17B:18-37. Definitions; deposit prerequisite to authorization

17B:18-37. a. As used in this section and in N.J.S.17B:18-38 and N.J.S.17B:18-39:

(1) "Bank" means a State or federally chartered bank, savings bank, or savings and loan association which has trust powers and which has its principal office in New Jersey.

(2) "Custodian" means a bank which performs fiduciary functions in the maintenance of deposits.

(3) "Deposit" means those deposits of securities required to be made by insurance companies prior to their authorization to transact business within any jurisdiction.

(4) "Federal Reserve book-entry system" means the computerized system sponsored by the United States Department of the Treasury and certain agencies and instrumentalities of the United States for holding and transferring securities of the United States government and the agencies and instrumentalities, respectively, in Federal Reserve Banks through banks which are members of the Federal Reserve System or which otherwise have access to this computerized system.

(5) "Policyholders" means those persons including subscribers, certificate holders, and others who are named in or covered by a contract of insurance.

(6) "Securities" means and shall only include:

(a) Bills, bonds and notes issued by the United States Treasury;

(b) Debt obligations of the State of New Jersey, its authorities, counties and municipalities; and

(c) Certificates of deposit of a State or federally chartered bank, savings bank, or savings and loan association with its principal office in New Jersey.

b. The commissioner shall appoint one or more custodians which shall be selected on the basis of bids submitted by banks to perform such fiduciary functions as the commissioner deems necessary in the maintenance of deposits.

c. No domestic insurer shall be issued a certificate of authority until it has deposited with the custodian on behalf of the commissioner, securities having a market value of at least $100,000.00 to be held in physical form or purchased for its account in the Federal Reserve book-entry system. The deposits are to be held for the benefit and security of all of the policyholders of the company depositing them. The records of the custodian, through which an insurance company holds securities in the Federal Reserve book-entry system or in physical form, shall at all times show that these securities are held for an insurance company and for which accounts thereof.

d. The Commissioner of Insurance may, from time to time after the company has commenced business, require it to make further deposits of securities, up to the sum of $250,000.00, as the commissioner may deem necessary to protect the policyholders of the depositing company.

L.1971, c.144; amended 1989,c.264,s.5.