2006 New York Code - Flexible Rate Limitations In Problem Markets.

 
    * § 2344. Flexible rate limitations in problem markets. (a) As used in
  this section:
    (1) "Market"  means  a  line,  subline or classification (other than a
  classification delineated by geographic location)  of  property/casualty
  insurance  risks  whose  coverages  are not subject to subsection (b) of
  section two thousand three hundred  five,  section  two  thousand  three
  hundred  twenty-eight,  section three thousand four hundred twenty-five,
  or three thousand four hundred forty-six of this chapter.
    (2) "Rate" means charge per unit of exposure  (whether  such  rate  is
  manually generated or based upon judgment) for a particular market.
    (b)   The   superintendent   shall   by  regulation  establish  annual
  limitations upon rate level increases or decreases which may take effect
  without prior approval with respect to a market. The regulation shall be
  designed to restore and  promote  stability  in  such  markets.  Upon  a
  determination  made  that,  as  to  a  particular market, competition is
  either sufficient to assure that rates will not  be  excessive  or  that
  such  market is conducted in a manner not resulting in inadequate rates,
  not destructive  of  competition  or  detrimental  to  the  solvency  of
  insurers,   the   superintendent  shall  exempt  such  market  from  the
  limitations set forth in such regulation.  The  superintendent,  upon  a
  determination  that  annual  limitations  are  necessary  to restore and
  promote stability in such a market, shall thereafter withdraw or  modify
  such   exemption.   The   superintendent  shall  whenever  he  deems  it
  appropriate hold a hearing, on a record and at which representatives  of
  consumers  and other interested parties may participate, for the purpose
  of determining, on the  basis  of  findings  of  fact  and  conclusions,
  whether  an  exemption  (or  withdrawal  or modification thereof) of any
  market is appropriate. The initial hearing for  such  purpose  shall  be
  held  within  sixty  days of the effective date of this section, and the
  superintendent shall act expeditiously in determining whether to  exempt
  any market.
    (c)  Limitations established or modified pursuant to subsection (b) of
  this section may vary by market and, in establishing or  modifying  such
  limitations, the superintendent may consider such factors as: the extent
  and  nature of competition; size and significance of the coverage; level
  and range of rates and  rate  changes  among  insurers;  investment  and
  underwriting experience of insurers; reinsurance availability; extent of
  consumer  complaints  to the insurance department; extent of denials and
  restrictions of coverage; volume of cancellations  and  nonrenewals;  or
  changing conditions in the economic, judicial and social environment.
    (d)  (1)  Notwithstanding any other provisions of this article, in any
  market  governed  by  such  regulation   and   not   exempted   by   the
  superintendent pursuant to this section, filings that produce rate level
  changes within the limitations specified in such regulation shall become
  effective  without  prior approval pursuant to subsection (a) of section
  two thousand three hundred five of this article; filings  which  produce
  rate  level  changes  beyond such limitations shall not become effective
  until approved by the  superintendent  pursuant  to  subsection  (b)  of
  section  two  thousand  three  hundred five of this article, except that
  filings  shall  be   deemed   approved   unless   disapproved   by   the
  superintendent  within  thirty  days,  which the superintendent may with
  cause extend an additional thirty days and with further cause extend  an
  additional fifteen days.
    (2)  No  insurer  shall  cause  an  expiring policy to be renewed with
  another insurer under common control, as defined by paragraph sixteen of
  subsection (a) of section one hundred seven of this chapter in order  to
  avoid  the limitations established by this section. An insurer may renew
  an expiring policy with another insurer under common control based  upon
  underwriting criteria or other valid business reasons.
    (e)  The  superintendent  shall  by  regulation  establish  reasonable
  standards for rating plans (including experience rating plans,  schedule
  rating  plans,  individual  risk  premium modification plans and expense
  reduction plans) designed to modify rates in the development of premiums
  for  individual  risks  insured  in  a  property/casualty  market.  Such
  standards  shall  permit  recognition of expected differences in loss or
  expense characteristics, and shall be designed so that  such  plans  are
  reasonable  and  equitable  in  their  application, and are not unfairly
  discriminatory, violative of public policy or otherwise contrary to  the
  best  interests  of  the  people of this state. Such standards shall not
  prevent the development  of  new  or  innovative  rating  methods  which
  otherwise  comply with this article. Such rating plans shall be filed or
  refiled  by  insurers   in   compliance   with   the   regulation.   The
  superintendent  shall  review  such  plans,  and  may  without a hearing
  disapprove a  plan  that  does  not  comply  with  the  regulation.  The
  regulation  shall  establish  maximum debits and credits that may result
  from the application of a rating plan,  shall  encourage  loss  control,
  safety  programs and other methods of risk management, and shall require
  insurers to maintain documentation  of  the  basis  for  the  debits  or
  credits applied under any plan. Once it has been filed and approved, use
  of the rating plan shall become mandatory and such plan shall be applied
  uniformly   for  eligible  risks  in  a  manner  that  is  not  unfairly
  discriminatory.
    (f) The superintendent shall  review  all  rates  filed  between  June
  first,  nineteen  hundred  eighty-six,  and  the  effective  date of the
  regulation promulgated pursuant to subsection (b) of this  section,  and
  shall,  on  a  selective  basis,  review rates established prior to June
  first, nineteen hundred eighty-six, including rates not manually  rated,
  to   determine   whether  they  comply  with  the  applicable  standards
  prescribed by this  article  for  purposes  of  the  annual  limitations
  established  or  modified pursuant to subsection (b) of this section. In
  establishing priorities for such selective  review,  the  superintendent
  shall  give  consideration  to  markets  which  have been subject to the
  largest rate changes in the twelve month period  prior  to  June  first,
  nineteen hundred eighty-six and to markets affecting the greatest number
  of  risks;  the  superintendent  shall  to the extent material also give
  consideration to the criteria  set  forth  in  subsection  (c)  of  this
  section.  In  addition,  the  superintendent shall to the fullest extent
  possible  review  markets  not  manually  rated,  for  the  purpose   of
  determining  whether  a  manual  rate  is  appropriate and shall, upon a
  determination  of  appropriateness,  require  that  a  manual  rate   be
  developed  for  such  market.  If the superintendent determines that the
  reviewed rate pursuant to the mandatory or selective review specified by
  this subsection does not comply with the applicable standards prescribed
  by this article, the insurer shall be  afforded  an  opportunity  to  be
  heard  and  shall file in accordance with such determination prospective
  rates applicable to  new  and  renewal  policies.    Except  as  to  the
  procedures  set  forth  in  this  subsection,  nothing contained in this
  subsection shall be  construed  to  alter,  limit,  modify,  enlarge  or
  abrogate  any  right  of  any  insurer  or any power or authority of the
  superintendent under any other provision of this chapter.
    (g) (1) Within ninety days after the effective date  of  this  section
  every insurer licensed to write property/casualty coverages in regard to
  a  market  not  exempted  pursuant to subsection (b) of this section and
  affected by the statutory provisions specified in this  paragraph  shall
  file  with the superintendent rates, for each such market written by the
  insurer, appropriately modified to reflect  the  likely  reductive  cost
  effects   reasonably   attributable   to  any  newly  enacted  statutory
  provisions of the civil practice law and rules, court of claims act  and
  not-for-profit  corporation  law.  Such filings shall contain a specific
  explanation of the reductive cost effects (which shall also be expressed
  in amounts or percentages) ascribed to such statutory provisions,  in  a
  form prescribed by the superintendent. In regard to a market not subject
  to this section or exempted pursuant to this section, subsequent filings
  shall  reflect  likely reductive cost effects reasonably attributable to
  such statutory provisions appropriate to such market.
    (2)  The  superintendent  shall  determine  whether  the  rates  filed
  pursuant  to  paragraph  one  of  this subsection reasonably reflect the
  likely reductive cost effects attributable to the  statutory  provisions
  specified in paragraph one of this subsection.
    (3)  In  the  event that the superintendent determines that the likely
  reductive cost effects are not properly reflected  in  such  rates,  the
  basis  for  such  determination  shall be stated and, within thirty days
  after receipt of such determination, the affected insurer may request  a
  hearing.  All policies written or renewed on or after the effective date
  of  the  statutory  provisions  specified  in  paragraph  one  of   this
  subsection  shall  be  subject to appropriate premium adjustments in the
  event the superintendent's determination is sustained, and  the  insurer
  shall maintain its records in regard to each such policy for a period of
  no  less  than six years in order to verify that appropriate adjustments
  have been made.
    (4) For purposes of the annual  limitations  established  pursuant  to
  subsection   (b)   of   this   section,  the  rates  determined  by  the
  superintendent to reasonably reflect the likely reductive  cost  effects
  of the provisions specified in paragraph one of this subsection shall be
  treated  as if they had been in effect for the twelve month period prior
  to the date of such determination.
    (h) This section shall cease to be of any force or effect  during  the
  period  August  third,  two  thousand  one  through  the  day before the
  effective date of the property/casualty insurance availability act,  and
  after  June thirtieth, two thousand six, except that rates shall reflect
  the  likely  reductive  cost  effects  reasonably  attributable  to  the
  statutory  provisions  specified  in  paragraph one of subsection (g) of
  this section.
    * NB Expires July 1, 2006