Thus far in 2011, six additional states have enacted the provisions from the National Association of Insurance Commissioners’ Insurer Receivership Model Act (“IRMA”) that govern the treatment of “qualified financial contracts” and “netting agreements.”

The IRMA provisions, which are modelled on the U.S. Bankruptcy Code, allow a party that has entered into a swap transaction with an insurer to exercise certain netting, collateral realization and termination rights without being precluded by the automatic stay that is imposed if the insurer becomes insolvent.

It finally happened. On 12 December 2011, New York Governor Andrew Cuomo signed Senate Bill 2713A into law. The bill, which was passed by the legislature in June, adds important provisions to the New York Insurance Law regarding the treatment of qualified financial contracts in an insurance insolvency proceeding.

On 30 November 2011, New York Senate Bill 2713A was delivered to the desk of Governor Andrew Cuomo for signature. If signed by the Governor, the bill will add provisions to the New York Insurance Law regarding the treatment of qualified financial contracts in an insurance insolvency proceeding. “Qualified financial contracts” include derivatives, securities lending, repurchase agreements, futures contracts and other financial instruments. These contracts are typically documented under master agreements providing for netting of obligations between the parties.

On 30 November 2011, New York Senate Bill 2713A was delivered to the desk of Governor Andrew Cuomo for signature. If signed by the Governor, the bill will add provisions to the New York Insurance Law regarding the treatment of qualified financial contracts in an insurance insolvency proceeding. “Qualified financial contracts” include derivatives, securities lending, repurchase agreements, futures contracts and other financial instruments. These contracts are typically documented under master agreements providing for netting of obligations between the parties.

Thus far in 2011, six additional states have enacted the provisions from the National Association of Insurance Commissioners’ Insurer Receivership Model Act (“IRMA”) that govern the treatment of “qualified financial contracts” and “netting agreements.”

The IRMA provisions, which are modelled on the U.S. Bankruptcy Code, allow a party that has entered into a swap transaction with an insurer to exercise certain netting, collateral realization and termination rights without being precluded by the automatic stay that is imposed if the insurer becomes insolvent.