N.J. Stat. tit. 17, ch. 20

N.J. Stat. tit. 17, ch. 20
in effect

N.J. Stat. § 17:20-1 Definitions

17:20-1. a. As used in this chapter: (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. Every company organized under subtitle 3 of Title 17 of the Revised Statutes (R.S.17:17-1 et seq.), other than a mutual company organized to make insurance solely against loss or damage to property belonging to the insured member, shall deposit with the custodian on behalf of the commissioner, securities with 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 shall be held for the benefit and security of all 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, as the commissioner may deem necessary to protect the policyholders of the depositing company. Amended 1989,c.264,s.1; repealed in part (see N.J.S.17B:36-3b).

N.J. Stat. § 17:20-1.1 Procedure for holding of deposits

Whenever the commissioner is required or authorized by a law of this or any other state or country to receive and hold a deposit, he may utilize the procedures for the holding of those deposits which are found in R.S.17:20-1. L.1989, c.264, s.12.

N.J. Stat. § 17:20-2 Deposits; interest on; substitution of

17:20-2. The commissioner shall hold the securities deposited as aforesaid, for the benefit and security of all the policyholders of the company depositing them, but shall, so long as the company continues solvent and complies with all the requisites of the laws applicable to it, permit the company to collect the interest or dividends on the securities so deposited, and, from time to time, with his assent, to withdraw any of the securities, on depositing with him other eligible securities, the market value of which shall not cause the value of the total deposit to fall below the amount required by the commissioner. Amended 1989,c.264,s.2; repealed in part(see N.J.S.17B:36-3b).

N.J. Stat. § 17:20-3 Delivery of securities on dissolution, liquidation, reorganization or merger; action to obtain delivery; claims of policyholders

17:20-3. Whenever any insurance company of this State shall voluntarily dissolve, or a receiver or trustee thereof shall be appointed by the Superior Court in any action brought in such court to effect the liquidation or reorganization of such company; or if, pursuant to the provisions of any statute of this State, any statutory officer shall take possession of the business and affairs of such company; or if such company shall have heretofore or shall hereafter become legally merged into or consolidated with another such company, the commissioner shall thereupon deliver to such receiver or trustee, or to the directors or trustees on dissolution, or to such statutory officer, or to the company resulting from such merger or consolidation, the securities deposited with him. Before the commissioner shall make such delivery, such receiver or trustee, or such directors or trustees on dissolution, or such statutory officer, or such company resulting from such merger or consolidation, shall institute an action in the Superior Court to obtain delivery by the commissioner of such securities to the plaintiff. The court may proceed in the action in a summary manner or otherwise, and process therein may be served upon all persons, other than the commissioner by publishing the same or a notice thereof once in a newspaper published in the county where the company has its principal office. The court may enter judgment directing the commissioner to deliver such securities to the plaintiff. Upon such delivery, the commissioner shall be relieved of all further responsibility or obligation in regard to the securities so deposited, except when such securities are delivered by such commissioner as commissioner to himself in his capacity as the officer designated by statute to take possession of the business and affairs of any such company. Such deposited securities shall not be delivered to the directors or trustees on dissolution until all proceedings in such voluntary dissolution shall have first been approved by the commissioner. Nothing herein contained shall be construed as in anywise affecting the rights, in such securities, of the policyholders of such company for whose benefit and security such deposit was made, as provided in R.S.17:20-2. Such securities or the proceeds thereof, shall be administered, upon such delivery, as a trust fund for the benefit of such policyholders, and shall not be mingled with other assets of such company, until distribution thereof is made as hereinafter provided. The Superior Court, in any action brought therein for the delivery of such securities as herein provided, shall have jurisdiction to limit the time within which policyholders shall present and make proof of their respective claims against such company, and may bar all such policyholders from any claim in such securities for failing so to do within the time limited. The court may also prescribe what notice, by publication or otherwise, shall be given to such policyholders of such limitation of time. Nothing contained in subtitle 3 of Title 17 of the Revised Statutes (R.S.17:17-1 et seq.) shall be construed as conferring upon the Superior Court general jurisdiction over the business and affairs of such company by reason only of any application made to it pursuant to the provisions of this section. Such claims shall be presented to such receiver or trustee, or to such directors or trustees in dissolution, or to such statutory officer, or to such company resulting from such merger or consolidation, in writing and under oath and shall be passed upon by the same, subject to a summary review by the court as may be prescribed by order of the court. Upon the expiration of the time limited for filing claims, and upon the determination as herein provided, of claims disallowed, such securities or the proceeds thereof shall be distributed pro rata to such policyholders on account of such claims, and the balance thereof shall thereupon be discharged from any trust for the benefit of such policyholders. If the proceeds of such distribution are insufficient to pay such claims in full, nothing herein contained shall be construed as preventing such policyholders from asserting any lawful claim against other assets of such company for the amount of such deficiency. Amended 1953,c.17,s.109; 1989,c.264,s.3; repealed in part (see N.J.S.17B:36-3b).

N.J. Stat. § 17:20-3.1 Fees for services of custodian required pursuant to R.S.17:20-1 et seq.

The Commissioner of Insurance shall establish, by regulation, the fees to be charged insurance companies for the services of the custodian pursuant to the requirements of R.S.17:20-1 through R.S.17:20-3. L.1989, c.264, s.4.

N.J. Stat. § 17:20-4 Deposits to do business elsewhere

The commissioner may receive from any insurance company of this State a deposit of any securities necessary to enable it to transact business in any other State, territory, dependency or Federal District of the United States or in any foreign country under the laws thereof. The securities shall be held by the commissioner as long as the company desires to transact business in the State, territory, dependency, Federal District or foreign country requiring the deposit but the company may draw the dividends or receive the interest on the securities. When the company desires to discontinue its business therein, and the deposit is no longer required by the laws thereof, the commissioner shall return the securities to the company depositing them. Before the commissioner shall return such securities deposited with him as aforesaid, the company shall institute an action and obtain a judgment therefor in the Superior Court substantially similar to that provided in section 17:20-3 of this Title. Amended by L.1953, c. 17, p. 240, s. 110.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026

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