NY Ins L § 1322 (2021)
2021 New York Laws ISC - Insurance Article 13 - Assets and Deposits 1322 - Risk-Based Capital for Life Insurance Companies, Accident and Health Insurance Companies, Corporations Organized Pursuant to Article Forty-Three of This Chapter, and Certain Health Maintenance Organizations.

§  1322. Risk-based capital for life insurance companies, accident and health insurance companies, corporations organized pursuant  to  article forty-three   of   this   chapter,   and   certain   health  maintenance organizations. (a) Definitions. In this section:  (1) "Adjusted RBC report" means a RBC report which has  been  adjusted by  the  superintendent in accordance with paragraph three of subsection (c) of this section.  (2) "Corrective order" means an order  issued  by  the  superintendent specifying  corrective  actions  which the superintendent has determined are required.  (3) "Domestic insurer" means any authorized life insurance company  or accident  and  health  insurance company incorporated or organized under any law  of  this  state;  corporation  organized  pursuant  to  article forty-three   of   this  chapter;  or  health  maintenance  organization domiciled in this state and certified or operating in at least one other state.  (4) "Foreign insurer" means any authorized life insurance  company  or accident  and  health  insurance company incorporated or organized under the laws of any state, other than this state.  (5) "Negative trend" means a negative trend over a period of time,  as determined  in  accordance with the "trend test calculation" included in the RBC instructions defined in paragraph seven of this subsection.  (6) "RBC" means risk-based capital.  (7) "RBC instructions"  means  the  RBC  report  including  risk-based capital instructions, which in addition to any other matter which may be required  to  be  stated therein, either by law or by the superintendent pursuant to law, shall conform substantially to the form of  the  report and  instructions  adopted  from time to time for such purpose by, or by the authority of, the National Association of  Insurance  Commissioners, together  with  such  additions,  omissions  or modifications, similarly adopted from time to time, as may be approved by the superintendent.  (8)  "RBC  level"  means  an  insurer's  company  action  level   RBC, regulatory  action level RBC, authorized control level RBC, or mandatory control level RBC where:  (A) "Company action level RBC"  means  the  product  of  2.0  and  the insurer's authorized control level RBC;  (B)  "Regulatory  action  level  RBC" means the product of 1.5 and the insurer's authorized control level RBC;  (C) "Authorized control level RBC" means the number  determined  under the risk-based capital formula in accordance with the RBC instructions;  (D)  "Mandatory  control  level  RBC" means the product of .70 and the insurer's authorized control level RBC.  (9) "RBC plan" means a comprehensive  financial  plan  containing  the elements  specified  in paragraph two of subsection (d) of this section. If the superintendent rejects the RBC plan, and it  is  revised  by  the insurer,  with  or without the superintendent's recommendation, the plan shall be called the "Revised RBC plan."  (10) "RBC report" means the report required in subsection (c) of  this section.  (11) "Total adjusted capital" means the sum of:  (A) An insurer's statutory capital and surplus; and  (B) Such other items, if any, as the RBC instructions may provide.  (b)  Applicability.  This section shall apply to every authorized life insurance company and accident and health insurance company incorporated or organized under any law of this state; corporation organized pursuant to  article  forty-three  of  this  chapter;   or   health   maintenance organization  domiciled  in  this state and certified or operating in at least one other state.  (c) RBC reports. (1)  Every  domestic  insurer  other  than  a  health maintenance  organization  domiciled  in  this  state  and  certified or operating in at least one other state shall, on or prior to  each  March fifteenth,  and  every such health maintenance organization, on or prior to  each  April fifteenth (the "filing date"), prepare and submit to the superintendent a report of its RBC levels as of the end of the  calendar year  just  ended,  in  a  form  and  containing  such information as is required by the RBC instructions. In addition, the  insurer  shall  file the RBC report:  (A)  With  the  National  Association  of  Insurance  Commissioners in accordance with the RBC instructions; and  (B) With the insurance commissioner in any state in which the  insurer is  authorized to do business, upon the written request of the insurance commissioner. The insurer shall file the RBC report by the later of:  (i) The filing date; or  (ii) Fifteen days after the date of the request.  (2) An insurer's RBC  shall  be  determined  in  accordance  with  the formula  set  forth  in  the  RBC  instructions.  The  formula  shall be determined in each case by applying the factors in the manner set  forth in the RBC instructions, and shall take into account (and may adjust for the covariance between):  (A) The risk with respect to the insurer's assets;  (B)  The  risk  of  adverse  insurance  experience with respect to the insurer's liabilities and obligations;  (C) The interest rate risk with respect to the insurer's business; and  (D) All other business risks and such other relevant risks as are  set forth in the RBC instructions.  (3)  If a domestic insurer files a RBC report which the superintendent determines is inaccurate, then the superintendent shall adjust  the  RBC report  to  correct  the  inaccuracy and shall notify the insurer of the adjustment. The notice shall contain a statement of the reason  for  the adjustment.  A  RBC report as so adjusted is referred to as an "Adjusted RBC report."  (d) Company action level  event.  (1)  "Company  action  level  event" means, with respect to a domestic insurer:  (A) The filing by the insurer of a RBC report indicating that: (i) The insurer's  total  adjusted  capital  is  greater  than  or  equal to its regulatory action level RBC but less than its company action level  RBC; or  (ii)  (I)  The insurer has total adjusted capital that is greater than or equal to its company action level RBC but less than  the  product  of 3.0 and its authorized control level RBC; and  (II) there is a negative trend;  (B)  The  notification  by  the  superintendent  to  the insurer of an adjusted RBC report that indicates the occurrence of an event  described in  item (i) or (ii) of subparagraph (A) of this paragraph, provided the insurer does not challenge the adjusted RBC report under subsection  (h) of this section; or  (C)  If,  under subsection (h) of this section, the insurer challenges an adjusted RBC  report  that  indicates  the  occurrence  of  an  event described  in  item  (i)  or (ii) of subparagraph (A) of this paragraph, then the notification by the superintendent  to  the  insurer  that  the superintendent has, after a hearing, rejected the insurer's challenge.  (2)  If  there  is  a company action level event, the domestic insurer shall prepare and submit to the superintendent a RBC plan which:  (A) Identifies the conditions in the insurer which contribute  to  the company action level event;  (B) Contains proposals of corrective actions which the insurer intends to  take  and  would  be  expected  to  result in the elimination of the company action level event;  (C)  Provides  projections  of  the insurer's financial results in the current year and at least the four succeeding years, both in the absence of proposed  corrective  actions  and  giving  effect  to  the  proposed corrective actions, including projections of statutory operating income, net  income,  and  capital and surplus. The projections for both new and renewal business may include separate projections for each major line of business and separately identify each significant  income,  expense  and benefit component;  (D) Identifies the key assumptions impacting the insurer's projections and the sensitivity of the projections to the assumptions; and  (E)  Identifies  the  quality  of,  and  problems associated with, the insurer's business, including its assets,  anticipated  business  growth and  associated  surplus  strain, extraordinary exposure to risk, mix of business and use of reinsurance.  (3) The RBC plan shall be submitted within forty-five days  after  the occurrence of the company action level event.  (4)  (A) Within sixty days after the submission by an insurer of a RBC plan to the superintendent, the superintendent shall notify the  insurer whether the RBC plan is satisfactory, unsatisfactory, or unacceptable.  (B) If the RBC plan is satisfactory, the insurer shall implement it.  (C) If the RBC plan is unsatisfactory, the notification to the insurer shall  set  forth  the  reasons for the determination, and may set forth proposed revisions which will render the RBC plan  satisfactory  to  the superintendent.  Upon  notification from the superintendent, the insurer shall prepare a revised RBC plan, which may incorporate by reference any revisions proposed by the superintendent, and shall submit  the  revised RBC plan to the superintendent:  (i)   Within   forty-five   days   after  the  notification  from  the superintendent; or  (ii) If, under subsection (h) of this section, the insurer  challenges the notification from the superintendent, within forty-five days after a notification  to  the  insurer  that  the  superintendent  has,  after a hearing, rejected the insurer's challenge.  (D) If the RBC plan is unacceptable because  it  does  not  adequately address  all  of  the  elements  specified  in  paragraph  two  of  this subsection, the notification to the insurer shall set forth the  reasons for  the determination and shall state that the notification constitutes a regulatory action level event.  (5) (A) Every domestic insurer that files a RBC plan  or  revised  RBC plan  with  the  superintendent  shall  file  a  copy with the insurance commissioner of any state in which  the  insurer  is  authorized  to  do business, upon the written request of the insurance commissioner, if the state  has  a  RBC  provision  substantially similar to paragraph one of subsection (i) of this section.  (B) The insurer shall file a copy of the RBC plan or revised RBC  plan in that state by the later of:  (i)  The date on which the RBC plan or revised RBC plan is filed under paragraph three or four of this subsection; or  (ii) Fifteen days after the date of the request.  (e) Regulatory action level event. (1) "Regulatory action level event" means, with respect to a domestic insurer:  (A) The filing by the insurer of a  RBC  report  indicating  that  the insurer's  total  adjusted  capital  is  greater  than  or  equal to its authorized control level RBC but less than its regulatory  action  level RBC;  (B)  The  notification  by  the  superintendent  to  the insurer of an adjusted RBC report that indicates the occurrence of an event  described in  subparagraph  (A)  of  this paragraph, provided the insurer does not challenge the adjusted RBC report under subsection (h) of this section;  (C)  If,  under subsection (h) of this section, the insurer challenges an adjusted RBC  report  that  indicates  the  occurrence  of  an  event described in subparagraph (A) of this paragraph, the notification by the superintendent  to  the  insurer  that  the  superintendent has, after a hearing, rejected the insurer's challenge;  (D) The failure of the insurer to timely file a RBC report, unless the insurer provides the superintendent with a satisfactory explanation  for the failure and cures the failure within ten days after the filing date;  (E)  The  failure  of  the  insurer  to  timely submit a RBC plan or a revised RBC plan to the superintendent;  (F)  Notification  by  the  superintendent  that  the  RBC   plan   is unacceptable  or  the  revised  RBC plan is unsatisfactory, provided the insurer does not challenge the determination  under  subsection  (h)  of this section;  (G) If, under subsection (h) of this section, the insurer challenges a determination  by  the  superintendent  under  subparagraph  (F) of this paragraph, the notification by the superintendent to  the  insurer  that the superintendent has, after a hearing, rejected the challenge;  (H) Notification by the superintendent to the insurer that the insurer has  failed  to adhere to its RBC plan or revised RBC plan, and that the failure has a substantial adverse effect on  the  insurer's  ability  to eliminate  the company action level event, provided the insurer does not challenge the determination under subsection (h) of this section; or  (I) If, under subsection (h) of this section, the insurer challenges a determination by the  superintendent  under  subparagraph  (H)  of  this paragraph,  the  notification  by the superintendent to the insurer that the superintendent has, after a hearing, rejected the challenge.  (2) If there is a regulatory action level  event,  the  superintendent shall:  (A)  Require  the  insurer  to  prepare  and  submit a RBC plan or, if applicable, a revised RBC plan, unless the RBC plan is unacceptable  (in which  case  the  superintendent  may require a revised RBC plan) or the revised RBC plan has already been submitted;  (B) Perform such examination or analysis as the  superintendent  deems necessary  of  the  assets,  liabilities  and operations of the insurer, including a review of the RBC plan or revised RBC plan; and  (C) Subsequent to the examination  or  analysis,  issue  a  corrective order.  (3)  In  determining  corrective  actions, the superintendent may take into account such  factors  as  are  deemed  relevant,  based  upon  the superintendent's  examination or analysis of the assets, liabilities and operations of the insurer, including  the  results  of  any  sensitivity tests undertaken pursuant to the RBC instructions.  (4) The RBC plan or revised RBC plan shall be submitted:  (A)  Within  forty-five  days  after  the occurrence of the regulatory action level event; or  (B) If, under subsection (h) of this section, the  insurer  challenges the  superintendent's  determination  that a RBC plan is unsatisfactory, within forty-five days  after  notification  to  the  insurer  that  the superintendent has, after a hearing, rejected the insurer's challenge.  (5)  The  superintendent  may retain actuaries, investment experts and other consultants as the superintendent deems necessary  to  review  the insurer's  RBC  plan or revised RBC plan, examine or analyze the assets, liabilities and operations of the insurer, and formulate the  corrective  order.  The  fees,  costs  and expenses relating to consultants shall be borne by the affected insurer as directed by the superintendent.  (f)  Authorized  control  level  event.  (1) "Authorized control level event" means, with respect to a domestic insurer:  (A) The filing by the insurer of a  RBC  report  indicating  that  the insurer's  total  adjusted  capital  is  greater  than  or  equal to its mandatory control level RBC but less than its authorized  control  level RBC;  (B)  The  notification  by  the  superintendent  to  the insurer of an adjusted RBC report that indicates the occurrence of an event  described in  subparagraph  (A)  of  this paragraph, provided the insurer does not challenge the adjusted RBC report under subsection (h) of this section;  (C) If, under subsection (h) of this section, the  insurer  challenges an  adjusted  RBC  report  that  indicates  the  occurrence  of an event described in subparagraph (A) of this  paragraph,  notification  by  the superintendent  to  the  insurer  that  the  superintendent has, after a hearing, rejected the insurer's challenge;  (D) The failure of the insurer to respond, in a manner satisfactory to the superintendent, to a corrective order, provided the insurer has  not challenged the corrective order under subsection (h) of this section; or  (E) If, under subsection (h) of this section, the insurer challenges a corrective  order  and  the superintendent, after a hearing, rejects the challenge or modifies the corrective order, the failure of  the  insurer to  respond,  in  a  manner  satisfactory  to the superintendent, to the corrective  order  subsequent  to  rejection  or  modification  by   the superintendent.  (2)  If there is an authorized control level event, the superintendent shall take such actions as are:  (A) Required under subsection (e) of this section regarding an insurer with respect to which a regulatory action level event has occurred; or  (B) Necessary to cause the insurer to be placed  under  rehabilitation or liquidation under article seventy-four of this chapter.  (g) Mandatory control level event. (1) "Mandatory control level event" means, with respect to a domestic insurer:  (A)  The  filing  by  the insurer of a RBC report, indicating that the insurer's total adjusted capital is  less  than  its  mandatory  control level RBC;  (B)  Notification  by the superintendent to the insurer of an adjusted RBC report that indicates  the  occurrence  of  an  event  described  in subparagraph  (A)  of  this  paragraph,  provided  the  insurer does not challenge the adjusted RBC report under subsection (h) of this  section; or  (C)  If,  under subsection (h) of this section, the insurer challenges an adjusted RBC  report  that  indicates  the  occurrence  of  an  event described  in  subparagraph  (A)  of this paragraph, notification by the superintendent to the insurer  that  the  superintendent  has,  after  a hearing, rejected the insurer's challenge.  (2)  If  there  is a mandatory control level event, the superintendent shall take such actions as are necessary to  cause  the  insurer  to  be placed under rehabilitation or liquidation under article seventy-four of this  chapter.  However,  the  superintendent may forgo action for up to ninety days after the occurrence of a mandatory control level  event  if the  superintendent  determines  that  there is a reasonable expectation that the mandatory control level event  may  be  eliminated  within  the period.  (h) Hearings. (1) A domestic insurer shall have the right to a hearing upon notification to the insurer by the superintendent;  (A) Of an adjusted RBC report;  (B)  That  the insurer's RBC plan is unsatisfactory or unacceptable or the revised RBC plan is unsatisfactory;  (C)  That  the insurer has failed to adhere to its RBC plan or revised RBC plan and that the failure has a substantial adverse  effect  on  the ability of the insurer to eliminate the company action level event; or  (D) Of a corrective order.  (2)   If   a   hearing   is  requested  within  five  days  after  the superintendent gives a notification specified in paragraph one  of  this subsection,  the  superintendent  shall  give  notice  and  a hearing in accordance with the provisions of article three of this chapter.  (3) The superintendent shall set a date for the  hearing,  which  date shall  be  no  less than ten nor more than thirty days after the date of the insurer's hearing request.  (i) Confidentiality and prohibition  on  announcements.  (1)  All  RBC reports  and adjusted RBC reports (to the extent the information therein is not required to be set forth in a publicly available annual statement schedule), RBC plans, revised  RBC  plans,  results  or  report  of  any examination  or  analysis  of  an insurer performed pursuant hereto, and corrective orders filed with or issued  by  the  superintendent  contain information that may be damaging to the insurer if made available to its competitors, and shall be confidential and not made public or subject to subpoena,  except  to  the  extent  the  superintendent finds release of information necessary to protect the public.  (2)(A) The comparison of an insurer's total adjusted capital to any of its RBC levels is a regulatory tool which  may  indicate  the  need  for possible  corrective  action  with  respect  to  the insurer, and is not intended as a means to rank insurers  generally,  and  the  use  of  the information to rank insurers may be misleading to the general public.  (B) Except as otherwise required under the provisions of this section, no  authorized  insurer,  licensed  insurance  agent, licensed insurance broker, or any person on behalf of the insurer, agent or broker, or  any other  person  licensed  pursuant  to this chapter shall, make, publish, disseminate, circulate or place before the public, or cause, directly or indirectly, to be made, published, disseminated,  circulated  or  placed before  the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over  any radio  or  television  station,  or  in any other way, an advertisement, announcement or statement containing  an  assertion,  representation  or statement  with  regard  to  the  RBC  Levels  of any insurer, or of any component derived in the calculation.  (C)  Notwithstanding  subparagraph  (B)  of  this  paragraph,   if   a materially  false  or  inappropriate  statement,  comparing an insurer's total adjusted capital or other amount to one or more of its RBC levels, is published in a written  publication,  and  the  insurer  is  able  to demonstrate  to  the  superintendent the falsity or inappropriateness of the statement, then the insurer may publish an announcement in a written publication to rebut the statement.  (j) Foreign insurers. (1) A foreign insurer shall,  upon  the  written request of the superintendent, submit to the superintendent a RBC report as of the end of the calendar year just ended by the later of:  (A)  The date a RBC report would be required to be filed by a domestic insurer under this section; or  (B) Fifteen days after the date of the request.  (2)  A  foreign  insurer  shall,  upon  the  written  request  of  the superintendent, within five days, submit to the superintendent a copy of its  RBC  plan  or  revised  RBC  plan  that is filed with the insurance commissioner of any other state.  (3) (A) If there is a company action level  event,  regulatory  action level  event,  or  authorized  control  level  event,  and the insurance commissioner of the  state  of  incorporation  or  organization  of  the insurer   does  not  require  the  insurer  to  file  a  RBC  plan,  the superintendent  may  require  the  insurer  to file an RBC plan with the superintendent  within   forty-five   days   of   the   superintendent's notification.  (B)  If  the  RBC  plan  is  unsatisfactory or if the insurer fails to timely file the RBC plan with the superintendent, the superintendent may order the insurer not to issue any new insurance policies  or  contracts in this state.  (4)  If  there  is a mandatory control level event, the superintendent may make application under article seventy-four of this chapter.  (k) Notices. Unless a later date  is  specified,  any  notice  by  the superintendent  to  an  insurer  under  this section which may result in regulatory action hereunder shall be  effective  upon  delivery,  except that, if the notice is mailed, it shall be effective three days after it is mailed.  (l)  Phase-in  provision.  For  RBC  reports  required  to be filed in nineteen hundred ninety-four with  respect  to  calendar  year  nineteen hundred  ninety-three,  the  following  requirements  shall apply to the provisions of subsections (d), (e), (f) and (g) of this section:  (1) In the event of a company action level event  with  respect  to  a domestic  insurer,  the  superintendent  shall take no regulatory action hereunder.  (2) In the event of a regulatory action level event under subparagraph (A), (B) or (C) of paragraph one of subsection (e) of this  section  the superintendent  shall  take the actions required under subsection (d) of this section.  (3) In the event of a regulatory action level event under subparagraph (D), (E), (F), (G), (H) or (I) of paragraph one  of  subsection  (e)  of this  section  or  an authorized control level event, the superintendent shall take the actions required under subsection  (e)  of  this  section with respect to the insurer.  (4) In the event of a mandatory control level event with respect to an insurer,  the  superintendent  shall  take  the  actions  required under subsection (f) of this section with respect to the insurer.