2023 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.