The Office of General Counsel issued the following informal opinion on November 4, 2004, representing the position of the New York State Insurance Department.
Re: Statutory Deposits and Judgment Collection
Question Presented
May a judgment creditor attach the "bonded assets" of an insurance company for the purposes of debt collection?
Conclusion
No. Assets deposited by an insurer with the Superintendent of the New York State Insurance Department pursuant to N.Y. Ins. Law § 1314 (McKinney Supp. 2004) are not subject to attachment.
Facts
An attorney represents a number of creditors who have obtained judgments against numerous insurance companies. On a number of occasions, these same insurance companies have failed to cooperate in executing the judgments.
Analysis
Please note initially that the Office of General Counsel assumed for the purposes of this analysis that the use of the term "bonded assets" is in fact a reference to funds deposited by an insurer with the Superintendent of Insurance in accordance with N.Y. Ins. Law § 1314 (McKinney 2000). Notably, N.Y. Ins. Law § 1314(c) (McKinney 2000) expressly prohibits a judgment creditor from collecting against such deposits. In pertinent part, § 1314(c) states:
No judgment creditor or other claimant may levy on any deposit [made with the Superintendent of the Insurance Department] or part thereof. Upon the making of an order by a court of competent jurisdiction for the liquidation, rehabilitation or conservation of any depositing insurer, the deposit and the income therefrom shall be transferred to the superintendent as liquidator, rehabilitator,or conservator. See, N.Y. Ins. Law § 1314(c) (McKinney 2002).
The Insurance Department was also asked to provide the "process by which a judgment creditor may enforce its court ordered judgments against an insurer's bonded assets." No such procedure is in existence as enforcing judgments against an insurer's "deposit funds" is expressly prohibited by statute. Id.
Lastly, the Department was requested to provide any other debt collection procedures that might be available to an insurer's judgment creditors. Unfortunately, the General Counsel's office can not respond to inquiries of such a general nature.
For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.