N.Y. ISC Law § 1322 — New York Code / Act ISC / Article 13 / Section 1322
Risk-based capital for life insurance companies, accident and health insurance companies, corporations organized pursuant to article fort...
Status: in_force

§ 1322. Risk-based capital for life insurance companies, accident and\nhealth insurance companies, corporations organized pursuant to article\nforty-three of this chapter, and certain health maintenance\norganizations. (a) Definitions. In this section:\n  (1) "Adjusted RBC report" means a RBC report which has been adjusted\nby the superintendent in accordance with paragraph three of subsection\n(c) of 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 life insurance company or\naccident and health insurance company incorporated or organized under\nany law of this state; corporation organized pursuant to article\nforty-three of this chapter; or health maintenance organization\ndomiciled in this state and certified or operating in at least one other\nstate.\n  (4) "Foreign insurer" means any authorized life insurance company or\naccident and health insurance company incorporated or organized under\nthe laws of any state, other than this state.\n  (5) "Negative trend" means a negative trend over a period of time, as\ndetermined in accordance with the "trend test calculation" included in\nthe RBC instructions defined in paragraph seven of this subsection.\n  (6) "RBC" means risk-based capital.\n  (7) "RBC instructions" means the RBC report including risk-based\ncapital instructions, which in addition to any other matter which may be\nrequired to be stated therein, either by law or by the superintendent\npursuant to law, shall conform substantially to the form of the report\nand instructions adopted from time to time for such purpose by, or by\nthe authority of, the National Association of Insurance Commissioners,\ntogether with such additions, omissions or modifications, similarly\nadopted from time to time, 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;\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. This section shall apply to every authorized life\ninsurance company and accident and health insurance company incorporated\nor organized under any law of this state; corporation organized pursuant\nto article forty-three of this chapter; or health maintenance\norganization domiciled in this state and certified or operating in at\nleast one other state.\n  (c) RBC reports. (1) Every domestic insurer other than a health\nmaintenance organization domiciled in this state and certified or\noperating in at least one other state shall, on or prior to each March\nfifteenth, and every such health maintenance organization, on or prior\nto each April fifteenth (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) An insurer's RBC shall be determined in accordance with the\nformula set forth in the RBC instructions. The formula shall be\ndetermined in each case by applying the factors in the manner set forth\nin the RBC instructions, and shall take into account (and may adjust for\nthe covariance between):\n  (A) The risk with respect to the insurer's assets;\n  (B) The risk of adverse insurance experience with respect to the\ninsurer's liabilities and obligations;\n  (C) The interest rate risk with respect to the insurer's business; and\n  (D) All other business risks and such other relevant risks as are set\nforth in the RBC instructions.\n  (3) If a domestic insurer files a 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. A 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 a RBC report indicating that: (i) 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;\nor\n  (ii) (I) The insurer has total adjusted capital that is greater than\nor equal to its company action level RBC but less than the product of\n3.0 and its authorized control level RBC; and\n  (II) there is a negative trend;\n  (B) The notification by the superintendent to the insurer of an\nadjusted RBC report that indicates the occurrence of an event described\nin item (i) or (ii) of subparagraph (A) of this paragraph, provided the\ninsurer does not challenge the adjusted RBC report under subsection (h)\nof this section; or\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 item (i) or (ii) of subparagraph (A) of this paragraph,\nthen the notification by the superintendent to the insurer that the\nsuperintendent has, after a hearing, rejected the insurer's challenge.\n  (2) If there is a company action level event, the domestic insurer\nshall prepare and submit to the superintendent a RBC plan which:\n  (A) Identifies the conditions in the insurer which contribute to the\ncompany action level 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, anticipated business growth\nand associated surplus strain, extraordinary exposure to risk, mix of\nbusiness 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 a RBC\nplan to the superintendent, the superintendent shall notify the insurer\nwhether the RBC plan is satisfactory, unsatisfactory, or unacceptable.\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  (D) If the RBC plan is unacceptable because it does not adequately\naddress all of the elements specified in paragraph two of this\nsubsection, the notification to the insurer shall set forth the reasons\nfor the determination and shall state that the notification constitutes\na regulatory action level event.\n  (5) (A) Every domestic insurer that files a 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 a 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 a 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 a RBC report, unless the\ninsurer provides the superintendent with a satisfactory explanation for\nthe failure and cures the failure within ten days after the filing date;\n  (E) The failure of the insurer to timely submit a RBC plan or a\nrevised RBC plan to the superintendent;\n  (F) Notification by the superintendent that the RBC plan is\nunacceptable or the revised RBC plan is unsatisfactory, provided the\ninsurer does not challenge the determination under subsection (h) of\nthis 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, and that the\nfailure has a substantial adverse effect on the insurer's ability to\neliminate the company action level event, provided the insurer does not\nchallenge the determination 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 a RBC plan or, if\napplicable, a revised RBC plan, unless the RBC plan is unacceptable (in\nwhich case the superintendent may require a revised RBC plan) or the\nrevised RBC plan has already been submitted;\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, including the results of any sensitivity\ntests undertaken pursuant to the RBC instructions.\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 a 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  (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 a 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 a 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) If there is a mandatory control level event, the superintendent\nshall take such actions as are necessary to cause the insurer to be\nplaced under rehabilitation or liquidation under article seventy-four of\nthis chapter. However, the superintendent may forgo action for up to\nninety days after the occurrence of a mandatory control level event if\nthe superintendent determines that there is a reasonable expectation\nthat the mandatory control level event may be eliminated within the\nperiod.\n  (h) Hearings. (1) A domestic insurer shall have the right to a hearing\nupon notification to the insurer by the superintendent;\n  (A) Of an adjusted RBC report;\n  (B) That the insurer's RBC plan is unsatisfactory or unacceptable or\nthe revised RBC plan 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.\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 and prohibition on announcements. (1) All RBC\nreports and adjusted RBC reports (to the extent the information therein\nis not required to be set forth in a publicly available annual statement\nschedule), RBC plans, revised RBC plans, results or report of any\nexamination or analysis of an insurer performed pursuant hereto, and\ncorrective orders filed with or issued by the superintendent contain\ninformation that may be damaging to the insurer if made available to its\ncompetitors, and shall be confidential and not made public or subject to\nsubpoena, except to the extent the superintendent finds release of\ninformation necessary to protect the public.\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  (j) Foreign insurers. (1) A foreign insurer shall, upon the written\nrequest of the superintendent, submit to the superintendent a RBC report\nas of the end of the calendar year just ended by the later of:\n  (A) The date a 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 a RBC plan, the\nsuperintendent may require the insurer to file an RBC plan with the\nsuperintendent within forty-five days of the superintendent's\nnotification.\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 a mandatory control level event, the superintendent\nmay make application under article 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  (l) Phase-in provision. For RBC reports required to be filed in\nnineteen hundred ninety-four with respect to calendar year nineteen\nhundred ninety-three, the following requirements shall apply to the\nprovisions of subsections (d), (e), (f) and (g) of this section:\n  (1) In the event of a company action level event with respect to a\ndomestic insurer, the superintendent shall take no regulatory action\nhereunder.\n  (2) In the event of a regulatory action level event under subparagraph\n(A), (B) or (C) of paragraph one of subsection (e) of this section the\nsuperintendent shall take the actions required under subsection (d) of\nthis section.\n  (3) In the event of a regulatory action level event under subparagraph\n(D), (E), (F), (G), (H) or (I) of paragraph one of subsection (e) of\nthis section or an authorized control level event, the superintendent\nshall take the actions required under subsection (e) of this section\nwith respect to the insurer.\n  (4) In the event of a mandatory control level event with respect to an\ninsurer, the superintendent shall take the actions required under\nsubsection (f) of this section with respect to the insurer.\n