Bill > A4171

This bill amends the "Life and Health Insurers Rehabilitation and Liquidation Act" to clarify and protect the rights of financial counterparties, which are entities that have entered into financial agreements with insurers, to terminate and settle certain contracts, known as netting agreements and qualified financial contracts, even if the insurer becomes insolvent or is liquidated. Specifically, it ensures that these counterparties can exercise their contractual rights to end, liquidate, or accelerate obligations under these agreements without being prevented by the insurer's financial distress or the initiation of a formal liquidation process. The bill also clarifies how damages are calculated in such cases, generally limiting them to actual direct compensatory damages, and outlines how a receiver for an insolvent insurer must handle these agreements, either by transferring all related contracts and obligations to the counterparty or none at all. Important terms defined include "netting agreement," which is a contract that allows for the netting or settlement of obligations under financial contracts, and "qualified financial contract," which encompasses various financial instruments like commodity contracts, forward contracts, and swap agreements. The context for this bill is to provide greater certainty and protection for parties involved in these complex financial transactions with insurers, ensuring that their contractual rights are upheld even in the event of an insurer's failure.