New York Laws
Article 43 - Non-Profit Medical and Dental Indemnity, or Health and Hospital Service Corporations
4308 - Supervision of Superintendent.

(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.