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§4308
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§4308 . Supervision of superintendent; public hearings.
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§4308(a)
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(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.
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§4308(b)
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(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 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 §4310 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.
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§4308(c)
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(c)
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§4308(c)(1)
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(1) Except for an application pursuant to subsection §4304(f) of this article, no increase or decrease in premiums with respect to individual contracts issued pursuant to the provisions of such section shall be approved by the superintendent unless it is in compliance with the provisions of (this sub§) as well as other applicable provisions of law.
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§4308(c)(2)
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(2) Prior to any such filing or application by or on behalf of a corporation for an increase or decrease in premiums for such contracts, such corporation, when directed by the superintendent, shall conduct a public hearing with respect to the terms of such filing or application. Notice of such hearing shall be published on 3 successive days in at least 2 newspapers having general circulation within the territory or district wherein such corporation seeking approval of the filing is authorized to do business. The date specified for the hearing shall be not less than 10 nor more than 30 days from the date of the 1st publication of the hearing. The notice of hearing shall state the purpose thereof, the time when and the place where the public hearing will be held. The public hearing shall be held at a time and location deemed by the superintendent to be most convenient to the greatest number of persons affected by such filing. At such hearing any person may be heard in favor of, or against, the terms of the filing or application.
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§4308(c)(3)
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(3) Following the public hearing held pursuant to paragraph (this sub§)(2) ,a transcript of the testimony therein shall be submitted together with a rate filing or application, to the superintendent. Upon receipt of such filing or application by or on behalf of a corporation, the superintendent shall order that a public hearing be held with respect to the terms of such filing or application. Notice of such hearing shall be published on 3 successive days in at least 2 newspapers having general circulation within the territory or district wherein such corporation seeking approval of the filing or application is authorized to do business. For a corporation writing more than $3,000,000,000 in premiums as of December 31st, 1996 and whose service territory is greater than 10 counties, such notice is to be published in at least 1 newspaper having general circulation in each county where persons in the service territory are affected by the proposed change. The date specified for the hearing shall be not less than 10 nor more than 30 days from the date of the last publication of the hearing. The notice of hearing shall also state the purpose thereof, the time when and the place where the public hearing will be held. For those corporations writing more than $3,000,000,000 in premiums as of December 31st, 1996, and whose territory is greater than 10 counties, the notice of hearing shall also state the changes proposed, the contracts to be affected and the time when such changes would take effect. The notice of hearing shall state, in prominent display, a toll-free telephone number of the insurance department that may be contacted to receive additional information on the subject rate application. The public hearing shall be held at a time and location deemed by the superintendent to be most convenient to the greatest number of persons affected by such filing or application. A copy of such notice of hearing shall be forwarded by the superintendent by registered or certified mail to the principal address of the corporation seeking approval of such filing or application. The hearing may be continued or adjourned from day to day within the discretion of the superintendent. At such hearing any person may be heard in favor of, or against, the terms of the filing or application. After conclusion of the public hearing the superintendent shall render a written decision determining whether the filing or application shall become effective as filed, shall become effective as modified, or shall be disapproved. If, subsequent to the hearing, but prior to the issuing of the superintendent's written decision on a rate increase request, the corporation increases its requested rate for any contract by 2% or more, a re-hearing shall be held. The time, location, and notice requirements for such re-hearing shall be determined by the superintendent.
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§4308(c)(4)
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(4) In case of conflict between (this sub§) and any other provision of law, (this sub§) shall prevail.
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§4308(d)
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(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 $2,000,000,000 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 5 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 1st, 1993 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:
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§4308(i)
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(i) determining the corporation's financial and market position, including its reserves, trends in membership, market share, and profitability by market segment;
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§4308(i)
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(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;
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§4308(i)
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(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;
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§4308(i)
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(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;
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§4308(i)
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(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;
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§4308(i)
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(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;
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§4308(i)
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(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
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§4308(i)
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(viii) evaluating and identifying possible improvements in the corporation's managed care strategies, operations and claims handling.
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§4308(e)
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(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 which are experiencing losses. In every case in which the superintendent chooses to require an audit provided for in (this sub§) ,the superintendent shall have the authority to select the auditor. Any costs incurred as a result of the operation of (this sub§) shall be assessed on all domestic insurers in the same manner as provided for in §332 of this chapter.
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§4308(f)
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(f) The results of any audit conducted pursuant to subsections (this §)(d) and (this §)(e) 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 1st 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.
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§4308(g)
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(g)
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§4308(g)(1)
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(1) Beginning January 1st, 1996, as an alternate procedure to the requirements of subsection (this §)(c) ,a corporation subject to the provisions of this article desiring to increase or decrease premiums for any contract subject to (this §) 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 85% for individual direct payment contracts or 75% 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 105% during 1994, shall the loss ratio for any direct payment, group or group remittance contract be more than 105% 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 sub§) ,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 §) . For purposes of (this §) ,a small group is any group whose contract is subject to the requirements of §4317 of this article.
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§4308(g)(2)
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(2) Prior to January 1st, 2000, no rate increase or decrease may be deemed approved under (this sub§) 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 10% during any continuous 12 month period. No rate increase may be imposed unless at least 30 days advance written notice of such increase has been provided to each contract holder and subscriber.
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§4308(h)
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(h)
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§4308(h)(1)
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(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 (this §)(g) ,at least 85% for individual direct payment contracts or 75% 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 105% in 1994, for any direct payment, group or group remittance contract, not in excess of 105% 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 May 1st of each year, the loss ratio calculated pursuant to (this sub§) for each such contract form for the previous calendar year.
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§4308(h)(2)
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(2) In each case where the loss ratio for a contract form fails to comply with the 85% minimum loss ratio requirement for individual direct payment contracts, or the 75% minimum loss ratio requirement for small group and small group remittance contracts, as set forth in paragraph (this sub§)(1) ,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 85% for individual direct payment contracts, or 75% 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 that was in effect as of December 31st of the applicable year and remains in effect as of the date the dividend or credit is issued. All dividends and credits must be distributed by September 30th of the year following the calendar year in which the loss ratio requirements were not satisfied. The annual report required by paragraph (this sub§)(1) 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.
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§4308(h)(3)
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(3) In each case where the loss ratio for a contract form fails to comply with the 105% maximum loss ratio requirement of paragraph (this sub§)(1) ,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 105% 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 31st 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 30th of the year following the calendar year in which the loss ratio requirements were not satisfied. The annual report required by paragraph (this sub§)(1) 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.
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§4308(i)
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(i) The alternate procedure described in subsections (this §)(g) and (this §)(h) shall apply to individual direct payment contracts issued pursuant to §4321 and §4322 of this article on and after January 1st, 1997.
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§4308(j)
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(j) The 85% minimum loss ratio for individual direct payment contracts described in subsections (this §)(g) and (this §)(h) shall be reduced to 82.5% as of January 1st, 1997 and shall be further reduced to 80% as of January 1st, 1998 and thereafter. The refund or credit requirements for failure to meet minimum loss ratios will continue, but at these reduced percentages. Source Data downloaded: 2009-04-09 15: 12: 49; Processed: 2009-05-08 15: 36: 09
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