The Office of General Counsel issued the following opinion on August 8, 2003, representing the position of the New York State Insurance Department.
Re: Coverage by the Life Insurance Company Guaranty Corporation of New York
1. To what extent, if any, does New York Insurance Law, Article 77 (McKinney 2000) protect payments to New York State residents who purchase an annuity/life insurance policy from an insurer located in New Jersey when such insurer is not a licensed insurer in New York?
2. Would the New Jersey Guaranty Fund cover these contracts?
1. Pursuant to New York Insurance Law § 7703(a) (McKinney 2000), the Life Insurance Company Guaranty Corporation of New York, (hereinafter the Corporation), only applies to ". . . a life insurance company licensed to transact life or . . . annuities in this state. . . ".
2. The Department only opines on the New York Insurance Law.
The inquirer represents a client who resides in New York, but who bought a product that the inquirer describes as an annuity/life insurance policy from an insurer located in New Jersey. The New Jersey insurer is not licensed in New York, and is not approved in New York. All administration and applications are processed outside of New York. The inquirer wants to know if the Corporation covered this client. The inquirer further wants to know if the New Jersey Fund covered the client.
The Department only opines on the New York Insurance Law. One must inquire to the New Jersey fund for the opinion of the state of New Jersey on this matter.
N.Y. Ins. Law § 7702 (McKinney 2000) states in the relevant part that "[t]he purpose of this article is to provide funds to protect resident policyowners, insureds, beneficiaries, annuitants, payees and assignees of life insurance policies, . . . , annuity contracts, . . . issued by life insurance companies, subject to certain limitations, against failure in the performance of contractual obligations due to the impairment or insolvency of the insurer issuing such policies or contracts." However, N.Y. Ins. Law § 7703(a) (McKinney 2000) states in the relevant part that "[t]his article shall apply to direct life insurance policies, . . . , annuity contracts, . . . issued to a resident by a life insurance company licensed to transact life or health insurance or annuities in this state at the time the policy, contract or agreement was issued . . . ." N.Y. Ins. Law § 7705(h) (McKinney 2000) states in the relevant part that "[m]ember insurer means any life insurance company licensed to transact in this state any kind of insurance to which this article applies. . . . "
Since the life insurance company from which the inquirers client purchased a policy is not licensed in New York, it is not covered by the Corporation.
This opinion only reflects the Departments interpretation of the of the Insurance Law, and is not binding on Life Insurance Company Guaranty Corporation of New York which is a separate entity.
For further information one may contact Senior Attorney Susan Dess at the New York City Office.