2023 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
that 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 two hundred six of the financial services law.
(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.