The Office of General Counsel issued the following informal opinion on June 13, 2002, representing the position of the New York State Insurance Department.

Re: Savings Clause in a Reinsurance Agreement

This letter is in response to your recent e-mail to Deputy Superintendent and General Counsel Samers.

Question Presented:

May the language of a "savings clause" in a reinsurance agreement with an authorized reinsurer vary from the language discussed in a February 26, 2002 Department opinion letter?


The language acceptable to the Department in the "savings clause" depends upon the status of the reinsurer.


The inquirer’s e-mail to the Department included a copy of an opinion issued by the Department on February 26, 2002, which required specific language for a savings clause. However, the inquirer wanted to know if the inquirer’s proposed variation of the above cited savings clause is acceptable to the Department. The inquirer explained that the goal of the inquirer’s company was to establish a standard set of recitals that could be used in reinsurance agreements with clients and their reinsurers resident in, licensed in and operating in various states and countries.

Because the inquirer included a copy in its inquiry of the February 26, 2002 opinion that explains the need for a savings clause in reinsurance contracts, that discussion will not be herein repeated. Instead, this opinion will focus on the inquirer’s specific inquiry that arose from the February 26, 2002 opinion.


The inquirer’s company has proposed using the following:

If any provision of this Article shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Article or the enforceability of such provision in any other jurisdiction.

Pursuant to N.Y. Ins. Law § 1106(f) (McKinney 2000), this phrase may be used if the reinsurer is an authorized foreign insurer in New York. N.Y. Ins. Law § 1106(f) (McKinney 2000) states:

No foreign insurer and no United States branch of an alien insurer which does outside of this state any kind or combination of kinds of insurance business not permitted to be done in this state by similar domestic insurers hereafter organized, shall be or continue to be authorized to do an insurance business in this state, unless in the judgment of the superintendent the doing of such kind or combination of kinds of insurance business will not be prejudicial to the best interests of the people of this state.

This Department has previously concluded that the proposed language is acceptable for use by an authorized foreign insurer. However, if the reinsurer is a New York domestic insurer, then Section 1102(b) of the New York Insurance law prohibits it from issuing a reinsurance agreement with the above language proposed by the inquirer’s company. N.Y. Ins. Law § 1102(b) (McKinney 2000) states:

No corporation organized under any law of this state shall do an insurance business outside this state unless so authorized pursuant to the provisions of this chapter or exempted by the provisions of this chapter from such requirement.

A reinsurance agreement of a reinsurer that is a New York domestic insurer, must contain the language specified in the February 26, 2002 opinion, which states in the pertinent part: ". . . in no event shall coverage be provided to the extent that such coverage is not permitted under New York law."

For further information you may contact Senior Attorney Susan A. Dess at the New York City Office.