2021 New York Laws
ISC - Insurance
Article 41 - Property/casualty Insurance Companies
4110 - Domestic Mutual Companies; Expense Limits.

§  4110.  Domestic  mutual  companies; expense limits. (a) No domestic
mutual property/casualty insurance company licensed to write a  kind  of
insurance  specified  in  paragraph  seven,  eight,  nine,  ten, eleven,
thirteen, fourteen, fifteen, sixteen or seventeen of subsection  (a)  of
section  one  thousand one hundred thirteen of this chapter shall expend
in any one calendar year for management expenses a greater  amount  than
thirty  percent  of  the  sum of its net premium income and seventy-five
percent of its investment  income  for  such  year;  provided  that  any
insurer   whose  principal  line  of  business  is  medical  malpractice
liability insurance or any insurer who is the subject  of  a  proceeding
pursuant to article seventy-four of this chapter shall not expend in any
one  calendar year for management expenses, a greater amount than thirty
percent of its net premium income for  such  year.  Management  expenses
shall  be  held  to  include all expenses of the company except expenses
incurred in the investigation,  adjustment  and  settlement  of  claims,
taxes, fees and expenses of examination, and taxes, repairs and expenses
on  real  estate.  In  applying  the  provisions of this section the net
premium income of, and expenses of, boiler and  machinery  insurance  or
elevator insurance shall not be included. In the event expenses incurred
in  making  a  new system upgrade result in this subsection's management
expenses limit  being  exceeded,  then  the  insurer  shall  inform  the
superintendent  sixty  days  in  advance  of  the  expense  limit  being
exceeded. Subject to approval by the superintendent, the limit shall  be
temporarily  raised to the amount necessary to encompass the aforestated
new system upgrade, provided that in no event shall the limit be  raised
more  than  five  percentage  points and shall not be in effect for more
than three years, and provided further that an insurer may submit to the
superintendent, for  the  superintendent's  prior  approval,  a  written
request  to  temporarily  raise  the limit for up to an additional three
years, for a total of no more than six years. An  insurer  shall  submit
such  written  request to the superintendent at least sixty days but not
more than one hundred twenty days before the expiration of  the  initial
period during which the limit was raised. The insurer shall not increase
premiums  solely  as a result of the management expenses cap limit being
exceeded. For purposes of this  subsection,  a  new  system  upgrade  is
defined  as  the acquisition of electronic data processing apparatus and
related equipment constituting a  data  processing,  record  keeping  or
accounting system and operating and non-operating software.
  (b)  Subsection  (a)  hereof  shall  not  apply  to  a  mutual company
organized before the effective date of this chapter as a domestic mutual
fire or marine or marine protection and indemnity company.