The Office of General Counsel issued the following opinion on June 19, 2003, representing the position of the New York State Insurance Department.
Re: Approval of Structured Settlement Annuity
Pursuant to N.Y. C.P.L.R. § 1206(c) (McKinney 2002), is an unauthorized insurer that issues an annuity contract a "qualified insurer"?
No. Only authorized insurers that have the power to issue annuities in New York have been designated as "qualified insurers" by the Superintendent. ABC Life Insurance Company is not licensed in New York to write annuities and, thus, is not a "qualified insurer".
The Court has been asked to approve a proposed settlement whereby the defendant will purchase an annuity from ABC Life Insurance Company, an unauthorized insurer.
N.Y. C.P.L.R. § 1206(c) (McKinney 2002) provides in pertinent part:
[T]he court may order that money constituting any part of the property be deposited in one or more specified insured banks or trust companies or savings banks or insured state or federal credit unions or be invested in one or more specified accounts in insured savings and loan associations, or it may order that a structured settlement agreement be executed, which shall include any settlement whose terms contain provisions for the payment of funds on an installment basis, provided that with respect to future installment payments, the court may order that each party liable for such payments shall fund such payments, in an amount necessary to assure the future payments, in the form of an annuity contract executed by a qualified insurer and approved by the superintendent of insurance pursuant to articles fifty-A and fifty-B of this chapter. . . .
N.Y. C.P.L.R. § 5049 (McKinney 2002) provides:
The superintendent of insurance shall establish rules and procedures for determining which insurers, self-insurers, plans or arrangements are financially qualified to provide the security required under this article and to be designated as qualified insurers.
Shortly after the enactment of N.Y. C.P.L.R. § 5049, the Superintendent of Insurance, in a letter to the Chief Administrative Judge, designated as "qualified insurers" all insurers authorized to issue annuities in New York. The term "authorized insurer" is defined in N.Y. Ins. Law § 107(a)(10) (McKinney Supp. 2003) as:
an insurer authorized as such to do an insurance business in this state in compliance with this chapter, by reason of a license so to do issued and in force pursuant to the laws of this state or of a corporate charter granted and in force pursuant to the laws of this state, but not including any insurer herein exempted from compliance with the requirement that it obtain a license to do business.
Accordingly, only insurers licensed by the New York State Department of Insurance to write the kind of insurance authorized by Section 1113(a)(2) of the New York Insurance Law (Annuities) are financially qualified to provide the requisite security and to be designated as qualified insurers. ABC Life is not licensed in New York to write annuities and thus, is not a "qualified insurer".
The Court in Rohring v. City of Niagara Falls, 212 A.D.2d 320, 630 N.Y.S.2d 827 (4th Dept. 1995), appeal dismissed 87 N.Y.2d 860, 639 N.Y.S.2d 312 (1995), held that it is not necessary for the Superintendent of Insurance to approve separately each annuity contract purchased as part of structured judgment.
For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.