NY Ins L § 4308 (2021)
2021 New York Laws ISC - Insurance Article 43 - Non-Profit Medical and Dental Indemnity, or Health and Hospital Service Corporations 4308 - Supervision of Superintendent.

§  4308.  Supervision of superintendent. (a) No corporation subject to the provisions of this article shall enter into any contract unless  and until it shall have filed with the superintendent a copy of the contract or  certificate and of all applications, riders and endorsements for use in connection with the issuance  or  renewal  thereof,  to  be  formally approved  by  him  as  conforming  to  the applicable provisions of this article and not inconsistent with any other provision of law  applicable thereto.  The  superintendent  shall, within a reasonable time after the filing of any such form, notify the corporation filing the  same  either of his approval or of his disapproval of such form.  (b)  No  corporation  subject  to the provisions of this article shall enter into any contract unless and until it shall have  filed  with  the superintendent  a  schedule  of  the premiums or, if appropriate, rating formula from which  premiums  are  determined,  to  be  paid  under  the contracts and shall have obtained the superintendent's approval thereof. The  superintendent  may  refuse  such  approval  if  he finds that such premiums,  or  the  premiums  derived  from  the  rating  formula,   are excessive, inadequate or unfairly discriminatory, provided, however, the superintendent  may  also  consider  the  financial  condition  of  such corporation in approving or disapproving any premium or rating  formula. Any  adjustments  to an approved schedule of premiums or to the approved rating formula for non-community rated contracts shall also  be  subject to   the   approval   of  the  superintendent  provided,  however,  such adjustments shall not be subject to the requirements of  subsection  (c) of  this  section. Any premium or formula approved by the superintendent shall make provision for such increase as may be necessary to  meet  the requirements  of  a  plan  approved  by the superintendent in the manner prescribed in section four thousand three hundred ten  of  this  article for  restoration of the statutory reserve fund required by such section. Notwithstanding any other provision of law, the superintendent, as  part of  the  rate  increase  approval process, may defer, reduce or reject a rate increase if, in the judgment  of  the  superintendent,  the  salary increases   for   senior   level   management   executives  employed  at corporations subject to the provisions of this article are excessive  or unwarranted given the financial condition or overall performance of such corporation.  The  superintendent  is authorized to promulgate rules and regulations which the superintendent deems necessary to carry  out  such deferral, reduction or rejection.  (c)  (1) An increase or decrease in premiums with respect to community rated contracts shall not be approved by the superintendent unless it is in compliance with the provisions of this subsection as  well  as  other applicable provisions of law.  (2)  A  corporation  desiring to increase or decrease premiums for any contract subject to this  subsection  shall  submit  a  rate  filing  or application  to  the  superintendent.  A  corporation shall send written notice of the proposed rate adjustment, including  the  specific  change requested,  to  each  contract  holder  and  subscriber  affected by the adjustment on or before the date  the  rate  filing  or  application  is submitted  to  the  superintendent. The notice shall prominently include mailing and website addresses  for  both  the  department  of  financial services  and  the corporation through which a person may, within thirty days from the date the rate filing or application is  submitted  to  the superintendent,   contact   the  department  of  financial  services  or corporation to receive  additional  information  or  to  submit  written comments  to  the department of financial services on the rate filing or application. The superintendent shall establish a process to post on the department's website, in a timely manner, all relevant written  comments received  pertaining  to  rate  filings or applications. The corporation  shall provide a copy of the notice to the superintendent with  the  rate filing  or  application.  The superintendent shall immediately cause the notice to be posted on the department of  financial  services'  website. The  superintendent  shall  determine  whether the filing or application shall become effective as filed, shall become effective as modified,  or shall  be  disapproved.  The superintendent may modify or disapprove the rate filing or application if the superintendent finds that the premiums are unreasonable, excessive, inadequate, or unfairly discriminatory, and may consider the financial condition of the  corporation  in  approving, modifying  or  disapproving any premium adjustment. The determination of the superintendent shall be supported by sound actuarial assumptions and methods, and shall be rendered in writing between thirty and sixty  days from  the  date  the  rate  filing  or  application  is submitted to the superintendent. Should the superintendent require additional information from  the  corporation  in  order   to   make   a   determination,   the superintendent   shall   require   the   corporation   to  furnish  such information, and in such event, the sixty days shall be tolled and shall resume as of the date the corporation furnishes the information  to  the superintendent.  If  the  superintendent requests additional information less than ten days from the expiration of the sixty days  (exclusive  of tolling),  the  superintendent  may  extend  the  sixty  day  period  an additional twenty days, to make a determination.    The  application  or rate  filing  will be deemed approved if a determination is not rendered within the time allotted under this section.  A  corporation  shall  not implement  a  rate  adjustment  unless the corporation provides at least sixty days  advance  written  notice  of  the  premium  rate  adjustment approved  by  the  superintendent to each contract holder and subscriber affected by the rate adjustment.  (3) (A) The expected minimum loss ratio for a contract form subject to this subsection for which a rate filing or application is made  pursuant to   this  paragraph,  other  than  a  medicare  supplemental  insurance contract, or, with the approval of the superintendent, an aggregation of contract forms that are combined into one  community  rating  experience pool  and rated consistent with community rating requirements, shall not be  less  than  eighty-two  percent.  In  reviewing  a  rate  filing  or application,  the  superintendent  may  modify  the  eighty-two  percent expected minimum loss ratio requirement if the superintendent determines the modification to be in the interests of the people of this  state  or if  the  superintendent  determines  that a modification is necessary to maintain insurer solvency. No later than July thirty-first of each year, every corporation subject to this subparagraph shall annually report the actual loss ratio for the previous calendar year in a format  acceptable to  the  superintendent.  If  an  expected  loss  ratio  is not met, the superintendent may direct the corporation  to  take  corrective  action, which  may  include  the  submission  of  a rate filing to reduce future premiums, or to issue dividends, premium  refunds  or  credits,  or  any combination of these.  (B)  The  expected  minimum  loss  ratio  for  a medicare supplemental insurance contract form shall not be less than eighty percent. No  later than  May  first  of  each  year,  every  corporation  subject  to  this subparagraph shall annually  report  the  actual  loss  ratio  for  each contract  form subject to this section for the previous calendar year in a format acceptable to the superintendent. In each case where  the  loss ratio for the contract form fails to comply with the eighty percent loss ratio requirement, the corporation shall submit a corrective action plan to  the  superintendent  for  assuring  compliance  with  the applicable minimum loss  ratio  standard.  The  corrective  action  plan  shall  be submitted  to  the superintendent within sixty days of the corporation's  submission of the annual  report  required  by  this  subparagraph.  The corporation's  plan  may  utilize premium refunds or credits, subject to the approval of the superintendent.  (4)  In  case  of  conflict  between  this  subsection  and  any other provision of law, this subsection shall prevail.  (d) The superintendent  shall  order  an  independent  management  and financial  audit  of  corporations  subject  to  the  provisions of this article with a combined premium volume  exceeding  two  billion  dollars annually   in   order  to  develop  a  detailed  understanding  of  such corporation's financial status and to determine the  viability  of  such corporation's products. Such audit shall be performed by an organization upon  submission of a program plan in response to a request for proposal approved by the superintendent in consultation with the commissioner  of health  and  the state comptroller. Such audit shall not be performed by any organization that has in any way performed or furnished services  of any  kind  to  the  corporation within the past five years, unless it is adequately demonstrated that such services  would  not  compromise  that organization's performance and objectivity. The audit shall be completed and  a  report  submitted by May first, nineteen hundred ninety-three to the superintendent, the commissioner of health, and the  chairs  of  the senate and assembly committees on health and insurance. The scope of the audit  shall  include,  but not be limited to, financial and competitive position,  corporate  structure   and   governance,   organization   and management,  strategic  direction, rate adequacy, and the regulatory and competitive environment in the state  of  New  York.  Specifically,  the audit shall include, but not be limited to:  (i)  determining  the  corporation's  financial  and  market position, including  its  reserves,  trends  in  membership,  market  share,   and profitability by market segment;  (ii)  evaluating  the  corporation's product offerings with respect to market requirements and trends, the corporation's responses to  the  New York health care market, and its management of medical claims costs;  (iii) assessing the effectiveness of the organizational and management structure  and  performance,  including,  but  not  limited to, possible improvement in the size, structure, composition  and  operation  of  the board  of  directors,  productivity  improvement,  information  systems, management development, personnel practices, mix and  level  of  skills, personnel  turnover,  investment  practices  and  rate  of  return  upon investment activities;  (iv) analyzing the corporation's strategic directions, its adequacy to meet competitive, market, and existing regulatory trends,  including  an evaluation  of  the use of brokers in marketing products, and the impact of those strategies on the corporation's  future  financial  performance and on the health care system of New York;  (v)   evaluating   the   adequacy  of  rates  for  existing  products, particularly (but not limited to) small  group,  medicare  supplemental, and  direct  payment  to identify areas that may need immediate remedial attention;  (vi)  identifying  any  changes  to  the  regulatory  and  legislative environment  that may need to be made to ensure that the corporation can continue to be financially viable and competitive;  (vii) identifying and assessing  specific  transactions  such  as  the procurement of reinsurance, sale of real property and the sale of future investment income to improve the financial condition of the corporation; and  (viii)   evaluating  and  identifying  possible  improvements  in  the corporation's managed care strategies, operations and claims handling.  (e) Notwithstanding any other provision  of  law,  the  superintendent shall  have  the  power  to require independent management and financial audits of  corporations  subject  to  the  provisions  of  this  article whenever  in  the  judgment of the superintendent, losses sustained by a corporation  jeopardize  its  ability  to provide meaningful coverage at affordable rates or when such audit would be necessary  to  protect  the interests  of  subscribers.  The audit shall include, but not be limited to, an investigation of  the  corporation's  provision  of  benefits  to senior  citizens,  individual  and  family,  and  small  group and small business subscribers in relation to the needs of those subscribers.  The audit  shall  also  include  an  evaluation  of  the  efficiency  of the corporation's management, particularly with respect to lines of business which are experiencing losses. In every case in which the superintendent chooses to require  an  audit  provided  for  in  this  subsection,  the superintendent shall have the authority to select the auditor. Any costs incurred  as  a  result  of  the  operation  of this subsection shall be assessed on all domestic insurers in the same manner as provided for  in section three hundred thirty-two of this chapter.  (f) The results of any audit conducted pursuant to subsections (d) and (e) of this section shall be provided to the corporation and each member of  its  board of directors. The superintendent shall have the authority to direct the corporation in writing to  implement  any  recommendations resulting  from  the audit that the superintendent finds to be necessary and reasonable; provided, however, that the superintendent  shall  first consider  any written response submitted by the corporation or the board of directors prior to making such finding. Upon any  application  for  a rate  adjustment by the corporation, the superintendent shall review the corporation's compliance with the directions  and  recommendations  made previously  by  the  superintendent,  as  a  result of the most recently completed management or financial audit and shall include such  findings in any written decision concerning such application.  (g)(1)  Until  September  thirtieth, two thousand ten, as an alternate procedure to the requirements of  subsection  (c)  of  this  section,  a corporation  subject  to  the  provisions  of  this  article desiring to increase or decrease premiums for any contract subject to  this  section may  instead  submit  a rate filing or application to the superintendent and such application or filing shall be deemed approved,  provided  that (A) the anticipated incurred loss ratio for a contract form shall not be less  than eighty-two percent for individual direct payment contracts or eighty-two percent for small group and small group remittance contracts, nor, except in the case of individual direct payment  contracts  with  a loss  ratio  of  greater  than  one hundred five percent during nineteen hundred ninety-four, shall the loss ratio for any direct payment,  group or  group  remittance  contract be more than one hundred five percent of the anticipated earned premium, and (B) the corporation submits, as part of such filing, a certification by a member of the American  Academy  of Actuaries or other individual acceptable to the superintendent that that corporation  is  in  compliance  with the provisions of this subsection, based  upon  that  person's  examination,  including  a  review  of  the appropriate records and of the actuarial assumptions and methods used by the  corporation  in establishing premium rates for contracts subject to this section. A corporation shall not utilize  the  alternate  procedure pursuant  to  this  subsection  to  implement  a  change  in rates to be effective on or after October first, two thousand ten. For  purposes  of this  section,  a  small group is any group whose contract is subject to the requirements  of  section  forty-three  hundred  seventeen  of  this article.  (2) Prior to January first, two thousand, no rate increase or decrease may  be  deemed  approved  under  this  subsection  if  that increase or decrease, together with any other rate increases or decreases imposed on the same contract form, would  cause  the  aggregate  rate  increase  or decrease  for  that  contract  form  to  exceed  ten  percent during any continuous twelve month period. No rate increase may be imposed pursuant to this subsection unless at least thirty days advance written notice of such increase has been provided to each contract holder and subscriber.  (h)(1) Each calendar year, a corporation subject to the provisions  of this  article  shall  return, in the form of aggregate benefits incurred for each contract form filed pursuant to  the  alternate  procedure  set forth in subsection (g) of this section, at least eighty-two percent for individual  direct  payment  contracts  or  eighty-two percent for small group and small group remittance contracts, but, except in the  case  of individual  direct  payment  contracts with a loss ratio of greater than one hundred five percent in nineteen hundred ninety-four, for any direct payment, group or group  remittance  contract,  not  in  excess  of  one hundred  five  percent of the aggregate premiums earned for the contract form during that calendar year. Corporations subject to  the  provisions of  this  article shall annually report, no later than June thirtieth of each year, the loss ratio calculated pursuant  to  this  subsection  for each such contract form for the previous calendar year.  (2)  In  each  case  where the loss ratio for a contract form fails to comply with the eighty-two percent minimum loss  ratio  requirement  for individual  direct  payment contracts, or the eighty-two percent minimum loss ratio requirement  for  small  group  and  small  group  remittance contracts,  as  set  forth  in  paragraph  one  of  this subsection, the corporation shall issue a dividend or credit against future premiums for all contract holders with that contract form in an amount sufficient  to assure  that  the  aggregate  benefits incurred in the previous calendar year plus the amount of the dividends and credits shall  equal  no  less than  eighty-two  percent  for  individual  direct payment contracts, or eighty-two percent for small group and small group remittance contracts, of the aggregate premiums earned for the contract form in  the  previous calendar  year.  The dividend or credit shall be issued to each contract holder or subscriber who had a contract that was in effect at  any  time during  the  applicable  year.  The dividend or credit shall be prorated based on the direct premiums earned for the applicable  year  among  all contract  holders  or  subscribers  eligible to receive such dividend or credit. A corporation shall make a reasonable  effort  to  identify  the current  address  of, and issue dividends or credits to, former contract holders or subscribers entitled to the dividend or credit. A corporation shall, with respect to dividends or credits  to  which  former  contract holders  that  the  corporation is unable to identify after a reasonable effort  would  otherwise  be  entitled,  have  the  option,  as   deemed acceptable  by  the  superintendent,  of prospectively adjusting premium rates by the amount of such dividends or credits, issuing the amount  of such  dividends  or credits to existing contract holders, depositing the amount of such dividends or credits in the fund established pursuant  to section  four  thousand  three  hundred twenty-two-a of this article, or utilizing any other method which offsets the amount of such dividends or credits. All dividends and credits  must  be  distributed  by  September thirtieth  of  the  year  following  the calendar year in which the loss ratio requirements were not satisfied. The  annual  report  required  by paragraph   one   of  this  subsection  shall  include  a  corporation's calculation of the dividends and credits, as well as an  explanation  of the  corporation's  plan to issue dividends or credits. The instructions and format  for  calculating  and  reporting  loss  ratios  and  issuing  dividends  or  credits  shall  be  specified  by  the  superintendent by regulation.  Such  regulations  shall   include   provisions   for   the distribution  of  a  dividend  or credit in the event of cancellation or termination by a contract holder or subscriber.  (3)  In  each  case  where the loss ratio for a contract form fails to comply with the one hundred five percent maximum loss ratio  requirement of  paragraph  one of this subsection, the corporation shall institute a premium rate increase  in  an  amount  sufficient  to  assure  that  the aggregate benefits incurred in the previous calendar year shall equal no more  than one hundred five percent of the sum of the aggregate premiums earned for the contract form in  the  previous  calendar  year  and  the aggregate  premium  rate increase. The rate increase shall be applied to each contract that was in effect as  of  December  thirty-first  of  the applicable  year  and remains in effect as of the date the rate increase is imposed. All rate increases must be imposed by September thirtieth of the  year  following  the  calendar  year  in  which  the   loss   ratio requirements were not satisfied. The annual report required by paragraph one  of this subsection shall include a corporation's calculation of the premium rate increase, as well as an explanation  of  the  corporation's plan  to  implement  the  rate increase. The instructions and format for calculating and reporting loss ratios and  implementing  rate  increases shall be specified by the superintendent by regulation.  (i)  The  alternate  procedure described in subsections (g) and (h) of this section shall apply to individual direct payment  contracts  issued pursuant  to  sections  four  thousand three hundred twenty-one and four thousand three hundred twenty-two of this article on and  after  January first, nineteen hundred ninety-seven. Such alternate procedure shall not be  utilized  to implement a change in rates to be effective on or after October first, two thousand ten.  (j) All community rated contracts, other  than  medicare  supplemental insurance  contracts,  issued  or  in  effect  during  calendar year two thousand ten shall be subject to a minimum  loss  ratio  requirement  of eighty-two  percent.  Corporations  may  use the alternate procedure set forth in subsection (g) of this section to adjust premium rates in order to meet the required minimum loss ratio for calendar year  two  thousand ten.  The  rate  filing  or application shall be submitted no later than September thirtieth, two thousand ten.