N.Y. ISC Law § 1324 — New York Code / Act ISC / Article 13 / Section 1324
Risk-based capital for property/casualty insurance companies
Status: in_force

§ 1324. Risk-based capital for property/casualty insurance companies.\n(a) Definitions. In this section:\n  (1) "Adjusted RBC report" means an RBC report which has been adjusted\nby the superintendent in accordance with paragraph two of subsection (c)\nof this section.\n  (2) "Corrective order" means an order issued by the superintendent\nspecifying corrective actions which the superintendent has determined\nare required.\n  (3) "Domestic insurer" means any authorized property/casualty\ninsurance company either incorporated or organized under any law of this\nstate or, in the case of a United States branch of an alien insurer,\nentered into the United States through this state.\n  (4) "Foreign insurer" means any authorized property/casualty insurance\ncompany either incorporated or organized under the laws of any state,\nother than this state, or in the case of a United States branch of an\nalien insurer, entered into the United States through any state other\nthan this state.\n  (5) "Property/casualty insurance company" means any property/casualty\ninsurance company or United States branch of an alien insurer licensed\nunder article forty-one of this chapter, any reciprocal insurer licensed\nunder article sixty-one of this chapter or any advance premium\ncorporation or assessment corporation organized and licensed under\narticle sixty-six of this chapter.\n  (6) "RBC" means risk-based capital.\n  (7) "RBC instructions" means the RBC report including risk-based\ncapital instructions in effect as of December thirty-first, two thousand\nfour as issued by the national association of insurance commissioners,\nand which in addition to any other matter which may be required to be\nstated therein, either by law or by the superintendent pursuant to law,\nshall conform substantially to the form of the report and instructions\nadopted from time to time for such purpose by, or by the authority of,\nthe national association of insurance commissioners, together with such\nadditions, omissions, or modifications, similarly adopted from time to\ntime, as may be approved by the superintendent.\n  (8) "RBC level" means an insurer's company action level RBC,\nregulatory action level RBC, authorized control level RBC, or mandatory\ncontrol level RBC where:\n  (A) "Company action level RBC" means the product of 2.0 and the\ninsurer's authorized control level RBC;\n  (B) "Regulatory action level RBC" means the product of 1.5 and the\ninsurer's authorized control level RBC;\n  (C) "Authorized control level RBC" means the number determined under\nthe risk-based capital formula in accordance with the RBC instructions;\nand\n  (D) "Mandatory control level RBC" means the product of .70 and the\ninsurer's authorized control level RBC.\n  (9) "RBC plan" means a comprehensive financial plan containing the\nelements specified in paragraph two of subsection (d) of this section.\nIf the superintendent rejects the RBC plan, and it is revised by the\ninsurer, with or without the superintendent's recommendation, the plan\nshall be called the "revised RBC plan".\n  (10) "RBC report" means the report required in subsection (c) of this\nsection.\n  (11) "Total adjusted capital" means the sum of:\n  (A) An insurer's statutory capital and surplus; and\n  (B) Such other items, if any, as the RBC instructions may provide.\n  (b) Applicability. (1) This section shall apply to every\nproperty/casualty insurance company, unless exempted under paragraph two\nof this subsection.\n  (2) Except as set forth in subparagraph (C) of this paragraph, with\nprior written approval, the superintendent may exempt from the\nprovisions of this section a non-stock domestic property/casualty\ninsurance company which:\n  (A)(i) Writes no direct business outside of this state;\n  (ii) Writes direct annual premiums of twenty million dollars or less;\nand\n  (iii) Assumes reinsurance premiums in an amount that is less than five\npercent of total direct premiums written; or\n  (B)(i) Has total direct premiums comprised of at least ninety percent\nmedical malpractice liability insurance, as that term is defined in\nsubsection (b) of section five thousand five hundred one of this\nchapter;\n  (ii) Assumes reinsurance premiums in an amount that is less than five\npercent of total direct premiums written; and\n  (iii) Writes ninety percent of its total direct premiums in this\nstate.\n  (C) The exemptions permitted under subparagraphs (A) and (B) of this\nparagraph shall not apply to an insurer which:\n  (i) Is controlled by another insurer;\n  (ii) Owns or controls another insurer, unless the insurer that is\nowned or controlled is subject to the provisions of this section,\nsection one thousand three hundred twenty-two or section one thousand\nthree hundred twenty-five of this article, as added by a chapter of the\nlaws of 2007, or a substantially similar provision in another\njurisdiction;\n  (iii) Is under common control of a person that controls another\ninsurer; or\n  (iv) Is a party to a pooling agreement wherein risks underwritten by\nparties to the agreement are apportioned to the parties in a\npredetermined manner.\n  (c) RBC reports. (1) Every domestic insurer shall, on or prior to each\nMarch first (the "filing date"), prepare and submit to the\nsuperintendent a report of its RBC levels as of the end of the calendar\nyear just ended, in a form and containing such information as is\nrequired by the RBC instructions. In addition, the insurer shall file\nthe RBC report:\n  (A) With the National Association of Insurance Commissioners in\naccordance with the RBC instructions; and\n  (B) With the insurance commissioner in any state in which the insurer\nis authorized to do business, upon the written request of the insurance\ncommissioner. The insurer shall file the RBC report by the later of:\n  (i) The filing date; or\n  (ii) Fifteen days after the date of the request.\n  (2) If a domestic insurer files an RBC report which the superintendent\ndetermines is inaccurate, then the superintendent shall adjust the RBC\nreport to correct the inaccuracy and shall notify the insurer of the\nadjustment. The notice shall contain a statement of the reason for the\nadjustment. An RBC report as so adjusted is referred to as an "adjusted\nRBC report".\n  (d) Company action level event. (1) "Company action level event"\nmeans, with respect to a domestic insurer:\n  (A) The filing by the insurer of an RBC report indicating that the\ninsurer's total adjusted capital is greater than or equal to its\nregulatory action level RBC but less than its company action level RBC;\n  (B) The notification by the superintendent to the insurer of an\nadjusted RBC report that indicates the occurrence of an event described\nin subparagraph (A) of this paragraph, provided the insurer does not\nchallenge the adjusted RBC report under subsection (h) of this section;\n  (C) If, under subsection (h) of this section, the insurer challenges\nan adjusted RBC report that indicates the occurrence of an event\ndescribed in subparagraph (A) of this paragraph, the notification by the\nsuperintendent to the insurer that the superintendent has, after a\nhearing, rejected the insurer's challenge; or\n  (D) The filing by the insurer of an RBC report indicating that the\ninsurer has total adjusted capital that is greater than or equal to its\ncompany action level RBC, but less than the product of three point zero\nand its authorized control level RBC, and with a combined ratio greater\nthan one hundred twenty percent as determined in accordance with the\ntrend test calculation in the RBC instructions.\n  (2) If there is a company action level event, the domestic insurer\nshall prepare and submit to the superintendent an RBC plan which:\n  (A) Identifies the conditions which contribute to the company action\nlevel event;\n  (B) Contains proposals of corrective actions which the insurer intends\nto take and would be expected to result in the elimination of the\ncompany action level event;\n  (C) Provides projections of the insurer's financial results in the\ncurrent year and at least the four succeeding years, both in the absence\nof proposed corrective actions and giving effect to the proposed\ncorrective actions, including projections of statutory operating income,\nnet income, and capital and surplus. The projections for both new and\nrenewal business may include separate projections for each major line of\nbusiness and separately identify each significant income, expense and\nbenefit component;\n  (D) Identifies the key assumptions impacting the insurer's projections\nand the sensitivity of the projections to the assumptions; and\n  (E) Identifies the quality of, and problems associated with, the\ninsurer's business, including its assets, liabilities, anticipated\nbusiness growth and associated surplus strain, extraordinary exposure to\nrisk, mix of business, and use of reinsurance.\n  (3) The RBC plan shall be submitted within forty-five days after the\noccurrence of the company action level event.\n  (4)(A) Within sixty days after the submission by an insurer of an RBC\nplan to the superintendent, the superintendent shall notify the insurer\nwhether the RBC plan is satisfactory or unsatisfactory.\n  (B) If the RBC plan is satisfactory, the insurer shall implement it.\n  (C) If the RBC plan is unsatisfactory, the notification to the insurer\nshall set forth the reasons for the determination, and may set forth\nproposed revisions which will render the RBC plan satisfactory to the\nsuperintendent. Upon notification from the superintendent, the insurer\nshall prepare a revised RBC plan, which may incorporate by reference any\nrevisions proposed by the superintendent, and shall submit the revised\nRBC plan to the superintendent:\n  (i) Within forty-five days after the notification from the\nsuperintendent; or\n  (ii) If, under subsection (h) of this section, the insurer challenges\nthe notification from the superintendent, within forty-five days after a\nnotification to the insurer that the superintendent has, after a\nhearing, rejected the insurer's challenge.\n  (5) If there is a company action level event, the superintendent may\nlimit the premium writings of the insurer.\n  (6)(A) Every domestic insurer that files an RBC plan or revised RBC\nplan with the superintendent shall file a copy with the insurance\ncommissioner of any state in which the insurer is authorized to do\nbusiness, upon the written request of the insurance commissioner, if the\nstate has an RBC provision substantially similar to paragraph one of\nsubsection (i) of this section.\n  (B) The insurer shall file a copy of the RBC plan or revised RBC plan\nin that state by the later of:\n  (i) The date on which the RBC plan or revised RBC plan is filed under\nparagraph three or four of this subsection; or\n  (ii) Fifteen days after the date of the request.\n  (e) Regulatory action level event. (1) "Regulatory action level event"\nmeans, with respect to a domestic insurer:\n  (A) The filing by the insurer of an RBC report indicating that the\ninsurer's total adjusted capital is greater than or equal to its\nauthorized control level RBC but less than its regulatory action level\nRBC;\n  (B) The notification by the superintendent to the insurer of an\nadjusted RBC report that indicates the occurrence of an event described\nin subparagraph (A) of this paragraph, provided the insurer does not\nchallenge the adjusted RBC report under subsection (h) of this section;\n  (C) If, under subsection (h) of this section, the insurer challenges\nan adjusted RBC report that indicates the occurrence of an event\ndescribed in subparagraph (A) of this paragraph, the notification by the\nsuperintendent to the insurer that the superintendent has, after a\nhearing, rejected the insurer's challenge;\n  (D) The failure of the insurer to timely file an RBC report, unless\nthe insurer provides the superintendent with a satisfactory explanation\nfor the failure or cures the failure within ten days after the filing\ndate;\n  (E) The failure of the insurer to timely submit an RBC plan or a\nrevised RBC plan to the superintendent;\n  (F) Notification by the superintendent that the revised RBC plan is\nunsatisfactory, provided the insurer does not challenge the\ndetermination under subsection (h) of this section;\n  (G) If, under subsection (h) of this section, the insurer challenges a\ndetermination by the superintendent under subparagraph (F) of this\nparagraph, the notification by the superintendent to the insurer that\nthe superintendent has, after a hearing, rejected the challenge;\n  (H) Notification by the superintendent to the insurer that the insurer\nhas failed to adhere to its RBC plan or revised RBC plan or that the\ninsurer has failed to attain the amount of capital projected in the RBC\nplan or revised RBC plan, and that the failure of either has a\nsubstantial adverse effect on the insurer's ability to eliminate the\ncompany action level event, provided the insurer does not challenge the\ndetermination under subsection (h) of this section; or\n  (I) If, under subsection (h) of this section, the insurer challenges a\ndetermination by the superintendent under subparagraph (H) of this\nparagraph, the notification by the superintendent to the insurer that\nthe superintendent has, after a hearing, rejected the challenge.\n  (2) If there is a regulatory action level event, the superintendent\nshall:\n  (A) Require the insurer to prepare and submit an RBC plan or, if\napplicable, a revised RBC plan;\n  (B) Perform such examination or analysis as the superintendent deems\nnecessary of the assets, liabilities, and operations of the insurer,\nincluding a review of the RBC plan or revised RBC plan; and\n  (C) Subsequent to the examination or analysis, issue a corrective\norder.\n  (3) In determining corrective actions, the superintendent may take\ninto account such factors as are deemed relevant, based upon the\nsuperintendent's examination or analysis of the assets, liabilities and\noperations of the insurer.\n  (4) The RBC plan or revised RBC plan shall be submitted:\n  (A) Within forty-five days after the occurrence of the regulatory\naction level event; or\n  (B) If, under subsection (h) of this section, the insurer challenges\nthe superintendent's determination that an RBC plan is unsatisfactory,\nwithin forty-five days after notification to the insurer that the\nsuperintendent has, after a hearing, rejected the insurer's challenge.\n  (5) The superintendent may retain actuaries, investment experts, and\nother consultants as the superintendent deems necessary to review the\ninsurer's RBC plan or revised RBC plan, examine or analyze the assets,\nliabilities and operations of the insurer, and formulate the corrective\norder. The fees, costs and expenses relating to consultants shall be\nborne by the affected insurer as directed by the superintendent.\n  (6) If there is a regulatory action level event, the superintendent\nmay limit the premium writings of the insurer.\n  (f) Authorized control level event. (1) "Authorized control level\nevent" means, with respect to a domestic insurer:\n  (A) The filing by the insurer of an RBC report indicating that the\ninsurer's total adjusted capital is greater than or equal to its\nmandatory control level RBC but less than its authorized control level\nRBC;\n  (B) The notification by the superintendent to the insurer of an\nadjusted RBC report that indicates the occurrence of an event described\nin subparagraph (A) of this paragraph, provided the insurer does not\nchallenge the adjusted RBC report under subsection (h) of this section;\n  (C) If, under subsection (h) of this section, the insurer challenges\nan adjusted RBC report that indicates the occurrence of an event\ndescribed in subparagraph (A) of this paragraph, notification by the\nsuperintendent to the insurer that the superintendent has, after a\nhearing, rejected the insurer's challenge;\n  (D) The failure of the insurer to respond, in a manner satisfactory to\nthe superintendent, to a corrective order, provided the insurer has not\nchallenged the corrective order under subsection (h) of this section; or\n  (E) If, under subsection (h) of this section, the insurer challenges a\ncorrective order and the superintendent, after a hearing, rejects the\nchallenge or modifies the corrective order, the failure of the insurer\nto respond, in a manner satisfactory to the superintendent, to the\ncorrective order subsequent to rejection or modification by the\nsuperintendent.\n  (2) If there is an authorized control level event, the superintendent\nshall take such actions as are:\n  (A) Required under subsection (e) of this section regarding an insurer\nwith respect to which a regulatory action level event has occurred; or\n  (B) Necessary to cause the insurer to be placed under rehabilitation\nor liquidation under article seventy-four of this chapter.\n  (g) Mandatory control level event. (1) "Mandatory control level event"\nmeans, with respect to a domestic insurer:\n  (A) The filing by the insurer of an RBC report, indicating that the\ninsurer's total adjusted capital is less than its mandatory control\nlevel RBC;\n  (B) Notification by the superintendent to the insurer of an adjusted\nRBC report that indicates the occurrence of an event described in\nsubparagraph (A) of this paragraph, provided the insurer does not\nchallenge the adjusted RBC report under subsection (h) of this section;\nor\n  (C) If, under subsection (h) of this section, the insurer challenges\nan adjusted RBC report that indicates the occurrence of an event\ndescribed in subparagraph (A) of this paragraph, notification by the\nsuperintendent to the insurer that the superintendent has, after a\nhearing, rejected the insurer's challenge.\n  (2)(A) If there is a mandatory control level event, except as set\nforth in subparagraph (B) of this paragraph, the superintendent shall\ntake such actions as are necessary to cause the insurer to be placed\nunder rehabilitation or liquidation under article seventy-four of this\nchapter.\n  (B) The superintendent may forgo action set forth in subparagraph (A)\nof this paragraph after the occurrence of a mandatory control level\nevent if:\n  (i) The insurer has demonstrated within a ninety day period that the\nmandatory control level event will be eliminated under a plan approved\nby the superintendent; or\n  (ii) No business is being written or renewed, any existing\npolicyholder obligations are being run-off under a plan approved by the\nsuperintendent and the insurer meets the minimum capital and surplus as\notherwise required under this chapter.\n  (h) Hearings. (1) An insurer shall have the right to a hearing upon\nnotification to the insurer by the superintendent:\n  (A) Of an adjusted RBC report;\n  (B) That the insurer's RBC plan is unsatisfactory or the revised RBC\nplan is unsatisfactory;\n  (C) That the insurer has failed to adhere to its RBC plan or revised\nRBC plan and that the failure has a substantial adverse effect on the\nability of the insurer to eliminate the company action level event; or\n  (D) Of a corrective order.\n  (2) If a hearing is requested within five days after the\nsuperintendent gives a notification specified in paragraph one of this\nsubsection, the superintendent shall give notice and a hearing in\naccordance with the provisions of article three of this chapter, except\nthat the hearing, and any report resulting from such hearing, shall be\nkept confidential in accordance with the provisions of paragraph one of\nsubsection (i) of this section.\n  (3) The superintendent shall set a date for the hearing, which date\nshall be no less than ten nor more than thirty days after the date of\nthe insurer's hearing request.\n  (i) Confidentiality; prohibition on announcements; prohibition on use\nin rate making; excess of capital over the amount indicated in the RBC\nreport. (1) All RBC plans, revised RBC plans, results or reports of any\nexamination or analysis of an insurer performed pursuant to this\nsection, corrective orders filed with or issued by the superintendent\nand any report resulting from a hearing held pursuant to subsection (h)\nof this section contain information that may be damaging to the insurer\nif made available to its competitors, and shall be confidential and not\nmade public or subject to subpoena, except to the extent the\nsuperintendent finds release of information necessary to protect the\npublic.\n  (2)(A) The comparison of an insurer's total adjusted capital to any of\nits RBC levels is a regulatory tool which may indicate the need for\npossible corrective action with respect to the insurer, and is not\nintended as a means to rank insurers generally, and the use of the\ninformation to rank insurers may be misleading to the general public.\n  (B) Except as otherwise required under the provisions of this section,\nno authorized insurer, licensed insurance agent, licensed insurance\nbroker, or any person on behalf of the insurer, agent or broker, or any\nother person licensed pursuant to this chapter shall make, publish,\ndisseminate, circulate, or place before the public or cause, directly or\nindirectly, to be made, published, disseminated, circulated or placed\nbefore the public, in a newspaper, magazine, or other publication, or in\nthe form of a notice, circular, pamphlet, letter or poster, or over any\nradio or television station, or in any other way, an advertisement,\nannouncement or statement containing an assertion, representation or\nstatement with regard to the RBC levels of any insurer, or of any\ncomponent derived in the calculation.\n  (C) Notwithstanding subparagraph (B) of this paragraph, if a\nmaterially false or inappropriate statement, comparing an insurer's\ntotal adjusted capital or other amount to one or more of its RBC levels,\nis published in a written publication, and the insurer is able to\ndemonstrate to the superintendent the falsity or inappropriateness of\nthe statement, then the insurer may publish an announcement in a written\npublication to rebut the statement.\n  (3) RBC instructions, RBC reports, adjusted RBC reports, RBC plans and\nrevised RBC plans shall not be used by the superintendent in determining\nwhether rates comply with standards set forth in this chapter and shall\nnot be considered or introduced as evidence in any hearing involving\nsuch standards.\n  (4) An excess of capital over the amount produced by the RBC\nrequirements contained in this section is desirable in the business of\ninsurance. Accordingly, insurers should seek to maintain capital above\nthe RBC levels required by this section. Additional capital is used and\nuseful in the insurance business and helps to secure an insurer against\nvarious risks inherent in, or affecting, the business of insurance and\nnot accounted for or only partially measured by the RBC requirements\ncontained in this section.\n  (j) Foreign insurers. (1) A foreign insurer shall, upon the written\nrequest of the superintendent, submit to the superintendent an RBC\nreport, in the same form as required of a domestic insurer, as of the\nend of the calendar year just ended by the later of:\n  (A) The date an RBC report would be required to be filed by a domestic\ninsurer under this section; or\n  (B) Fifteen days after the date of the request.\n  (2) A foreign insurer shall, upon the written request of the\nsuperintendent, within five days, submit to the superintendent a copy of\nits RBC plan or revised RBC plan that is filed with the insurance\ncommissioner of any other state.\n  (3)(A) If there is a company action level event, regulatory action\nlevel event, or authorized control level event, and the insurance\ncommissioner of the state of incorporation or organization of the\ninsurer does not require the insurer to file an RBC plan, the\nsuperintendent may require the insurer to file an RBC plan, in the same\nform as required of a domestic insurer, with the superintendent within\nforty-five days of the superintendent's notification.\n  (B) If the RBC plan is unsatisfactory or if the insurer fails to\ntimely file the RBC plan with the superintendent, the superintendent may\norder the insurer not to issue any new insurance policies or contracts\nin this state.\n  (4) If there is an authorized control level event or a mandatory\ncontrol level event, the superintendent may make application under\narticle seventy-four of this chapter.\n  (k) Notices. Unless a later date is specified, any notice by the\nsuperintendent to an insurer under this section which may result in\nregulatory action hereunder shall be effective upon delivery, except\nthat, if the notice is mailed, it shall be effective three days after it\nis mailed.\n