINGLY OR A COMBINATION OF TWO OR MORE, TO DETERMINE WHETHER  THE
 CONTINUED  OPERATION  OF  ANY INSURER MIGHT BE DEEMED TO BE HAZARDOUS TO
 ITS POLICYHOLDERS, CREDITORS, OR TO THE GENERAL PUBLIC:
   (I) ADVERSE  FINDINGS  REPORTED  IN  FINANCIAL  CONDITION  AND  MARKET
 CONDUCT EXAMINATION REPORTS, AUDIT REPORTS, ACTUARIAL OPINIONS, REPORTS,
 OR SUMMARIES, OR OTHER REPORTS;
   (II)  THE  NATIONAL  ASSOCIATION  OF INSURANCE COMMISSIONERS INSURANCE
 REGULATORY INFORMATION SYSTEM AND ITS OTHER FINANCIAL ANALYSIS  SOLVENCY
 TOOLS AND REPORTS;
   (III)  WHETHER  THE  INSURER HAS MADE ADEQUATE PROVISION, ACCORDING TO
 PRESENTLY ACCEPTED ACTUARIAL STANDARDS OF PRACTICE, FOR THE  ANTICIPATED
 CASH  FLOWS REQUIRED BY THE CONTRACTUAL OBLIGATIONS AND RELATED EXPENSES
 OF THE INSURER, WHEN CONSIDERED IN LIGHT  OF  THE  ASSETS  HELD  BY  THE
 INSURER  WITH  RESPECT  TO  SUCH  RESERVES  AND RELATED ACTUARIAL ITEMS,
 INCLUDING THE INVESTMENT EARNINGS ON SUCH ASSETS, AND THE CONSIDERATIONS
 ANTICIPATED  TO  BE  RECEIVED  AND  RETAINED  UNDER  SUCH  POLICIES  AND
 CONTRACTS;
   (IV)  THE  ABILITY OF AN ASSUMING REINSURER TO PERFORM AND WHETHER THE
 INSURER'S REINSURANCE PROGRAM PROVIDES  SUFFICIENT  PROTECTION  FOR  THE
 INSURER'S REMAINING SURPLUS AFTER TAKING INTO ACCOUNT THE INSURER'S CASH
 FLOW AND THE CLASSES OF BUSINESS WRITTEN AS WELL AS THE FINANCIAL CONDI-
 TION OF THE ASSUMING REINSURER;

 S. 8025                             7
 
   (V)  WHETHER  THE  INSURER'S  OPERATING  LOSS IN THE LAST TWELVE-MONTH
 PERIOD OR ANY SHORTER PERIOD OF TIME,  INCLUDING  NET  CAPITAL  GAIN  OR
 LOSS,  CHANGE  IN NON-ADMITTED ASSETS, AND CASH DIVIDENDS PAID TO SHARE-
 HOLDERS, IS GREATER  THAN  FIFTY  PERCENT  OF  THE  INSURER'S  REMAINING
 SURPLUS TO POLICYHOLDERS IN EXCESS OF THE MINIMUM REQUIRED;
   (VI)  WHETHER  THE  INSURER'S  OPERATING LOSS IN THE LAST TWELVE-MONTH
 PERIOD OR ANY SHORTER PERIOD OF TIME, EXCLUDING NET  CAPITAL  GAINS,  IS
 GREATER  THAN TWENTY PERCENT OF THE INSURER'S REMAINING SURPLUS TO POLI-
 CYHOLDERS IN EXCESS OF THE MINIMUM REQUIRED;
   (VII) WHETHER A REINSURER, AN OBLIGOR, ANY  ENTITY  IN  THE  INSURER'S
 HOLDING COMPANY SYSTEM, AS DEFINED IN PARAGRAPH SIX OF SUBSECTION (A) OF
 SECTION ONE THOUSAND FIVE HUNDRED ONE OF THIS CHAPTER, OR ANY SUBSIDIARY
 OF  AN  INSURER, IS INSOLVENT, THREATENED WITH INSOLVENCY, OR DELINQUENT
 IN PAYMENT OF ITS MONETARY OR OTHER OBLIGATIONS, AND WHICH IN THE  OPIN-
 ION OF THE SUPERINTENDENT MAY AFFECT THE SOLVENCY OF THE INSURER;
   (VIII)  CONTINGENT  LIABILITIES,  PLEDGES,  OR  GUARANTEES THAT EITHER
 INDIVIDUALLY OR COLLECTIVELY INVOLVE A TOTAL AMOUNT THAT IN  THE  SUPER-
 INTENDENT'S OPINION MAY AFFECT THE INSURER'S SOLVENCY;
   (IX)  WHETHER  ANY PERSON WHO CONTROLS AN INSURER, AS DEFINED IN PARA-
 GRAPH TWO OF SUBSECTION (A) OF SECTION ONE THOUSAND FIVE HUNDRED ONE  OF
 THIS  CHAPTER,  IS DELINQUENT IN THE TRANSMITTING TO, OR PAYMENT OF, NET
 PREMIUMS TO THE INSURER;
   (X) THE AGE AND COLLECTIBILITY OF RECEIVABLES;
   (XI) WHETHER THE MANAGEMENT OF AN INSURER, INCLUDING OFFICERS,  DIREC-
 TORS, OR ANY OTHER PERSON WHO DIRECTLY OR INDIRECTLY CONTROLS THE OPERA-
 TION  OF  THE  INSURER, FAILS TO POSSESS AND DEMONSTRATE THE COMPETENCE,
 FITNESS, AND REPUTATION DEEMED NECESSARY TO SERVE THE  INSURER  IN  SUCH
 POSITION;
   (XII)  WHETHER  THE  INSURER'S  MANAGEMENT HAS FAILED TO RESPOND TO AN
 INQUIRY OF THE SUPERINTENDENT RELATIVE TO THE INSURER'S CONDITION OR HAS
 FURNISHED FALSE AND MISLEADING INFORMATION CONCERNING SUCH AN INQUIRY;
   (XIII) WHETHER  THE  INSURER  HAS  FAILED  TO  MEET  FINANCIAL  FILING
 REQUIREMENTS  OR  FILING  REQUIREMENTS  PURSUANT  TO  ARTICLES  FIFTEEN,
 SIXTEEN, OR SEVENTEEN OF THIS CHAPTER, OR REGULATIONS PROMULGATED THERE-
 UNDER, IN THE ABSENCE OF A REASON SATISFACTORY TO THE SUPERINTENDENT;
   (XIV) WHETHER THE INSURER'S MANAGEMENT EITHER HAS FILED ANY  FALSE  OR
 MISLEADING  SWORN FINANCIAL STATEMENT, OR HAS RELEASED FALSE OR MISLEAD-
 ING FINANCIAL STATEMENTS TO  LENDING  INSTITUTIONS  OR  TO  THE  GENERAL
 PUBLIC, OR HAS MADE A FALSE OR MISLEADING ENTRY, OR HAS OMITTED AN ENTRY
 OF MATERIAL AMOUNT IN THE INSURER'S BOOKS;
   (XV)  WHETHER  THE  INSURER HAS GROWN SO RAPIDLY AND TO SUCH AN EXTENT
 THAT IT LACKS ADEQUATE FINANCIAL AND ADMINISTRATIVE CAPACITY TO MEET ITS
 OBLIGATIONS IN A TIMELY MANNER;
   (XVI) WHETHER THE INSURER HAS EXPERIENCED OR IS EXPECTED TO EXPERIENCE
 IN THE FORESEEABLE FUTURE CASH FLOW OR LIQUIDITY PROBLEMS;
   (XVII) WHETHER MANAGEMENT HAS ESTABLISHED RESERVES THAT DO NOT  COMPLY
 WITH  MINIMUM  STANDARDS  ESTABLISHED  BY  THIS  CHAPTER  OR REGULATIONS
 PROMULGATED THEREUNDER, STATUTORY ACCOUNTING STANDARDS,  AS  ADOPTED  BY
 THE  SUPERINTENDENT,  SOUND  ACTUARIAL PRINCIPLES AND STANDARDS OF PRAC-
 TICE;
   (XVIII) WHETHER MANAGEMENT  PERSISTENTLY  ENGAGES  IN  MATERIAL  UNDER
 RESERVING THAT RESULTS IN ADVERSE DEVELOPMENT;
   (XIX)  WHETHER  ANY  TRANSACTION WITH AN AFFILIATE, A SUBSIDIARY, OR A
 PARENT FOR WHICH THE INSURER RECEIVES ASSETS OR CAPITAL GAINS, OR  BOTH,
 DOES NOT PROVIDE SUFFICIENT VALUE, LIQUIDITY, OR DIVERSITY TO ASSURE THE

 S. 8025                             8
 
 INSURER'S  ABILITY  TO  MEET ITS OUTSTANDING OBLIGATIONS AS THEY MATURE;
 AND
   (XX)  ANY OTHER FINDING DETERMINED BY THE SUPERINTENDENT TO BE HAZARD-
 OUS TO THE INSURER'S POLICYHOLDERS, CREDITORS, OR TO THE GENERAL PUBLIC.
   (B) IF THE SUPERINTENDENT DETERMINES THAT  THE  INSURER'S  SURPLUS  TO
 POLICYHOLDERS  IS  NOT ADEQUATE IN RELATION TO THE INSURER'S OUTSTANDING
 LIABILITIES OR TO ITS FINANCIAL NEEDS OR IF THE SUPERINTENDENT OTHERWISE
 DETERMINES THAT THE CONTINUED OPERATION OF THE INSURER MAY BE  HAZARDOUS
 TO  ITS  POLICYHOLDERS,  CREDITORS,  OR  TO THE GENERAL PUBLIC, THEN THE
 SUPERINTENDENT MAY, UPON A DETERMINATION, SUSPEND THE INSURER'S LICENSE,
 CERTIFICATE  OF  AUTHORITY,  OR  REGISTRATION,  RESTRICT  THE  INSURER'S
 LICENSE,  CERTIFICATE  OF AUTHORITY, OR REGISTRATION AUTHORITY, OR ISSUE
 AN ORDER REQUIRING THE INSURER TO DO ONE OR MORE OF THE FOLLOWING:
   (I) REDUCE THE TOTAL AMOUNT OF PRESENT  AND  POTENTIAL  LIABILITY  FOR
 POLICY BENEFITS BY REINSURANCE;
   (II)  REDUCE,  SUSPEND, OR LIMIT THE VOLUME OF BUSINESS BEING ACCEPTED
 OR RENEWED, OR LIMIT THE AMOUNT OF PREMIUMS WRITTEN IN THIS STATE;
   (III) REDUCE GENERAL INSURANCE AND COMMISSION  EXPENSES  BY  SPECIFIED
 METHODS;
   (IV) INCREASE THE INSURER'S CAPITAL AND SURPLUS;
   (V)  SUSPEND  OR  LIMIT THE DECLARATION AND PAYMENT OF DIVIDENDS BY AN
 INSURER TO ITS STOCKHOLDERS OR POLICYHOLDERS;
   (VI) FILE REPORTS ON A FORM AND IN A MANNER ACCEPTABLE TO  THE  SUPER-
 INTENDENT CONCERNING THE MARKET VALUE OF AN INSURER'S ASSETS;
   (VII)  LIMIT  OR  WITHDRAW  FROM  CERTAIN  INVESTMENTS  OR DISCONTINUE
 CERTAIN INVESTMENT PRACTICES TO  THE  EXTENT  THE  SUPERINTENDENT  DEEMS
 NECESSARY;
   (VIII) DOCUMENT THE ADEQUACY OF PREMIUM RATES IN RELATION TO THE RISKS
 INSURED;
   (IX) FILE, IN ADDITION TO REGULAR ANNUAL STATEMENTS, INTERIM FINANCIAL
 REPORTS  ON  A  FORM  AND  IN A MANNER PRESCRIBED BY THE SUPERINTENDENT,
 WHICH MAY INCLUDE A FORM ADOPTED BY THE NATIONAL ASSOCIATION  OF  INSUR-
 ANCE COMMISSIONERS;
   (X)  CORRECT CORPORATE GOVERNANCE PRACTICE DEFICIENCIES, AND ADOPT AND
 UTILIZE GOVERNANCE PRACTICES ACCEPTABLE TO THE SUPERINTENDENT;
   (XI) PROVIDE A BUSINESS PLAN TO THE SUPERINTENDENT IN ORDER TO CONTIN-
 UE TO TRANSACT BUSINESS IN THIS STATE; OR
   (XII) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, ADJUST RATES FOR ANY
 NON-LIFE INSURANCE POLICY OR CONTRACT WRITTEN BY THE  INSURER  THAT  THE
 SUPERINTENDENT  CONSIDERS  NECESSARY  TO IMPROVE THE INSURER'S FINANCIAL
 CONDITION.
   (d) [The superintendent  shall  identify  and  review  those  licensed
 property/casualty  insurers  needing  immediate  or  targeted regulatory
 attention, and shall include the number of insurers so identified in the
 report required by section three hundred thirty-four  of  this  chapter.
 Such   report   shall   also   include   the   name   of  each  licensed
 property/casualty insurer placed in  formal  conservatorship,  rehabili-
 tation or liquidation during the preceding year. Nothing herein shall be
 construed  to restrict or diminish any right or power of the superinten-
 dent under any other provision of this chapter] FOR THE PURPOSES OF THIS
 SECTION, "INSURER" SHALL MEAN  ANY  PERSON,  FIRM,  ASSOCIATION,  CORPO-
 RATION, OR JOINT-STOCK COMPANY AUTHORIZED TO DO AN INSURANCE BUSINESS IN
 THIS  STATE  BY  A  LICENSE  IN FORCE PURSUANT TO THE PROVISIONS OF THIS
 CHAPTER OR EXEMPTED BY THE PROVISIONS OF THIS CHAPTER FROM SUCH  LICENS-
 ING, EXCEPT THAT, FOR PURPOSES OF THIS SECTION, THE TERM "INSURER" SHALL
 NOT  INCLUDE  ANY  HEALTH MAINTENANCE ORGANIZATION OPERATING PURSUANT TO

 S. 8025                             9
 
 SECTION ONE THOUSAND ONE HUNDRED NINE OF THIS ARTICLE OR ANY  CONTINUING
 CARE RETIREMENT COMMUNITY OPERATING PURSUANT TO SECTION ONE THOUSAND ONE
 HUNDRED NINETEEN OF THIS ARTICLE.
   § 2. This act shall take effect immediately.
   § 2. Severability clause. If any clause, sentence, paragraph, subdivi-
 sion,  section  or  part  of  this act shall be adjudged by any court of
 competent jurisdiction to be invalid, such judgment  shall  not  affect,
 impair,  or  invalidate  the remainder thereof, but shall be confined in
 its operation to the clause, sentence, paragraph,  subdivision,  section
 or part thereof directly involved in the controversy in which such judg-
 ment shall have been rendered. It is hereby declared to be the intent of
 the  legislature  that  this  act  would  have been enacted even if such
 invalid provisions had not been included herein.
   § 3. This act shall take effect immediately  provided,  however,  that
 the  applicable effective date of Parts A through B of this act shall be
 as specifically set forth in the last section of such Parts.

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