New York, among several other states, protects its citizen
policyholders in disputes with unauthorized foreign or alien
insurance companies by requiring the insurance company to deposit
security or obtain a licence to do an insurance business in the
state before it can file any pleadings in an proceedings brought
against it in New York. This is to make sure that any judgment can
be enforced without the New York policyholder chasing around the
world to execute. While there are limited exceptions, the general
rule is before the defendant insurance company can appear and
respond to a lawsuit, it has to post security. When the insurance
company fails to comply, its efforts to respond to the case will be
limited.
