TO: ALL AUTHORIZED INSURERS WRITING GROUP OR BLANKET ACCIDENT AND HEALTH INSURANCE IN THE STATE OF NEW YORK. 

Gentlemen:

Re: Group and Blanket Accident and Health Insurance Premiums. 

It has come to our attention that group accident and
health insurance policies are being written in states other than New York by a number of
authorized insurers at premium rates which are lower than those charged in this State for
comparable insurance benefits.  These lower premium rates are being charged for policies written
to provide coverage under compulsory disability insurance laws.  In some instances the premium
rates are 15 per cent lower than the basic premium rates and in other instances they are
graded according to the size of the group. 

No factual proof has been presented to justify these
differentials in premium rates and, in view of the relatively short period that such laws
have been in effect, it is doubtful whether such proof is available.  Moreover, in view of
the relation which the expense element bears to the premium for group accident and health
insurance, it is quite obvious that the differential cannot be accounted, for by savings
in expense of administering this type of business.  Furthermore, by reason of the factors
peculiar to this form of insurance, "such as the lag in premium collections and development
of true claim experience, and the contingent obligations which may be incurred under compulsory
laws, the cost of coverage may prove to be higher than that incurred under policies not subject
to such conditions. 

It is the Department's opinion that the writing of
group and blanket accident and health policies in this State at premium rates which are higher
than those charged in other states for.  comparable benefits, constitutes an unfair discrimination
and a violation of Section 209 of the New York Insurance Law.  The commission of an act prohibited
by Section 209 is also one of the defined acts and practices enumerated in Section 273 as
unfair methods of competition and unfair and deceptive acts or practices in the business
of insurance.  In the event that your company is charging such discriminatory premium rates
you are to take immediate steps to remove the discrimination.