N.Y. ISC Law § 2344 — New York Code / Act ISC / Article 23 / Section 2344
Flexible rate limitations in problem markets
Status: in_force

* § 2344. Flexible rate limitations in problem markets. (a) As used in\nthis section:\n  (1) "Market" means a line, subline or classification (other than a\nclassification delineated by geographic location) of property/casualty\ninsurance risks whose coverages are not subject to subsection (b) of\nsection two thousand three hundred five, section two thousand three\nhundred twenty-eight, section three thousand four hundred twenty-five,\nor three thousand four hundred forty-six of this chapter.\n  (2) "Rate" means charge per unit of exposure (whether such rate is\nmanually generated or based upon judgment) for a particular market.\n  (b) The superintendent shall by regulation establish annual\nlimitations upon rate level increases or decreases which may take effect\nwithout prior approval with respect to a market. The regulation shall be\ndesigned to restore and promote stability in such markets. Upon a\ndetermination made that, as to a particular market, competition is\neither sufficient to assure that rates will not be excessive or that\nsuch market is conducted in a manner not resulting in inadequate rates,\nnot destructive of competition or detrimental to the solvency of\ninsurers, the superintendent shall exempt such market from the\nlimitations set forth in such regulation. The superintendent, upon a\ndetermination that annual limitations are necessary to restore and\npromote stability in such a market, shall thereafter withdraw or modify\nsuch exemption. The superintendent shall whenever he deems it\nappropriate hold a hearing, on a record and at which representatives of\nconsumers and other interested parties may participate, for the purpose\nof determining, on the basis of findings of fact and conclusions,\nwhether an exemption (or withdrawal or modification thereof) of any\nmarket is appropriate. The initial hearing for such purpose shall be\nheld within sixty days of the effective date of this section, and the\nsuperintendent shall act expeditiously in determining whether to exempt\nany market.\n  (c) Limitations established or modified pursuant to subsection (b) of\nthis section may vary by market and, in establishing or modifying such\nlimitations, the superintendent may consider such factors as: the extent\nand nature of competition; size and significance of the coverage; level\nand range of rates and rate changes among insurers; investment and\nunderwriting experience of insurers; reinsurance availability; extent of\nconsumer complaints to the department of financial services; extent of\ndenials and restrictions of coverage; volume of cancellations and\nnonrenewals; or changing conditions in the economic, judicial and social\nenvironment.\n  (d) (1) Notwithstanding any other provisions of this article, in any\nmarket governed by such regulation and not exempted by the\nsuperintendent pursuant to this section, filings that produce rate level\nchanges within the limitations specified in such regulation shall become\neffective without prior approval pursuant to subsection (a) of section\ntwo thousand three hundred five of this article; filings which produce\nrate level changes beyond such limitations shall not become effective\nuntil approved by the superintendent pursuant to subsection (b) of\nsection two thousand three hundred five of this article, except that\nfilings shall be deemed approved unless disapproved by the\nsuperintendent within thirty days, which the superintendent may with\ncause extend an additional thirty days and with further cause extend an\nadditional fifteen days.\n  (2) No insurer shall cause an expiring policy to be renewed with\nanother insurer under common control, as defined by paragraph sixteen of\nsubsection (a) of section one hundred seven of this chapter in order to\navoid the limitations established by this section. An insurer may renew\nan expiring policy with another insurer under common control based upon\nunderwriting criteria or other valid business reasons.\n  (e) The superintendent shall by regulation establish reasonable\nstandards for rating plans (including experience rating plans, schedule\nrating plans, individual risk premium modification plans and expense\nreduction plans) designed to modify rates in the development of premiums\nfor individual risks insured in a property/casualty market. Such\nstandards shall permit recognition of expected differences in loss or\nexpense characteristics, and shall be designed so that such plans are\nreasonable and equitable in their application, and are not unfairly\ndiscriminatory, violative of public policy or otherwise contrary to the\nbest interests of the people of this state. Such standards shall not\nprevent the development of new or innovative rating methods which\notherwise comply with this article. Such rating plans shall be filed or\nrefiled by insurers in compliance with the regulation. The\nsuperintendent shall review such plans, and may without a hearing\ndisapprove a plan that does not comply with the regulation. The\nregulation shall establish maximum debits and credits that may result\nfrom the application of a rating plan, shall encourage loss control,\nsafety programs and other methods of risk management, and shall require\ninsurers to maintain documentation of the basis for the debits or\ncredits applied under any plan. Once it has been filed and approved, use\nof the rating plan shall become mandatory and such plan shall be applied\nuniformly for eligible risks in a manner that is not unfairly\ndiscriminatory.\n  (f) The superintendent shall review all rates filed between June\nfirst, nineteen hundred eighty-six, and the effective date of the\nregulation promulgated pursuant to subsection (b) of this section, and\nshall, on a selective basis, review rates established prior to June\nfirst, nineteen hundred eighty-six, including rates not manually rated,\nto determine whether they comply with the applicable standards\nprescribed by this article for purposes of the annual limitations\nestablished or modified pursuant to subsection (b) of this section. In\nestablishing priorities for such selective review, the superintendent\nshall give consideration to markets which have been subject to the\nlargest rate changes in the twelve month period prior to June first,\nnineteen hundred eighty-six and to markets affecting the greatest number\nof risks; the superintendent shall to the extent material also give\nconsideration to the criteria set forth in subsection (c) of this\nsection. In addition, the superintendent shall to the fullest extent\npossible review markets not manually rated, for the purpose of\ndetermining whether a manual rate is appropriate and shall, upon a\ndetermination of appropriateness, require that a manual rate be\ndeveloped for such market. If the superintendent determines that the\nreviewed rate pursuant to the mandatory or selective review specified by\nthis subsection does not comply with the applicable standards prescribed\nby this article, the insurer shall be afforded an opportunity to be\nheard and shall file in accordance with such determination prospective\nrates applicable to new and renewal policies.  Except as to the\nprocedures set forth in this subsection, nothing contained in this\nsubsection shall be construed to alter, limit, modify, enlarge or\nabrogate any right of any insurer or any power or authority of the\nsuperintendent under any other provision of this chapter.\n  (g) (1) Within ninety days after the effective date of this section\nevery insurer licensed to write property/casualty coverages in regard to\na market not exempted pursuant to subsection (b) of this section and\naffected by the statutory provisions specified in this paragraph shall\nfile with the superintendent rates, for each such market written by the\ninsurer, appropriately modified to reflect the likely reductive cost\neffects reasonably attributable to any newly enacted statutory\nprovisions of the civil practice law and rules, court of claims act and\nnot-for-profit corporation law. Such filings shall contain a specific\nexplanation of the reductive cost effects (which shall also be expressed\nin amounts or percentages) ascribed to such statutory provisions, in a\nform prescribed by the superintendent. In regard to a market not subject\nto this section or exempted pursuant to this section, subsequent filings\nshall reflect likely reductive cost effects reasonably attributable to\nsuch statutory provisions appropriate to such market.\n  (2) The superintendent shall determine whether the rates filed\npursuant to paragraph one of this subsection reasonably reflect the\nlikely reductive cost effects attributable to the statutory provisions\nspecified in paragraph one of this subsection.\n  (3) In the event that the superintendent determines that the likely\nreductive cost effects are not properly reflected in such rates, the\nbasis for such determination shall be stated and, within thirty days\nafter receipt of such determination, the affected insurer may request a\nhearing. All policies written or renewed on or after the effective date\nof the statutory provisions specified in paragraph one of this\nsubsection shall be subject to appropriate premium adjustments in the\nevent the superintendent's determination is sustained, and the insurer\nshall maintain its records in regard to each such policy for a period of\nno less than six years in order to verify that appropriate adjustments\nhave been made.\n  (4) For purposes of the annual limitations established pursuant to\nsubsection (b) of this section, the rates determined by the\nsuperintendent to reasonably reflect the likely reductive cost effects\nof the provisions specified in paragraph one of this subsection shall be\ntreated as if they had been in effect for the twelve month period prior\nto the date of such determination.\n  (h) This section shall cease to be of any force or effect during the\nperiod August third, two thousand one through the day before the\neffective date of the property/casualty insurance availability act, and\nafter June thirtieth, two thousand twenty-nine, except that rates shall\nreflect the likely reductive cost effects reasonably attributable to the\nstatutory provisions specified in paragraph one of subsection (g) of\nthis section.\n  * NB Expires July 1, 2029\n