Prohibited pecuniary interest of officers; regulations.
1. Any officer or director, or any member of any committee or an employee of a domestic insurer, having the duty or power of investing or handling the insurer’s funds, shall not:
(a) Deposit or invest such funds except in the insurer’s name;
(b) Borrow the fund of the insurer, or be pecuniarily interested in any loan, pledge, deposit, security, investment, sale, purchase, exchange, reinsurance or other similar transaction or property of the insurer except as a stockholder, member, employee or director, unless the transaction is authorized or approved by the insurer’s board of directors, with the knowledge and recording of such pecuniary interest, by an affirmative vote of not less than two-thirds of the directors; and
(c) Take or receive to his own use any fee, brokerage, commission, gift or other similar consideration for or on account of any such transaction made by or on behalf of the insurer.
2. No insurer shall guarantee the financial obligation of any of its officers or directors.
3. This section does not prohibit:
(a) Such a director, officer, member of a committee or employee from becoming a policyholder of the insurer and enjoying the usual rights of a policyholder or from participating as beneficiary in any pension trust, deferred compensation plan, profit-sharing plan, stock option plan or similar plan authorized by the insurer and to which he may be eligible; or
(b) Any director or member of a committee from receiving a reasonable fee for lawful services actually rendered to the insurer.
4. The Commissioner may, by regulation from time to time, define and permit additional exceptions to the prohibitions contained in subsection 1 solely to enable payment of reasonable compensation to a director who is not otherwise an officer or employee of the insurer, or to a corporation or firm in which a director is interested, for necessary services performed or sales or purchases made to or for the insurer in the ordinary course of the insurer’s business and in the usual private, professional or business capacity of such director, corporation or firm.
Last modified: February 27, 2006