N.Y. ISC Law § 2313 — New York Code / Act ISC / Article 23 / Section 2313
Rate service organization; defined
Status: in_force

§ 2313. Rate service organization; defined. (a) In this article, "rate\nservice organization" means a person or any other entity which makes or\nfiles rates as permitted by this article, or which assists insurers in\nrate making or filing by collecting, compiling and furnishing loss or\nexpense statistics, or by recommending rates or rate information, or\nwhich inspects risks, tests appliances, formulates rules or establishes\nstandards, as such activities relate to rate making or to administration\nof rates. It shall include a person or entity which prepares and files\npolicy forms and endorsements on behalf of insurers. It shall not\ninclude a joint underwriting association under section two thousand\nthree hundred seventeen of this article, or any employee of an insurer,\nor in the case of insurers under common control or management an\nemployee of any such insurer or their manager, nor shall it include\nactuaries, certified public accountants, attorneys or other\nprofessionals who in their respective vocations may advise insurers on\nrate questions.\n  (b) Except as provided in subsection (j) hereof, no insurer shall\nutilize the services of a rate service organization unless the\norganization has obtained a license as provided by this section.\n  (c) No rate service organization shall refuse to supply any services\nwhich it is permitted to render in this state to any insurer authorized\nto do business in this state and offering to pay the fair and usual\ncompensation for the services.\n  (d) A rate service organization applying for a license as required by\nsubsection (b) hereof shall include with its application:\n  (1) a copy of its constitution, charter, articles of organization,\nagreement, association or corporation, and a copy of its by-laws, plan\nof operation and any other rules or regulations governing the conduct of\nits business;\n  (2) a list of its members and its subscribers;\n  (3) the name and address of one or more residents of this state upon\nwhom notices, process affecting it or orders of the superintendent may\nbe served;\n  (4) where appropriate a statement indicating one or more kinds of\ninsurance, or classes of risks, or any part or combination of the\nforegoing, for which it seeks to obtain a license;\n  (5) a statement showing its technical qualifications for acting in the\ncapacity for which it seeks a license; and\n  (6) any other relevant information and documents that the\nsuperintendent may require.\n  (e) The officers, members of the governing board or committee, and\nother persons in control of a corporation or of an unincorporated\nassociation, for the time being, and each partner of a partnership,\nshall be held individually responsible for knowingly violating any\nprovisions of this article applicable to such corporation, association\nor partnership as a rate service organization.\n  (f) Every organization which has applied for a license pursuant to\nsubsection (d) hereof shall thereafter promptly notify the\nsuperintendent of every material change in the facts or in the documents\nas filed.\n  (g) If the superintendent finds that the applicant and the natural\npersons through whom it acts are competent, trustworthy, and technically\nqualified to provide the services proposed, and that all requirements of\nlaw are met, he shall issue a license specifying the authorized activity\nof the applicant.\n  (h) Licenses issued pursuant to this section shall remain in effect\nuntil the licensee withdraws from the state or until the license is\nsuspended or revoked.\n  (i) Any amendment to a document filed pursuant to paragraph one of\nsubsection (d) hereof shall be filed at least thirty days before it\nbecomes effective. Failure to comply shall be a ground for revocation of\nthe license granted pursuant to subsection (h) hereof.\n  (j) A rate service organization which does not make or file rates, as\npermitted by this article, is not required to obtain a license under\nthis section but no insurer shall utilize the services of such a rate\nservice organization unless the organization has filed with the\nsuperintendent the information and documents prescribed in subsection\n(d) hereof and shall thereafter promptly notify the superintendent of\nevery material change in the information or documents. The\nsuperintendent may order any insurer or rate service organization found\nto be in violation of this subsection to discontinue such violation.\n  (k) If, after a hearing, the superintendent finds that the furnishing\nof such information or assistance by a rate service organization subject\nto subsection (j) hereof involves any act or practice which is unfair or\nunreasonable or otherwise inconsistent with the provisions of this\narticle, he may issue a written order specifying in what respects the\nact or practice is unfair or unreasonable or otherwise inconsistent with\nthe provisions of this article, and requiring the discontinuance of the\nact or practice.\n  (l) No rate service organization shall directly or indirectly require\nthe payment of any licensing, registration or membership fee by any\nbroker, as such, who is licensed under this chapter; nor shall any rate\nservice organization or any other association or bureau refuse to do\nbusiness with, or prohibit or prevent the payment of commissions to, any\nperson licensed as an insurance broker under this chapter.\n  (m) No rate service organization shall adopt any rule, the effect of\nwhich would be to prohibit or regulate the payment of dividends to\npolicyholders.\n  (n) A rate service organization may subscribe for or purchase\nactuarial, technical or other services, and such services shall be\navailable to all members and subscribers without discrimination.\n  (o) Cooperation among rate service organizations or among rate service\norganizations and insurers in rate making or in other matters within the\nscope of this article is hereby authorized, provided the filing\nresulting from such cooperation is subject to all the provisions of this\narticle which are applicable to filings generally. The superintendent\nmay review such cooperative activities and practices and if, after a\nhearing, he finds that any such activity or practice is unfair or\nunreasonable or otherwise inconsistent with this article, he may issue\nan order specifying in what respects such activity or practice is unfair\nor unreasonable or otherwise inconsistent with this article, and\nrequiring the discontinuance of such activity or practice.\n  (p) A rate service organization which pursuant to subsection (j)\nhereof is not required to obtain a license is expressly prohibited from\nusing or permitting the use of the phrase "supervised by the department\nof financial services of the state of New York" or any comparable\nphrase, or one which is likely to create the impression that such\norganization is supervised or subject to supervision by it.\n  (q) Any rate service organization may provide for the examination of\npolicies, daily reports, binders, renewal certificates, endorsements, or\nthe cancellation thereof, and may make reasonable rules governing their\nsubmission. Such rules shall contain a provision that in the event an\ninsurer does not within sixty days furnish satisfactory evidence to the\nrate service organization of the correction of any error or omission\npreviously called to its attention by the rate service organization, it\nshall be the duty of the rate service organization to notify the\nsuperintendent. All information so submitted for examination shall be\nconfidential.\n  (r) A rate service organization licensed pursuant to this section\nwhich files rates, rating plans or other statistical information\npursuant to paragraph one of subsection (b) of section two thousand\nthree hundred five of this article or otherwise relating to or in\nsupport of coverages written by its members or subscribers pursuant to\nparagraph fifteen of subsection (a) of section one thousand one hundred\nthirteen of this chapter shall be subject to audit by the superintendent\nby December thirty-first, nineteen hundred ninety-seven and not less\nthan once every three years thereafter. Such audit shall examine the\nfinances and operations of such rating organization and shall further\nmake recommendations for actions to be taken by such rating organization\nin furtherance of the findings of such audit. The superintendent shall\ncomplete an audit report no later than sixty days after the conclusion\nof the audit period and shall submit such audit report to the governor\nand the legislature.\n  (s) Notwithstanding any other provision of this article, no rate\nservice organization may file rates for workers' compensation insurance\nafter February first, two thousand eight, but a rate service\norganization may file loss costs or other statistical information,\nincluding rating plans, until June second, two thousand eighteen.\nNotwithstanding subsection (j) of this section, any such rate service\norganization shall nonetheless be required to be licensed pursuant to\nthis section.\n  * (t) (1) The governing body of a workers' compensation rate service\norganization shall be comprised of nine voting members. Four members\nshall represent insurers authorized to write workers' compensation\ninsurance in this state, and shall be selected in such manner as is\ndetermined by the members of the rate service organization. One member\nof the governing body shall be a representative of the state insurance\nfund. Each of the remaining four members of the governing body shall\nserve for a term of two years and until his or her successor shall have\nbeen appointed and approved, provided that the appointing entity\nappoints a successor member within one hundred twenty days of the\nexpiration of the term of office, and shall not be employed by, or serve\nas an officer or director of, an insurer authorized to write workers'\ncompensation insurance in this state, or any parent, subsidiary, or\naffiliate thereof. One such member of the governing body shall be\nappointed by the superintendent. The other three such members shall be\nappointed subject to the approval of the superintendent by the\nfollowing: (A) the workers' compensation board; (B) the Business Council\nof New York State, Inc.; and (C) the American Federation of Labor -\nCongress of Industrial Organizations of New York State. Any vacancy on\nthe governing body shall be filled in the same manner as the initial\nappointment. The governing body shall select a chief executive officer\nwho shall serve at the pleasure of the governing body and whose terms\nand conditions of employment shall be approved by the governing body. No\nrestriction in this subsection shall apply if compliance is prevented by\nthe failure of any appointing authority to make an appointment, or of\nthe superintendent to approve such appointment.\n  (2) The governing body of a workers' compensation rate service\norganization shall have charge of the general activities of the\norganization, including control and supervision over its finances and\nauthority to establish budgets, approve assessments and impose fines on\nmembers of the rate service organization.\n  (3) A workers' compensation rate service organization shall have an\nunderwriting committee and a medical and claims committee, and such\nother committees as the governing body deems appropriate. The\nunderwriting committee shall have the same allocation of voting members\nas the workers' compensation rate service organization governing body,\nand it shall be the responsibility of the underwriting committee to\naddress matters with respect to policy forms and endorsements, loss\ncosts, rating and statistical plans, payroll audits and other employer\nrelated issues. It shall be the responsibility of the medical and claims\ncommittee to study the administration of claims under the workers'\ncompensation law, and medical, surgical and hospital care of injured\nworkers.\n  (4) A workers' compensation rate service organization shall have an\nactuarial committee. It shall be the responsibility of the actuarial\ncommittee to review methodology and data collection processes used to\ndevelop loss costs. The American Federation of Labor - Congress of\nIndustrial Organizations of New York State and the Business Council of\nNew York State, Inc. shall together appoint one independent casualty\nactuary who is a fellow or associate of the casualty actuarial society\nto serve as a member of the actuarial committee. The appointment of such\nactuary, and his or her compensation and terms and conditions of\nretention, shall be subject to the approval of the superintendent as\nreasonable and customary for such professional. The actuary shall be\npaid by the workers' compensation rate service organization. Such\nactuary shall have the same access to the workers' compensation rate\nservice organization data and documents as the other members of that\ncommittee. The governing body of a workers' compensation rate service\norganization shall select a chief actuary of the actuarial committee,\nwho shall serve at the pleasure of the governing body and whose terms\nand conditions of employment shall be approved by the governing body.\nThe public actuary shall issue a report on or before June first, two\nthousand eighteen and each of the next ten years, indicating the overall\nsavings in the workers' compensation system as a result of the two\nthousand seventeen reforms.\n  (5) A workers' compensation rate service organization shall assess\ninsurers that write workers' compensation coverage in New York state for\nexpenses it incurs in its operation. Nothing in this paragraph shall\nprevent a workers' compensation rate service organization from also\nobtaining funds from any other source.\n  (6) A workers' compensation rate service organization shall retain all\ndata used to calculate rates, class relativities, and experience\nmodifications, as well as all data underlying any loss cost or other\nfiling made with the department, and any other data the superintendent\nmay direct, for such period of time as the superintendent shall direct.\n  * NB Repealed June 2, 2028\n