The Office of General Counsel issued the following opinion on January 29, 2004, representing the position of the New York State Insurance Department.
Re: Investments by Hospital Medical Malpractice Self-Insurance Fund
Does the Insurance Law impose any restrictions on the type of investments that a New York State hospitals medical malpractice self-insurance fund may make?
The Insurance Law imposes no restrictions on the type of investments that a New York State hospitals medical malpractice self-insurance fund may make.
The inquiry is general in nature.
The inquirer asks whether the Insurance Law or regulations contain any restrictions on how the funds maintained in a New York State hospitals medical malpractice self-insurance fund may be invested. Generally, a self-insurer is a person, firm or corporation that chooses to fulfill a potential legal liability in a manner that does not involve the purchasing of insurance coverage for such liability. Therefore, by definition, self-insurance involves the "protection against loss by setting aside ones own money." See, Barrons Dictionary of Insurance Terms 460 (4th ed. 2000).
As a rule, such activities do not fit within the definition of doing an insurance business in N.Y. Ins. Law § 1101 (McKinney Supp. 2004). The Insurance Law does not require self-insurers to obtain licenses to self-insure their own liability. Thus, they are not regulated by the Department and are not required to comply with the provisions of the Insurance Law and regulations,1 including the provisions relating to investment by insurers.
This opinion is limited to an interpretation of the Insurance Law and Regulations. No opinion is herein given regarding any other New York State law or regulation.
For further information you may contact Associate Attorney D. Monica Marsh at the New York City Office.
1 Except in regard to No-Fault insurance.