2013 New York Consolidated Laws
ISC - Insurance
Article 43 - (4301 - 4328) NON-PROFIT MEDICAL AND DENTAL INDEMNITY, OR HEALTH AND HOSPITAL SERVICE CORPORATIONS
4308 - Supervision of superintendent.

 
    §  4308.  Supervision of superintendent. (a) No corporation subject to
  the provisions of this article shall enter into any contract unless  and
  until it shall have filed with the superintendent a copy of the contract
  or  certificate and of all applications, riders and endorsements for use
  in connection with the issuance  or  renewal  thereof,  to  be  formally
  approved  by  him  as  conforming  to  the applicable provisions of this
  article and not inconsistent with any other provision of law  applicable
  thereto.  The  superintendent  shall, within a reasonable time after the
  filing of any such form, notify the corporation filing the  same  either
  of his approval or of his disapproval of such form.
    (b)  No  corporation  subject  to the provisions of this article shall
  enter into any contract unless and until it shall have  filed  with  the
  superintendent  a  schedule  of  the premiums or, if appropriate, rating
  formula from which  premiums  are  determined,  to  be  paid  under  the
  contracts and shall have obtained the superintendent's approval thereof.
  The  superintendent  may  refuse  such  approval  if  he finds that such
  premiums,  or  the  premiums  derived  from  the  rating  formula,   are
  excessive, inadequate or unfairly discriminatory, provided, however, the
  superintendent  may  also  consider  the  financial  condition  of  such
  corporation in approving or disapproving any premium or rating  formula.
  Any  adjustments  to an approved schedule of premiums or to the approved
  rating formula for non-community rated contracts shall also  be  subject
  to   the   approval   of  the  superintendent  provided,  however,  such
  adjustments shall not be subject to the requirements of  subsection  (c)
  of  this  section. Any premium or formula approved by the superintendent
  shall make provision for such increase as may be necessary to  meet  the
  requirements  of  a  plan  approved  by the superintendent in the manner
  prescribed in section four thousand three hundred ten  of  this  article
  for  restoration of the statutory reserve fund required by such section.
  Notwithstanding any other provision of law, the superintendent, as  part
  of  the  rate  increase  approval process, may defer, reduce or reject a
  rate increase if, in the judgment  of  the  superintendent,  the  salary
  increases   for   senior   level   management   executives  employed  at
  corporations subject to the provisions of this article are excessive  or
  unwarranted given the financial condition or overall performance of such
  corporation.  The  superintendent  is authorized to promulgate rules and
  regulations which the superintendent deems necessary to carry  out  such
  deferral, reduction or rejection.
    (c)  (1) An increase or decrease in premiums with respect to community
  rated contracts shall not be approved by the superintendent unless it is
  in compliance with the provisions of this subsection as  well  as  other
  applicable provisions of law.
    (2)  A  corporation  desiring to increase or decrease premiums for any
  contract subject to this  subsection  shall  submit  a  rate  filing  or
  application  to  the  superintendent.  A  corporation shall send written
  notice of the proposed rate adjustment, including  the  specific  change
  requested,  to  each  contract  holder  and  subscriber  affected by the
  adjustment on or before the date  the  rate  filing  or  application  is
  submitted  to  the  superintendent. The notice shall prominently include
  mailing and website addresses  for  both  the  department  of  financial
  services  and  the corporation through which a person may, within thirty
  days from the date the rate filing or application is  submitted  to  the
  superintendent,   contact   the  department  of  financial  services  or
  corporation to receive  additional  information  or  to  submit  written
  comments  to  the department of financial services on the rate filing or
  application. The superintendent shall establish a process to post on the
  department's website, in a timely manner, all relevant written  comments
  received  pertaining  to  rate  filings or applications. The corporation

  shall provide a copy of the notice to the superintendent with  the  rate
  filing  or  application.  The superintendent shall immediately cause the
  notice to be posted on the department of  financial  services'  website.
  The  superintendent  shall  determine  whether the filing or application
  shall become effective as filed, shall become effective as modified,  or
  shall  be  disapproved.  The superintendent may modify or disapprove the
  rate filing or application if the superintendent finds that the premiums
  are unreasonable, excessive, inadequate, or unfairly discriminatory, and
  may consider the financial condition of the  corporation  in  approving,
  modifying  or  disapproving any premium adjustment. The determination of
  the superintendent shall be supported by sound actuarial assumptions and
  methods, and shall be rendered in writing between thirty and sixty  days
  from  the  date  the  rate  filing  or  application  is submitted to the
  superintendent. Should the superintendent require additional information
  from  the  corporation  in  order   to   make   a   determination,   the
  superintendent   shall   require   the   corporation   to  furnish  such
  information, and in such event, the sixty days shall be tolled and shall
  resume as of the date the corporation furnishes the information  to  the
  superintendent.  If  the  superintendent requests additional information
  less than ten days from the expiration of the sixty days  (exclusive  of
  tolling),  the  superintendent  may  extend  the  sixty  day  period  an
  additional twenty days, to make a determination.    The  application  or
  rate  filing  will be deemed approved if a determination is not rendered
  within the time allotted under this section.  A  corporation  shall  not
  implement  a  rate  adjustment  unless the corporation provides at least
  sixty days  advance  written  notice  of  the  premium  rate  adjustment
  approved  by  the  superintendent to each contract holder and subscriber
  affected by the rate adjustment.
    (3) * (A) The expected minimum loss ratio for a contract form  subject
  to  this  subsection  for  which  a  rate  filing or application is made
  pursuant to this paragraph, other than a medicare supplemental insurance
  contract, or, with the approval of the superintendent, an aggregation of
  contract forms that are combined into one  community  rating  experience
  pool  and rated consistent with community rating requirements, shall not
  be  less  than  eighty-two  percent.  In  reviewing  a  rate  filing  or
  application,  the  superintendent  may  modify  the  eighty-two  percent
  expected minimum loss ratio requirement if the superintendent determines
  the modification to be in the interests of the people of this  state  or
  if  the  superintendent  determines  that a modification is necessary to
  maintain insurer solvency. No later than June thirtieth  of  each  year,
  every corporation subject to this subparagraph shall annually report the
  actual  loss ratio for the previous calendar year in a format acceptable
  to the superintendent. If  an  expected  loss  ratio  is  not  met,  the
  superintendent  may  direct  the  corporation to take corrective action,
  which may include the submission of  a  rate  filing  to  reduce  future
  premiums,  or  to  issue  dividends,  premium refunds or credits, or any
  combination of these.
    * NB Effective until January 1, 2015
    * (A) The expected minimum loss ratio for a contract form  subject  to
  this  subsection for which a rate filing or application is made pursuant
  to  this  paragraph,  other  than  a  medicare  supplemental   insurance
  contract, or, with the approval of the superintendent, an aggregation of
  contract  forms  that  are combined into one community rating experience
  pool and rated consistent with community rating requirements, shall  not
  be  less  than  eighty-two  percent.  In  reviewing  a  rate  filing  or
  application,  the  superintendent  may  modify  the  eighty-two  percent
  expected minimum loss ratio requirement if the superintendent determines
  the  modification  to be in the interests of the people of this state or

  if the superintendent determines that a  modification  is  necessary  to
  maintain insurer solvency. No later than July thirty-first of each year,
  every corporation subject to this subparagraph shall annually report the
  actual  loss ratio for the previous calendar year in a format acceptable
  to the superintendent. If  an  expected  loss  ratio  is  not  met,  the
  superintendent  may  direct  the  corporation to take corrective action,
  which may include the submission of  a  rate  filing  to  reduce  future
  premiums,  or  to  issue  dividends,  premium refunds or credits, or any
  combination of these.
    * NB Effective January 1, 2015
    (B) The expected  minimum  loss  ratio  for  a  medicare  supplemental
  insurance  contract form shall not be less than eighty percent. No later
  than  May  first  of  each  year,  every  corporation  subject  to  this
  subparagraph  shall  annually  report  the  actual  loss  ratio for each
  contract form subject to this section for the previous calendar year  in
  a  format  acceptable to the superintendent. In each case where the loss
  ratio for the contract form fails to comply with the eighty percent loss
  ratio requirement, the corporation shall submit a corrective action plan
  to the  superintendent  for  assuring  compliance  with  the  applicable
  minimum  loss  ratio  standard.  The  corrective  action  plan  shall be
  submitted to the superintendent within sixty days of  the  corporation's
  submission  of  the  annual  report  required  by this subparagraph. The
  corporation's plan may utilize premium refunds or  credits,  subject  to
  the approval of the superintendent.
    (4)  In  case  of  conflict  between  this  subsection  and  any other
  provision of law, this subsection shall prevail.
    (d) The superintendent  shall  order  an  independent  management  and
  financial  audit  of  corporations  subject  to  the  provisions of this
  article with a combined premium volume  exceeding  two  billion  dollars
  annually   in   order  to  develop  a  detailed  understanding  of  such
  corporation's financial status and to determine the  viability  of  such
  corporation's products. Such audit shall be performed by an organization
  upon  submission of a program plan in response to a request for proposal
  approved by the superintendent in consultation with the commissioner  of
  health  and  the state comptroller. Such audit shall not be performed by
  any organization that has in any way performed or furnished services  of
  any  kind  to  the  corporation within the past five years, unless it is
  adequately demonstrated that such services  would  not  compromise  that
  organization's performance and objectivity. The audit shall be completed
  and  a  report  submitted by May first, nineteen hundred ninety-three to
  the superintendent, the commissioner of health, and the  chairs  of  the
  senate and assembly committees on health and insurance. The scope of the
  audit  shall  include,  but not be limited to, financial and competitive
  position,  corporate  structure   and   governance,   organization   and
  management,  strategic  direction, rate adequacy, and the regulatory and
  competitive environment in the state  of  New  York.  Specifically,  the
  audit shall include, but not be limited to:
    (i)  determining  the  corporation's  financial  and  market position,
  including  its  reserves,  trends  in  membership,  market  share,   and
  profitability by market segment;
    (ii)  evaluating  the  corporation's product offerings with respect to
  market requirements and trends, the corporation's responses to  the  New
  York health care market, and its management of medical claims costs;
    (iii) assessing the effectiveness of the organizational and management
  structure  and  performance,  including,  but  not  limited to, possible
  improvement in the size, structure, composition  and  operation  of  the
  board  of  directors,  productivity  improvement,  information  systems,
  management development, personnel practices, mix and  level  of  skills,

  personnel  turnover,  investment  practices  and  rate  of  return  upon
  investment activities;
    (iv) analyzing the corporation's strategic directions, its adequacy to
  meet  competitive,  market, and existing regulatory trends, including an
  evaluation of the use of brokers in marketing products, and  the  impact
  of  those  strategies  on the corporation's future financial performance
  and on the health care system of New York;
    (v)  evaluating  the  adequacy  of  rates   for   existing   products,
  particularly  (but  not  limited to) small group, medicare supplemental,
  and direct payment to identify areas that may  need  immediate  remedial
  attention;
    (vi)  identifying  any  changes  to  the  regulatory  and  legislative
  environment that may need to be made to ensure that the corporation  can
  continue to be financially viable and competitive;
    (vii)  identifying  and  assessing  specific  transactions such as the
  procurement of reinsurance, sale of real property and the sale of future
  investment income to improve the financial condition of the corporation;
  and
    (viii)  evaluating  and  identifying  possible  improvements  in   the
  corporation's managed care strategies, operations and claims handling.
    (e)  Notwithstanding  any  other  provision of law, the superintendent
  shall have the power to require  independent  management  and  financial
  audits  of  corporations  subject  to  the  provisions  of  this article
  whenever in the judgment of the superintendent, losses  sustained  by  a
  corporation  jeopardize  its  ability  to provide meaningful coverage at
  affordable rates or when such audit would be necessary  to  protect  the
  interests  of  subscribers.  The audit shall include, but not be limited
  to, an investigation of  the  corporation's  provision  of  benefits  to
  senior  citizens,  individual  and  family,  and  small  group and small
  business subscribers in relation to the needs of those subscribers.  The
  audit  shall  also  include  an  evaluation  of  the  efficiency  of the
  corporation's management, particularly with respect to lines of business
  which are experiencing losses. In every case in which the superintendent
  chooses to require  an  audit  provided  for  in  this  subsection,  the
  superintendent shall have the authority to select the auditor. Any costs
  incurred  as  a  result  of  the  operation  of this subsection shall be
  assessed on all domestic insurers in the same manner as provided for  in
  section three hundred thirty-two of this chapter.
    (f) The results of any audit conducted pursuant to subsections (d) and
  (e) of this section shall be provided to the corporation and each member
  of  its  board of directors. The superintendent shall have the authority
  to direct the corporation in writing to  implement  any  recommendations
  resulting  from  the audit that the superintendent finds to be necessary
  and reasonable; provided, however, that the superintendent  shall  first
  consider  any written response submitted by the corporation or the board
  of directors prior to making such finding. Upon any  application  for  a
  rate  adjustment by the corporation, the superintendent shall review the
  corporation's compliance with the directions  and  recommendations  made
  previously  by  the  superintendent,  as  a  result of the most recently
  completed management or financial audit and shall include such  findings
  in any written decision concerning such application.
    (g)(1)  Until  September  thirtieth, two thousand ten, as an alternate
  procedure to the requirements of  subsection  (c)  of  this  section,  a
  corporation  subject  to  the  provisions  of  this  article desiring to
  increase or decrease premiums for any contract subject to  this  section
  may  instead  submit  a rate filing or application to the superintendent
  and such application or filing shall be deemed approved,  provided  that
  (A) the anticipated incurred loss ratio for a contract form shall not be

  less  than eighty-two percent for individual direct payment contracts or
  eighty-two percent for small group and small group remittance contracts,
  nor, except in the case of individual direct payment  contracts  with  a
  loss  ratio  of  greater  than  one hundred five percent during nineteen
  hundred ninety-four, shall the loss ratio for any direct payment,  group
  or  group  remittance  contract be more than one hundred five percent of
  the anticipated earned premium, and (B) the corporation submits, as part
  of such filing, a certification by a member of the American  Academy  of
  Actuaries or other individual acceptable to the superintendent that that
  corporation  is  in  compliance  with the provisions of this subsection,
  based  upon  that  person's  examination,  including  a  review  of  the
  appropriate records and of the actuarial assumptions and methods used by
  the  corporation  in establishing premium rates for contracts subject to
  this section. A corporation shall not utilize  the  alternate  procedure
  pursuant  to  this  subsection  to  implement  a  change  in rates to be
  effective on or after October first, two thousand ten. For  purposes  of
  this  section,  a  small group is any group whose contract is subject to
  the requirements  of  section  forty-three  hundred  seventeen  of  this
  article.
    (2) Prior to January first, two thousand, no rate increase or decrease
  may  be  deemed  approved  under  this  subsection  if  that increase or
  decrease, together with any other rate increases or decreases imposed on
  the same contract form, would  cause  the  aggregate  rate  increase  or
  decrease  for  that  contract  form  to  exceed  ten  percent during any
  continuous twelve month period. No rate increase may be imposed pursuant
  to this subsection unless at least thirty days advance written notice of
  such increase has been provided to each contract holder and subscriber.
    (h)(1) Each calendar year, a corporation subject to the provisions  of
  this  article  shall  return, in the form of aggregate benefits incurred
  for each contract form filed pursuant to  the  alternate  procedure  set
  forth in subsection (g) of this section, at least eighty-two percent for
  individual  direct  payment  contracts  or  eighty-two percent for small
  group and small group remittance contracts, but, except in the  case  of
  individual  direct  payment  contracts with a loss ratio of greater than
  one hundred five percent in nineteen hundred ninety-four, for any direct
  payment, group or group  remittance  contract,  not  in  excess  of  one
  hundred  five  percent of the aggregate premiums earned for the contract
  form during that calendar year. Corporations subject to  the  provisions
  of  this  article shall annually report, no later than June thirtieth of
  each year, the loss ratio calculated pursuant  to  this  subsection  for
  each such contract form for the previous calendar year.
    (2)  In  each  case  where the loss ratio for a contract form fails to
  comply with the eighty-two percent minimum loss  ratio  requirement  for
  individual  direct  payment contracts, or the eighty-two percent minimum
  loss ratio requirement  for  small  group  and  small  group  remittance
  contracts,  as  set  forth  in  paragraph  one  of  this subsection, the
  corporation shall issue a dividend or credit against future premiums for
  all contract holders with that contract form in an amount sufficient  to
  assure  that  the  aggregate  benefits incurred in the previous calendar
  year plus the amount of the dividends and credits shall  equal  no  less
  than  eighty-two  percent  for  individual  direct payment contracts, or
  eighty-two percent for small group and small group remittance contracts,
  of the aggregate premiums earned for the contract form in  the  previous
  calendar  year.  The dividend or credit shall be issued to each contract
  holder or subscriber who had a contract that was in effect at  any  time
  during  the  applicable  year.  The dividend or credit shall be prorated
  based on the direct premiums earned for the applicable  year  among  all
  contract  holders  or  subscribers  eligible to receive such dividend or

  credit. A corporation shall make a reasonable  effort  to  identify  the
  current  address  of, and issue dividends or credits to, former contract
  holders or subscribers entitled to the dividend or credit. A corporation
  shall,  with  respect  to  dividends or credits to which former contract
  holders that the corporation is unable to identify  after  a  reasonable
  effort   would  otherwise  be  entitled,  have  the  option,  as  deemed
  acceptable by the superintendent,  of  prospectively  adjusting  premium
  rates  by the amount of such dividends or credits, issuing the amount of
  such dividends or credits to existing contract holders,  depositing  the
  amount  of such dividends or credits in the fund established pursuant to
  section four thousand three hundred twenty-two-a  of  this  article,  or
  utilizing any other method which offsets the amount of such dividends or
  credits.  All  dividends  and  credits  must be distributed by September
  thirtieth of the year following the calendar  year  in  which  the  loss
  ratio  requirements  were  not  satisfied. The annual report required by
  paragraph  one  of  this  subsection  shall  include   a   corporation's
  calculation  of  the dividends and credits, as well as an explanation of
  the corporation's plan to issue dividends or credits.  The  instructions
  and  format  for  calculating  and  reporting  loss  ratios  and issuing
  dividends or  credits  shall  be  specified  by  the  superintendent  by
  regulation.   Such   regulations   shall   include  provisions  for  the
  distribution of a dividend or credit in the  event  of  cancellation  or
  termination by a contract holder or subscriber.
    (3)  In  each  case  where the loss ratio for a contract form fails to
  comply with the one hundred five percent maximum loss ratio  requirement
  of  paragraph  one of this subsection, the corporation shall institute a
  premium rate increase  in  an  amount  sufficient  to  assure  that  the
  aggregate benefits incurred in the previous calendar year shall equal no
  more  than one hundred five percent of the sum of the aggregate premiums
  earned for the contract form in  the  previous  calendar  year  and  the
  aggregate  premium  rate increase. The rate increase shall be applied to
  each contract that was in effect as  of  December  thirty-first  of  the
  applicable  year  and remains in effect as of the date the rate increase
  is imposed. All rate increases must be imposed by September thirtieth of
  the  year  following  the  calendar  year  in  which  the   loss   ratio
  requirements were not satisfied. The annual report required by paragraph
  one  of this subsection shall include a corporation's calculation of the
  premium rate increase, as well as an explanation  of  the  corporation's
  plan  to  implement  the  rate increase. The instructions and format for
  calculating and reporting loss ratios and  implementing  rate  increases
  shall be specified by the superintendent by regulation.
    (i)  The  alternate  procedure described in subsections (g) and (h) of
  this section shall apply to individual direct payment  contracts  issued
  pursuant  to  sections  four  thousand three hundred twenty-one and four
  thousand three hundred twenty-two of this article on and  after  January
  first, nineteen hundred ninety-seven. Such alternate procedure shall not
  be  utilized  to implement a change in rates to be effective on or after
  October first, two thousand ten.
    (j) All community rated contracts, other  than  medicare  supplemental
  insurance  contracts,  issued  or  in  effect  during  calendar year two
  thousand ten shall be subject to a minimum  loss  ratio  requirement  of
  eighty-two  percent.  Corporations  may  use the alternate procedure set
  forth in subsection (g) of this section to adjust premium rates in order
  to meet the required minimum loss ratio for calendar year  two  thousand
  ten.  The  rate  filing  or application shall be submitted no later than
  September thirtieth, two thousand ten.