New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter XVI - Service Contracts
Part 390 - Service Contracts
Section 390.12 - Default contingency plan agreements
Current through Register Vol. 46, No. 12, March 20, 2024
Every application for approval of registration as a provider under section 7907 of the Insurance Law, wherein the provider has elected to assure its obligations to contract holders by a funded reserve account and financial security or by net worth qualification shall include a form of default contingency plan agreement that provides:
(a) for the appointment of a claims trustee that is acceptable to the superintendent and who is registered as a provider, in the event of a provider's default in performance as specified in sections 390.10(e) and 390.11(c) of this Part;
(b) that the appointment shall be made within 15 days of the provider's default;
(c) that the superintendent may make the appointment in the event the provider fails to make an appointment within the time specified by subdivision (b) of this section or if the appointed trustee fails to serve or resigns;
(d) for the trustee to administer all claims outstanding and which may arise after the provider's default;
(e) for the trustee to receive from the superintendent the funded reserve account, any securities deposited with the superintendent as financial security, and, in the case of a provider that met the net worth qualification, all funds that said provider shall have allocated upon its books of account to obligations to contract holders arising from service contracts marketed, issued, sold or offered for sale, made or offered to be made, or administered in this State on and after January 15, 1998;
(f) for the trustee to apply all funds received pursuant to subdivision (e) of this section exclusively to the payment of claims arising from service contracts issued by the provider;
(g) for the trustee to have the power to bring actions or proceedings against the provider to obtain the funds provided for by subdivision (e) of this section and any additional funds that may be necessary for the payment of claims and expenses arising from service contracts issued by the provider; and
(h) that all funds received by the trustee pursuant to the default contingency plan shall be treated as trust funds and shall not be used for any purpose except as specified in subdivision (f) of this section.
