2023 New York Laws › ISC - Insurance › Article 23 - Property/casualty Insurance Rates › 2313 - Rate Service Organization; Defined.

§ 2313. Rate service organization; defined. (a) In this article, "rate
service  organization" means a person or any other entity which makes or
files rates as permitted by this article, or which assists  insurers  in
rate  making  or  filing by collecting, compiling and furnishing loss or
expense statistics, or by recommending rates  or  rate  information,  or
which  inspects risks, tests appliances, formulates rules or establishes
standards, as such activities relate to rate making or to administration
of rates. It shall include a person or entity which prepares  and  files
policy  forms  and  endorsements  on  behalf  of  insurers. It shall not
include a joint underwriting  association  under  section  two  thousand
three  hundred seventeen of this article, or any employee of an insurer,
or in the case  of  insurers  under  common  control  or  management  an
employee  of  any  such  insurer  or their manager, nor shall it include
actuaries,   certified   public   accountants,   attorneys   or    other
professionals  who  in their respective vocations may advise insurers on
rate questions.
(b) Except as provided in subsection  (j)  hereof,  no  insurer  shall
utilize   the  services  of  a  rate  service  organization  unless  the
organization has obtained a license as provided by this section.
(c) No rate service organization shall refuse to supply  any  services
which  it is permitted to render in this state to any insurer authorized
to do business in this state and offering to  pay  the  fair  and  usual
compensation for the services.
(d)  A rate service organization applying for a license as required by
subsection (b) hereof shall include with its application:
(1) a copy of its constitution,  charter,  articles  of  organization,
agreement,  association  or corporation, and a copy of its by-laws, plan
of operation and any other rules or regulations governing the conduct of
its business;
(2) a list of its members and its subscribers;
(3) the name and address of one or more residents of this  state  upon
whom  notices,  process affecting it or orders of the superintendent may
be served;
(4) where appropriate a statement indicating  one  or  more  kinds  of
insurance,  or  classes  of  risks,  or  any  part or combination of the
foregoing, for which it seeks to obtain a license;
(5) a statement showing its technical qualifications for acting in the
capacity for which it seeks a license; and
(6)  any  other  relevant   information   and   documents   that   the
superintendent may require.
(e)  The  officers,  members  of the governing board or committee, and
other persons in control  of  a  corporation  or  of  an  unincorporated
association,  for  the  time  being,  and each partner of a partnership,
shall be held  individually  responsible  for  knowingly  violating  any
provisions  of  this article applicable to such corporation, association
or partnership as a rate service organization.
(f) Every organization which has applied for  a  license  pursuant  to
subsection   (d)   hereof   shall   thereafter   promptly   notify   the
superintendent of every material change in the facts or in the documents
as filed.
(g) If the superintendent finds that the  applicant  and  the  natural
persons through whom it acts are competent, trustworthy, and technically
qualified to provide the services proposed, and that all requirements of
law are met, he shall issue a license specifying the authorized activity
of the applicant.
(h)  Licenses  issued  pursuant to this section shall remain in effect
until the licensee withdraws from the state  or  until  the  license  is
suspended or revoked.
(i)  Any  amendment  to  a document filed pursuant to paragraph one of
subsection (d) hereof shall be filed at  least  thirty  days  before  it
becomes effective. Failure to comply shall be a ground for revocation of
the license granted pursuant to subsection (h) hereof.
(j)  A rate service organization which does not make or file rates, as
permitted by this article, is not required to  obtain  a  license  under
this  section  but  no insurer shall utilize the services of such a rate
service  organization  unless  the  organization  has  filed  with   the
superintendent  the  information  and documents prescribed in subsection
(d) hereof and shall thereafter promptly notify  the  superintendent  of
every   material   change   in   the   information   or  documents.  The
superintendent may order any insurer or rate service organization  found
to be in violation of this subsection to discontinue such violation.
(k)  If, after a hearing, the superintendent finds that the furnishing
of such information or assistance by a rate service organization subject
to subsection (j) hereof involves any act or practice which is unfair or
unreasonable or otherwise  inconsistent  with  the  provisions  of  this
article,  he  may  issue a written order specifying in what respects the
act or practice is unfair or unreasonable or otherwise inconsistent with
the provisions of this article, and requiring the discontinuance of  the
act or practice.
(l)  No rate service organization shall directly or indirectly require
the payment of any licensing, registration  or  membership  fee  by  any
broker,  as such, who is licensed under this chapter; nor shall any rate
service organization or any other association or  bureau  refuse  to  do
business with, or prohibit or prevent the payment of commissions to, any
person licensed as an insurance broker under this chapter.
(m)  No  rate service organization shall adopt any rule, the effect of
which would be to prohibit or  regulate  the  payment  of  dividends  to
policyholders.
(n)  A  rate  service  organization  may  subscribe  for  or  purchase
actuarial, technical or other  services,  and  such  services  shall  be
available to all members and subscribers without discrimination.
(o) Cooperation among rate service organizations or among rate service
organizations and insurers in rate making or in other matters within the
scope  of  this  article  is  hereby  authorized,  provided  the  filing
resulting from such cooperation is subject to all the provisions of this
article which are applicable to filings  generally.  The  superintendent
may  review  such  cooperative  activities and practices and if, after a
hearing, he finds that any  such  activity  or  practice  is  unfair  or
unreasonable  or  otherwise inconsistent with this article, he may issue
an order specifying in what respects such activity or practice is unfair
or  unreasonable  or  otherwise  inconsistent  with  this  article,  and
requiring the discontinuance of such activity or practice.
(p)  A  rate  service  organization  which  pursuant to subsection (j)
hereof is not required to obtain a license is expressly prohibited  from
using  or permitting the use of the phrase "supervised by the department
of financial services of the  state  of  New  York"  or  any  comparable
phrase,  or  one  which  is  likely  to  create the impression that such
organization is supervised or subject to supervision by it.
(q) Any rate service organization may provide for the  examination  of
policies, daily reports, binders, renewal certificates, endorsements, or
the  cancellation thereof, and may make reasonable rules governing their
submission. Such rules shall contain a provision that in  the  event  an
insurer  does not within sixty days furnish satisfactory evidence to the
rate service organization of the correction of  any  error  or  omission
previously  called to its attention by the rate service organization, it
shall be the duty  of  the  rate  service  organization  to  notify  the

superintendent.  All  information  so submitted for examination shall be
confidential.
(r)  A  rate  service  organization  licensed pursuant to this section
which  files  rates,  rating  plans  or  other  statistical  information
pursuant  to  paragraph  one  of  subsection (b) of section two thousand
three hundred five of this  article  or  otherwise  relating  to  or  in
support  of  coverages written by its members or subscribers pursuant to
paragraph fifteen of subsection (a) of section one thousand one  hundred
thirteen of this chapter shall be subject to audit by the superintendent
by  December  thirty-first,  nineteen  hundred ninety-seven and not less
than once every three years thereafter. Such  audit  shall  examine  the
finances  and  operations  of such rating organization and shall further
make recommendations for actions to be taken by such rating organization
in furtherance of the findings of such audit. The  superintendent  shall
complete  an  audit report no later than sixty days after the conclusion
of the audit period and shall submit such audit report to  the  governor
and the legislature.
(s)  Notwithstanding  any  other  provision  of  this article, no rate
service organization may file rates for workers' compensation  insurance
after   February   first,   two  thousand  eight,  but  a  rate  service
organization may file  loss  costs  or  other  statistical  information,
including  rating  plans,  until  June  second,  two  thousand eighteen.
Notwithstanding subsection (j) of this section, any  such  rate  service
organization  shall  nonetheless  be required to be licensed pursuant to
this section.
* (t) (1) The governing body of a workers' compensation  rate  service
organization  shall  be  comprised  of nine voting members. Four members
shall represent  insurers  authorized  to  write  workers'  compensation
insurance  in  this  state,  and  shall be selected in such manner as is
determined by the members of the rate service organization.  One  member
of  the  governing body shall be a representative of the state insurance
fund. Each of the remaining four members of  the  governing  body  shall
serve  for a term of two years and until his or her successor shall have
been  appointed  and  approved,  provided  that  the  appointing  entity
appoints  a  successor  member  within  one  hundred  twenty days of the
expiration of the term of office, and shall not be employed by, or serve
as an officer or director of, an insurer authorized  to  write  workers'
compensation  insurance  in  this  state,  or any parent, subsidiary, or
affiliate thereof. One such  member  of  the  governing  body  shall  be
appointed  by  the superintendent. The other three such members shall be
appointed  subject  to  the  approval  of  the  superintendent  by   the
following: (A) the workers' compensation board; (B) the Business Council
of  New  York  State,  Inc.;  and (C) the American Federation of Labor -
Congress of Industrial Organizations of New York State. Any  vacancy  on
the  governing  body  shall  be filled in the same manner as the initial
appointment. The governing body shall select a chief  executive  officer
who  shall  serve  at the pleasure of the governing body and whose terms
and conditions of employment shall be approved by the governing body. No
restriction in this subsection shall apply if compliance is prevented by
the failure of any appointing authority to make an  appointment,  or  of
the superintendent to approve such appointment.
(2)  The  governing  body  of  a  workers'  compensation  rate service
organization  shall  have  charge  of  the  general  activities  of  the
organization,  including  control  and supervision over its finances and
authority to establish budgets, approve assessments and impose fines  on
members of the rate service organization.
(3)  A  workers'  compensation rate service organization shall have an
underwriting committee and a medical  and  claims  committee,  and  such

other   committees   as   the  governing  body  deems  appropriate.  The
underwriting committee shall have the same allocation of voting  members
as  the  workers' compensation rate service organization governing body,
and  it  shall  be  the  responsibility of the underwriting committee to
address matters with respect to  policy  forms  and  endorsements,  loss
costs,  rating  and statistical plans, payroll audits and other employer
related issues. It shall be the responsibility of the medical and claims
committee to study the  administration  of  claims  under  the  workers'
compensation  law,  and  medical,  surgical and hospital care of injured
workers.
(4) A workers' compensation rate service organization  shall  have  an
actuarial  committee.  It  shall  be the responsibility of the actuarial
committee to review methodology and data collection  processes  used  to
develop  loss  costs.  The  American  Federation  of Labor - Congress of
Industrial Organizations of New York State and the Business  Council  of
New  York  State,  Inc.  shall together appoint one independent casualty
actuary who is a fellow or associate of the casualty  actuarial  society
to serve as a member of the actuarial committee. The appointment of such
actuary,  and  his  or  her  compensation  and  terms  and conditions of
retention, shall be subject to the approval  of  the  superintendent  as
reasonable  and  customary  for  such professional. The actuary shall be
paid by  the  workers'  compensation  rate  service  organization.  Such
actuary  shall  have  the  same access to the workers' compensation rate
service organization data and documents as the  other  members  of  that
committee.  The  governing  body of a workers' compensation rate service
organization shall select a chief actuary of  the  actuarial  committee,
who  shall  serve  at the pleasure of the governing body and whose terms
and conditions of employment shall be approved by  the  governing  body.
The  public  actuary  shall  issue a report on or before June first, two
thousand eighteen and each of the next ten years, indicating the overall
savings in the workers' compensation system  as  a  result  of  the  two
thousand seventeen reforms.
(5)  A  workers'  compensation  rate service organization shall assess
insurers that write workers' compensation coverage in New York state for
expenses it incurs in its operation. Nothing  in  this  paragraph  shall
prevent  a  workers'  compensation  rate  service organization from also
obtaining funds from any other source.
(6) A workers' compensation rate service organization shall retain all
data  used  to  calculate  rates,  class  relativities,  and  experience
modifications,  as  well  as  all data underlying any loss cost or other
filing made with the department, and any other data  the  superintendent
may direct, for such period of time as the superintendent shall direct.
* NB Repealed June 2, 2028