2013 New York Consolidated Laws
ISC - Insurance
Article 13 - (1301 - 1325) ASSETS AND DEPOSITS
1324 - Risk-based capital for property/casualty insurance companies.

 
    §  1324. Risk-based capital for property/casualty insurance companies.
  (a) Definitions. In this section:
    (1) "Adjusted RBC report" means an RBC report which has been  adjusted
  by the superintendent in accordance with paragraph two of subsection (c)
  of this section.
    (2)  "Corrective  order"  means  an order issued by the superintendent
  specifying corrective actions which the  superintendent  has  determined
  are required.
    (3)   "Domestic   insurer"   means  any  authorized  property/casualty
  insurance company either incorporated or organized under any law of this
  state or, in the case of a United States branch  of  an  alien  insurer,
  entered into the United States through this state.
    (4) "Foreign insurer" means any authorized property/casualty insurance
  company  either  incorporated  or organized under the laws of any state,
  other than this state, or in the case of a United States  branch  of  an
  alien  insurer,  entered  into the United States through any state other
  than this state.
    (5) "Property/casualty insurance company" means any  property/casualty
  insurance  company  or United States branch of an alien insurer licensed
  under article forty-one of this chapter, any reciprocal insurer licensed
  under  article  sixty-one  of  this  chapter  or  any  advance   premium
  corporation  or  assessment  corporation  organized  and  licensed under
  article sixty-six of this chapter.
    (6) "RBC" means risk-based capital.
    (7) "RBC instructions"  means  the  RBC  report  including  risk-based
  capital instructions in effect as of December thirty-first, two thousand
  four  as  issued by the national association of insurance commissioners,
  and which in addition to any other matter which may be  required  to  be
  stated  therein, either by law or by the superintendent pursuant to law,
  shall conform substantially to the form of the report  and  instructions
  adopted  from  time to time for such purpose by, or by the authority of,
  the national association of insurance commissioners, together with  such
  additions,  omissions,  or modifications, similarly adopted from time to
  time, as may be approved by the superintendent.
    (8)  "RBC  level"  means  an  insurer's  company  action  level   RBC,
  regulatory  action level RBC, authorized control level RBC, or mandatory
  control level RBC where:
    (A) "Company action level RBC"  means  the  product  of  2.0  and  the
  insurer's authorized control level RBC;
    (B)  "Regulatory  action  level  RBC" means the product of 1.5 and the
  insurer's authorized control level RBC;
    (C) "Authorized control level RBC" means the number  determined  under
  the  risk-based capital formula in accordance with the RBC instructions;
  and
    (D) "Mandatory control level RBC" means the product  of  .70  and  the
  insurer's authorized control level RBC.
    (9)  "RBC  plan"  means  a comprehensive financial plan containing the
  elements specified in paragraph two of subsection (d) of  this  section.
  If  the  superintendent  rejects  the RBC plan, and it is revised by the
  insurer, with or without the superintendent's recommendation,  the  plan
  shall be called the "revised RBC plan".
    (10)  "RBC report" means the report required in subsection (c) of this
  section.
    (11) "Total adjusted capital" means the sum of:
    (A) An insurer's statutory capital and surplus; and
    (B) Such other items, if any, as the RBC instructions may provide.

    (b)  Applicability.  (1)   This   section   shall   apply   to   every
  property/casualty insurance company, unless exempted under paragraph two
  of this subsection.
    (2)  Except  as  set forth in subparagraph (C) of this paragraph, with
  prior  written  approval,  the  superintendent  may  exempt   from   the
  provisions  of  this  section  a  non-stock  domestic  property/casualty
  insurance company which:
    (A)(i) Writes no direct business outside of this state;
    (ii) Writes direct annual premiums of twenty million dollars or  less;
  and
    (iii) Assumes reinsurance premiums in an amount that is less than five
  percent of total direct premiums written; or
    (B)(i)  Has total direct premiums comprised of at least ninety percent
  medical malpractice liability insurance, as  that  term  is  defined  in
  subsection  (b)  of  section  five  thousand  five  hundred  one of this
  chapter;
    (ii) Assumes reinsurance premiums in an amount that is less than  five
  percent of total direct premiums written; and
    (iii)  Writes  ninety  percent  of  its  total direct premiums in this
  state.
    (C) The exemptions permitted under subparagraphs (A) and (B)  of  this
  paragraph shall not apply to an insurer which:
    (i) Is controlled by another insurer;
    (ii)  Owns  or  controls  another  insurer, unless the insurer that is
  owned or controlled is  subject  to  the  provisions  of  this  section,
  section  one  thousand  three hundred twenty-two or section one thousand
  three hundred twenty-five of this article, as added by a chapter of  the
  laws   of   2007,  or  a  substantially  similar  provision  in  another
  jurisdiction;
    (iii) Is under common  control  of  a  person  that  controls  another
  insurer; or
    (iv)  Is  a party to a pooling agreement wherein risks underwritten by
  parties  to  the  agreement  are  apportioned  to  the  parties   in   a
  predetermined manner.
    (c) RBC reports. (1) Every domestic insurer shall, on or prior to each
  March   first   (the   "filing   date"),   prepare  and  submit  to  the
  superintendent a report of its RBC levels as of the end of the  calendar
  year  just  ended,  in  a  form  and  containing  such information as is
  required by the RBC instructions. In addition, the  insurer  shall  file
  the RBC report:
    (A)  With  the  National  Association  of  Insurance  Commissioners in
  accordance with the RBC instructions; and
    (B) With the insurance commissioner in any state in which the  insurer
  is  authorized to do business, upon the written request of the insurance
  commissioner. The insurer shall file the RBC report by the later of:
    (i) The filing date; or
    (ii) Fifteen days after the date of the request.
    (2) If a domestic insurer files an RBC report which the superintendent
  determines is inaccurate, then the superintendent shall adjust  the  RBC
  report  to  correct  the  inaccuracy and shall notify the insurer of the
  adjustment. The notice shall contain a statement of the reason  for  the
  adjustment.  An RBC report as so adjusted is referred to as an "adjusted
  RBC report".
    (d) Company action level  event.  (1)  "Company  action  level  event"
  means, with respect to a domestic insurer:
    (A)  The  filing  by  the insurer of an RBC report indicating that the
  insurer's total adjusted  capital  is  greater  than  or  equal  to  its
  regulatory action level RBC but less than its company action level RBC;

    (B)  The  notification  by  the  superintendent  to  the insurer of an
  adjusted RBC report that indicates the occurrence of an event  described
  in  subparagraph  (A)  of  this paragraph, provided the insurer does not
  challenge the adjusted RBC report under subsection (h) of this section;
    (C)  If,  under subsection (h) of this section, the insurer challenges
  an adjusted RBC  report  that  indicates  the  occurrence  of  an  event
  described in subparagraph (A) of this paragraph, the notification by the
  superintendent  to  the  insurer  that  the  superintendent has, after a
  hearing, rejected the insurer's challenge; or
    (D) The filing by the insurer of an RBC  report  indicating  that  the
  insurer  has total adjusted capital that is greater than or equal to its
  company action level RBC, but less than the product of three point  zero
  and  its authorized control level RBC, and with a combined ratio greater
  than one hundred twenty percent as determined  in  accordance  with  the
  trend test calculation in the RBC instructions.
    (2)  If  there  is  a company action level event, the domestic insurer
  shall prepare and submit to the superintendent an RBC plan which:
    (A) Identifies the conditions which contribute to the  company  action
  level event;
    (B) Contains proposals of corrective actions which the insurer intends
  to  take  and  would  be  expected  to  result in the elimination of the
  company action level event;
    (C) Provides projections of the insurer's  financial  results  in  the
  current year and at least the four succeeding years, both in the absence
  of  proposed  corrective  actions  and  giving  effect  to  the proposed
  corrective actions, including projections of statutory operating income,
  net income, and capital and surplus. The projections for  both  new  and
  renewal business may include separate projections for each major line of
  business  and  separately  identify each significant income, expense and
  benefit component;
    (D) Identifies the key assumptions impacting the insurer's projections
  and the sensitivity of the projections to the assumptions; and
    (E) Identifies the quality  of,  and  problems  associated  with,  the
  insurer's  business,  including  its  assets,  liabilities,  anticipated
  business growth and associated surplus strain, extraordinary exposure to
  risk, mix of business, and use of reinsurance.
    (3) The RBC plan shall be submitted within forty-five days  after  the
  occurrence of the company action level event.
    (4)(A)  Within sixty days after the submission by an insurer of an RBC
  plan to the superintendent, the superintendent shall notify the  insurer
  whether the RBC plan is satisfactory or unsatisfactory.
    (B) If the RBC plan is satisfactory, the insurer shall implement it.
    (C) If the RBC plan is unsatisfactory, the notification to the insurer
  shall  set  forth  the  reasons for the determination, and may set forth
  proposed revisions which will render the RBC plan  satisfactory  to  the
  superintendent.  Upon  notification from the superintendent, the insurer
  shall prepare a revised RBC plan, which may incorporate by reference any
  revisions proposed by the superintendent, and shall submit  the  revised
  RBC plan to the superintendent:
    (i)   Within   forty-five   days   after  the  notification  from  the
  superintendent; or
    (ii) If, under subsection (h) of this section, the insurer  challenges
  the notification from the superintendent, within forty-five days after a
  notification  to  the  insurer  that  the  superintendent  has,  after a
  hearing, rejected the insurer's challenge.
    (5) If there is a company action level event, the  superintendent  may
  limit the premium writings of the insurer.

    (6)(A)  Every  domestic  insurer that files an RBC plan or revised RBC
  plan with the superintendent  shall  file  a  copy  with  the  insurance
  commissioner  of  any  state  in  which  the insurer is authorized to do
  business, upon the written request of the insurance commissioner, if the
  state  has  an  RBC  provision substantially similar to paragraph one of
  subsection (i) of this section.
    (B) The insurer shall file a copy of the RBC plan or revised RBC  plan
  in that state by the later of:
    (i)  The date on which the RBC plan or revised RBC plan is filed under
  paragraph three or four of this subsection; or
    (ii) Fifteen days after the date of the request.
    (e) Regulatory action level event. (1) "Regulatory action level event"
  means, with respect to a domestic insurer:
    (A) The filing by the insurer of an RBC  report  indicating  that  the
  insurer's  total  adjusted  capital  is  greater  than  or  equal to its
  authorized control level RBC but less than its regulatory  action  level
  RBC;
    (B)  The  notification  by  the  superintendent  to  the insurer of an
  adjusted RBC report that indicates the occurrence of an event  described
  in  subparagraph  (A)  of  this paragraph, provided the insurer does not
  challenge the adjusted RBC report under subsection (h) of this section;
    (C) If, under subsection (h) of this section, the  insurer  challenges
  an  adjusted  RBC  report  that  indicates  the  occurrence  of an event
  described in subparagraph (A) of this paragraph, the notification by the
  superintendent to the insurer  that  the  superintendent  has,  after  a
  hearing, rejected the insurer's challenge;
    (D)  The  failure  of the insurer to timely file an RBC report, unless
  the insurer provides the superintendent with a satisfactory  explanation
  for  the  failure  or cures the failure within ten days after the filing
  date;
    (E) The failure of the insurer to timely  submit  an  RBC  plan  or  a
  revised RBC plan to the superintendent;
    (F)  Notification  by  the superintendent that the revised RBC plan is
  unsatisfactory,  provided   the   insurer   does   not   challenge   the
  determination under subsection (h) of this section;
    (G) If, under subsection (h) of this section, the insurer challenges a
  determination  by  the  superintendent  under  subparagraph  (F) of this
  paragraph, the notification by the superintendent to  the  insurer  that
  the superintendent has, after a hearing, rejected the challenge;
    (H) Notification by the superintendent to the insurer that the insurer
  has  failed  to  adhere  to its RBC plan or revised RBC plan or that the
  insurer has failed to attain the amount of capital projected in the  RBC
  plan  or  revised  RBC  plan,  and  that  the  failure  of  either has a
  substantial adverse effect on the insurer's  ability  to  eliminate  the
  company  action level event, provided the insurer does not challenge the
  determination under subsection (h) of this section; or
    (I) If, under subsection (h) of this section, the insurer challenges a
  determination by the  superintendent  under  subparagraph  (H)  of  this
  paragraph,  the  notification  by the superintendent to the insurer that
  the superintendent has, after a hearing, rejected the challenge.
    (2) If there is a regulatory action level  event,  the  superintendent
  shall:
    (A)  Require  the  insurer  to  prepare  and submit an RBC plan or, if
  applicable, a revised RBC plan;
    (B) Perform such examination or analysis as the  superintendent  deems
  necessary  of  the  assets,  liabilities, and operations of the insurer,
  including a review of the RBC plan or revised RBC plan; and

    (C) Subsequent to the examination  or  analysis,  issue  a  corrective
  order.
    (3)  In  determining  corrective  actions, the superintendent may take
  into account such  factors  as  are  deemed  relevant,  based  upon  the
  superintendent's  examination or analysis of the assets, liabilities and
  operations of the insurer.
    (4) The RBC plan or revised RBC plan shall be submitted:
    (A) Within forty-five days after  the  occurrence  of  the  regulatory
  action level event; or
    (B)  If,  under subsection (h) of this section, the insurer challenges
  the superintendent's determination that an RBC plan  is  unsatisfactory,
  within  forty-five  days  after  notification  to  the  insurer that the
  superintendent has, after a hearing, rejected the insurer's challenge.
    (5) The superintendent may retain actuaries, investment  experts,  and
  other  consultants  as  the superintendent deems necessary to review the
  insurer's RBC plan or revised RBC plan, examine or analyze  the  assets,
  liabilities  and operations of the insurer, and formulate the corrective
  order. The fees, costs and expenses relating  to  consultants  shall  be
  borne by the affected insurer as directed by the superintendent.
    (6)  If  there  is a regulatory action level event, the superintendent
  may limit the premium writings of the insurer.
    (f) Authorized control level  event.  (1)  "Authorized  control  level
  event" means, with respect to a domestic insurer:
    (A)  The  filing  by  the insurer of an RBC report indicating that the
  insurer's total adjusted  capital  is  greater  than  or  equal  to  its
  mandatory  control  level RBC but less than its authorized control level
  RBC;
    (B) The notification by  the  superintendent  to  the  insurer  of  an
  adjusted  RBC report that indicates the occurrence of an event described
  in subparagraph (A) of this paragraph, provided  the  insurer  does  not
  challenge the adjusted RBC report under subsection (h) of this section;
    (C)  If,  under subsection (h) of this section, the insurer challenges
  an adjusted RBC  report  that  indicates  the  occurrence  of  an  event
  described  in  subparagraph  (A)  of this paragraph, notification by the
  superintendent to the insurer  that  the  superintendent  has,  after  a
  hearing, rejected the insurer's challenge;
    (D) The failure of the insurer to respond, in a manner satisfactory to
  the  superintendent, to a corrective order, provided the insurer has not
  challenged the corrective order under subsection (h) of this section; or
    (E) If, under subsection (h) of this section, the insurer challenges a
  corrective order and the superintendent, after a  hearing,  rejects  the
  challenge  or  modifies the corrective order, the failure of the insurer
  to respond, in a manner  satisfactory  to  the  superintendent,  to  the
  corrective   order  subsequent  to  rejection  or  modification  by  the
  superintendent.
    (2) If there is an authorized control level event, the  superintendent
  shall take such actions as are:
    (A) Required under subsection (e) of this section regarding an insurer
  with respect to which a regulatory action level event has occurred; or
    (B)  Necessary  to cause the insurer to be placed under rehabilitation
  or liquidation under article seventy-four of this chapter.
    (g) Mandatory control level event. (1) "Mandatory control level event"
  means, with respect to a domestic insurer:
    (A) The filing by the insurer of an RBC report,  indicating  that  the
  insurer's  total  adjusted  capital  is  less than its mandatory control
  level RBC;
    (B) Notification by the superintendent to the insurer of  an  adjusted
  RBC  report  that  indicates  the  occurrence  of  an event described in

  subparagraph (A) of  this  paragraph,  provided  the  insurer  does  not
  challenge  the adjusted RBC report under subsection (h) of this section;
  or
    (C)  If,  under subsection (h) of this section, the insurer challenges
  an adjusted RBC  report  that  indicates  the  occurrence  of  an  event
  described  in  subparagraph  (A)  of this paragraph, notification by the
  superintendent to the insurer  that  the  superintendent  has,  after  a
  hearing, rejected the insurer's challenge.
    (2)(A)  If  there  is  a  mandatory control level event, except as set
  forth in subparagraph (B) of this paragraph,  the  superintendent  shall
  take  such  actions  as  are necessary to cause the insurer to be placed
  under rehabilitation or liquidation under article seventy-four  of  this
  chapter.
    (B)  The superintendent may forgo action set forth in subparagraph (A)
  of this paragraph after the occurrence  of  a  mandatory  control  level
  event if:
    (i)  The  insurer has demonstrated within a ninety day period that the
  mandatory control level event will be eliminated under a  plan  approved
  by the superintendent; or
    (ii)   No   business   is  being  written  or  renewed,  any  existing
  policyholder obligations are being run-off under a plan approved by  the
  superintendent  and the insurer meets the minimum capital and surplus as
  otherwise required under this chapter.
    (h) Hearings. (1) An insurer shall have the right to  a  hearing  upon
  notification to the insurer by the superintendent:
    (A) Of an adjusted RBC report;
    (B)  That  the insurer's RBC plan is unsatisfactory or the revised RBC
  plan is unsatisfactory;
    (C) That the insurer has failed to adhere to its RBC plan  or  revised
  RBC  plan  and  that the failure has a substantial adverse effect on the
  ability of the insurer to eliminate the company action level event; or
    (D) Of a corrective order.
    (2)  If  a  hearing  is  requested  within   five   days   after   the
  superintendent  gives  a notification specified in paragraph one of this
  subsection, the superintendent  shall  give  notice  and  a  hearing  in
  accordance  with the provisions of article three of this chapter, except
  that the hearing, and any report resulting from such hearing,  shall  be
  kept  confidential in accordance with the provisions of paragraph one of
  subsection (i) of this section.
    (3) The superintendent shall set a date for the  hearing,  which  date
  shall  be  no  less than ten nor more than thirty days after the date of
  the insurer's hearing request.
    (i) Confidentiality; prohibition on announcements; prohibition on  use
  in  rate  making; excess of capital over the amount indicated in the RBC
  report. (1) All RBC plans, revised RBC plans, results or reports of  any
  examination  or  analysis  of  an  insurer  performed  pursuant  to this
  section, corrective orders filed with or issued  by  the  superintendent
  and  any report resulting from a hearing held pursuant to subsection (h)
  of this section contain information that may be damaging to the  insurer
  if  made available to its competitors, and shall be confidential and not
  made  public  or  subject  to  subpoena,  except  to  the   extent   the
  superintendent  finds  release  of  information necessary to protect the
  public.
    (2)(A) The comparison of an insurer's total adjusted capital to any of
  its RBC levels is a regulatory tool which  may  indicate  the  need  for
  possible  corrective  action  with  respect  to  the insurer, and is not
  intended as a means to rank insurers  generally,  and  the  use  of  the
  information to rank insurers may be misleading to the general public.

    (B) Except as otherwise required under the provisions of this section,
  no  authorized  insurer,  licensed  insurance  agent, licensed insurance
  broker, or any person on behalf of the insurer, agent or broker, or  any
  other  person  licensed  pursuant  to  this chapter shall make, publish,
  disseminate, circulate, or place before the public or cause, directly or
  indirectly,  to  be  made, published, disseminated, circulated or placed
  before the public, in a newspaper, magazine, or other publication, or in
  the form of a notice, circular, pamphlet, letter or poster, or over  any
  radio  or  television  station,  or  in any other way, an advertisement,
  announcement or statement containing  an  assertion,  representation  or
  statement  with  regard  to  the  RBC  levels  of any insurer, or of any
  component derived in the calculation.
    (C)  Notwithstanding  subparagraph  (B)  of  this  paragraph,   if   a
  materially  false  or  inappropriate  statement,  comparing an insurer's
  total adjusted capital or other amount to one or more of its RBC levels,
  is published in a written  publication,  and  the  insurer  is  able  to
  demonstrate  to  the  superintendent the falsity or inappropriateness of
  the statement, then the insurer may publish an announcement in a written
  publication to rebut the statement.
    (3) RBC instructions, RBC reports, adjusted RBC reports, RBC plans and
  revised RBC plans shall not be used by the superintendent in determining
  whether rates comply with standards set forth in this chapter and  shall
  not  be  considered  or  introduced as evidence in any hearing involving
  such standards.
    (4) An  excess  of  capital  over  the  amount  produced  by  the  RBC
  requirements  contained  in this section is desirable in the business of
  insurance. Accordingly, insurers should seek to maintain  capital  above
  the  RBC levels required by this section. Additional capital is used and
  useful in the insurance business and helps to secure an insurer  against
  various  risks  inherent in, or affecting, the business of insurance and
  not accounted for or only partially measured  by  the  RBC  requirements
  contained in this section.
    (j)  Foreign  insurers.  (1) A foreign insurer shall, upon the written
  request of the superintendent,  submit  to  the  superintendent  an  RBC
  report,  in  the  same form as required of a domestic insurer, as of the
  end of the calendar year just ended by the later of:
    (A) The date an RBC report would be required to be filed by a domestic
  insurer under this section; or
    (B) Fifteen days after the date of the request.
    (2)  A  foreign  insurer  shall,  upon  the  written  request  of  the
  superintendent, within five days, submit to the superintendent a copy of
  its  RBC  plan  or  revised  RBC  plan  that is filed with the insurance
  commissioner of any other state.
    (3)(A) If there is a company action  level  event,  regulatory  action
  level  event,  or  authorized  control  level  event,  and the insurance
  commissioner of the  state  of  incorporation  or  organization  of  the
  insurer  does  not  require  the  insurer  to  file  an  RBC  plan,  the
  superintendent may require the insurer to file an RBC plan, in the  same
  form  as  required of a domestic insurer, with the superintendent within
  forty-five days of the superintendent's notification.
    (B) If the RBC plan is unsatisfactory  or  if  the  insurer  fails  to
  timely file the RBC plan with the superintendent, the superintendent may
  order  the  insurer not to issue any new insurance policies or contracts
  in this state.
    (4) If there is an authorized  control  level  event  or  a  mandatory
  control  level  event,  the  superintendent  may  make application under
  article seventy-four of this chapter.

    (k) Notices. Unless a later date  is  specified,  any  notice  by  the
  superintendent  to  an  insurer  under  this section which may result in
  regulatory action hereunder shall be  effective  upon  delivery,  except
  that, if the notice is mailed, it shall be effective three days after it
  is mailed.