senate Bill S971

2013-2014 Legislative Session

Relates the conversion of domestic reciprocal medical malpractice insurers and the premium rates and surcharges for medical malpractice insurance

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to insurance
Jan 09, 2013 referred to insurance

S971 - Bill Details

Current Committee:
Law Section:
Insurance Law
Laws Affected:
Amd §§7308 & 5502, Ins L; amd §40, Chap 266 of 1986
Versions Introduced in 2011-2012 Legislative Session:
S7388

S971 - Bill Texts

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Relates to the conversion of domestic reciprocal medical malpractice insurers and the premium rates and surcharges for medical malpractice insurance.

view sponsor memo
BILL NUMBER:S971

TITLE OF BILL:
An act
to amend the insurance law, in relation to reciprocal insurance
companies, and medical malpractice premium rates and surcharges; and to
amend chapter 266 of the laws of 1986, amending the civil practice law
and rules and other laws relating to malpractice and professional
medical conduct, in relation to medical malpractice
premium rates and surcharges

PURPOSE:
The purpose of this legislation is to facilitate the ability at
domestic medical malpractice insurers to adjust their premium rates
up to an aggregate of plus or minus five percent without prior
regulatory approval, permit domestic reciprocal medical malpractice
insurers that provide coverage to teaching faculty to convert more
easily to domestic stock insurance companies, and to reform the
Medical Malpractice Insurance Pool.

SUMMARY OF PROVISIONS:
This bill permits domestic medical malpractice insurers to adjust
their premium rates up to an aggregate of plus or minus five percent
without prior regulatory approval, permit domestic reciprocal
medical malpractice insurers that provide coverage to teaching
physicians and dentists to convert more easily to domestic stock
insurance companies, authorizes the superintendent of financial
services to impose surcharges in the event the Medical Malpractice
Insurance Pool has an actuarially projected deficiency for policy
year's through June 30, 2015, and requires the Property/Casualty
Insolvency Fund to apply to policies issued by the Medical
Malpractice Insurance Pool.

EXISTING LAW:
The insurance law currently requires the superintendent of financial
services to establish all medical malpractice insurance premium
rates, requires domestic reciprocal insurers to obtain a super
majority approval of its subscribers to convert to a domestic stock
company, and places the burden of any projected deficiency of the
Medical Malpractice Insurance Pool solely on the member companies of
such pool notwithstanding that they were mandated by law to become
its members.

JUSTIFICATION:
The current business environment for medical malpractice is very
restrictive of competition and innovation. Small reciprocal
insurers in particular are constrained by their governing
structure in their ability to take advantage of business
opportunities without time consuming and expensive subscriber
approval. The value of the subscribers' equity in such a company is
zero or close to zero because of a history of operating deficits.
The proposed legislation will permit a reciprocal insurer that writes
medical malpractice insurance for teaching staff at SUNY and
other academic facilities to convert to stock companies without
subscriber approval, but with oversight of the Department of


Financial Services. The revised procedures will improve competition
in the marketplace and improve carrier solvency.

Legislation enacted in 1986 provided that the superintendent of
insurance is required to establish medical malpractice insurance
premium rates. Over the quarter century since the legislation was
enacted, private carrier's have left the market and competition among
the few remaining carriers is very limited. The proposed legislation
will encourage competition and improve carrier solvency by
permitting insurance carriers that write medical malpractice
insurance to adjust their rates for different medical specialties,
and in differing geographical territories, provided that the overall
effect does not increase or decrease their rates by more than five
percent in the aggregate. In addition to increasing competition,
this bill will address the regulatory delays and burden to the state
that arises from the current legislation.

The legislation enacted in 2001 to dissolve the Medical Malpractice
Insurance Association ("MMIA") continued the authority of the
superintendent of insurance to impose premium surcharges on
physicians and surgeons who were insured by MMIA in the event of an
actuarially projected deficiency attributable to the premium levels
for policies providing coverage for physicians and surgeons medical
malpractice prior to July 1, 2001, but did not provide for such
surcharges in the event of a deficit attributable to the MMIA's
successor, the Medical Malpractice Insurance Pool ("MMIP"). The
proposed legislation clarifies that the superintendent of financial
services shall have authority to impose surcharges in respect of
policies issued by MMIP through June 30, 2015, and al,so clarifies
that if such surcharges are inadequate to meet any deficit in the
MMIP the Property/Casualty Guaranty Fund will be primarily
responsible to cover unpaid claims before the individual member
companies of MMIP will be exposed to liability. The proposed
legislation will have create an immediate benefit to the financial
condition of the members of the MMIP, some of which are experiencing
financial distress in part due to their MMIP potential exposure.

LEGISLATIVE HISTORY:
S.7388 - Referred to Insurance

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Effective immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   971

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sen.  LIBOUS -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to  reciprocal  insurance
  companies,  and  medical malpractice premium rates and surcharges; and
  to amend chapter 266 of the laws of 1986, amending the civil  practice
  law  and rules and other laws relating to malpractice and professional
  medical conduct, in relation to medical malpractice premium rates  and
  surcharges

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 7308 of the insurance law is  amended  to  read  as
follows:
  S   7308.  Conversion  of  domestic  reciprocal  insurers  into  stock
property/casualty insurance companies. (a) AS USED IN THIS ARTICLE:
  (1) "DOMESTIC RECIPROCAL MEDICAL MALPRACTICE INSURER" MEANS ANY DOMES-
TIC RECIPROCAL INSURER ORGANIZED PURSUANT TO ARTICLE SIXTY-ONE  OF  THIS
CHAPTER  FOR  WHICH,  IN  THE YEAR ENDING DECEMBER THIRTY-FIRST PRIOR TO
CONVERTING TO A STOCK  PROPERTY/CASUALTY  INSURANCE  COMPANY,  AT  LEAST
NINETY PERCENT OF ITS PREMIUM WRITINGS WERE DERIVED FROM INSURING PHYSI-
CIANS OR DENTISTS WHO HAD AN ACADEMIC APPOINTMENT AT ANY STATE UNIVERSI-
TY  OF  NEW  YORK  MEDICAL  SCHOOL  OR  FACILITY, OR WHO HAD AN ACADEMIC
APPOINTMENT AT NEW YORK MEDICAL COLLEGE;
  (2) "CLINICAL PRACTICE PLAN" MEANS (A) A  CLINICAL  PRACTICE  PLAN  AS
DEFINED  IN  SUBPARAGRAPH (III) OF PARAGRAPH (B) OF SUBDIVISION FOURTEEN
OF SECTION TWO HUNDRED SIX OF THE PUBLIC HEALTH LAW AND  WHICH  PLAN  IS
SUBJECT  TO  REGULATION  BY  THE  BOARD  OF REGENTS, AND (B) WESTCHESTER
MEDICAL CENTER.
  (B)  Any  domestic  reciprocal  insurer  doing  business   under   the
provisions  of  this  article may, EITHER (1) by the affirmative vote of
its subscribers holding two-thirds  of  its  operating  reserve  accumu-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05297-01-3

S. 971                              2

lations  at  the date of the meeting at which the proposal to convert is
voted upon, OR (2) IN THE CASE OF A DOMESTIC RECIPROCAL MEDICAL MALPRAC-
TICE INSURER, BY THE UNANIMOUS AFFIRMATIVE VOTE OF ITS ADVISORY  COMMIT-
TEE,  be converted into and licensed as a stock property/casualty insur-
ance company, in the manner prescribed by this section  and  subject  to
any other requirements of law. The advisory committee of any such recip-
rocal  insurer  proposing so to convert shall cause the attorney-in-fact
of such reciprocal insurer to give to [each subscriber of record at  the
close of business on the last day of the quarter year next preceding the
issue  of  such  notice]  THE  SUPERINTENDENT  not less than thirty days
notice by mail of [the meeting at which the]  SUCH  proposed  conversion
[is  to  be  voted  upon  and of a hearing of the subscribers before the
superintendent]. [At such hearing or any adjournment thereof,  the]  THE
superintendent  shall pass upon the fairness of the terms and conditions
of the proposed conversion and of the issuance of shares of  the  corpo-
ration  and  he  OR  SHE  shall  approve [or disapprove] the same IN THE
ABSENCE OF CLEAR EVIDENCE THAT SUCH CONVERSION WOULD BE  DETRIMENTAL  TO
THE  INTERESTS OF THE PEOPLE OF THE STATE.  The provisions of this chap-
ter relative to a similar domestic insurance company organized to do the
same kinds of insurance business shall apply  to  the  organization  and
licensing of such corporation.
  [(b)]   (C)   If   converted   into  a  stock  insurance  corporation,
subscriptions to the capital shares may be made, in whole or in part, by
the subscribers of the reciprocal insurer, and their  subscriptions  may
be  paid  in to the extent of their operating reserve accumulations by a
transfer thereof or any portion thereof to such corporation. The contin-
gent  surplus  of  the  reciprocal  insurer  accumulated   pursuant   to
subsection  (a) of section six thousand one hundred five of this chapter
shall be included in the capital and  surplus  of  the  corporation  and
shares representing the same shall be issued to existing subscribers, at
the  rate determined as provided in the next sentence for each dollar of
par value of the shares of such new corporation, in proportion to  their
shares in the aggregate operating reserves at the time when the proposal
to  convert is adopted. The rate of payment for each dollar of par value
of the stock of such new corporation shall be  determined  by  agreement
between  the  advisory committee of the reciprocal insurer and the board
of directors of the stock insurance  company.    Every  such  subscriber
shall  be  entitled  in  the  subscription to the capital shares of such
corporation to a priority in subscribing thereto for thirty  days  after
the  opening  of the books of subscription in proportion to his interest
in such reciprocal insurer at such date but at the rate of payment fixed
by the board of directors. At the expiration of  such  thirty  days  the
board of directors may sell and dispose of the capital shares which have
not  been  taken  or  subscribed, as aforesaid, but at not less than the
same rate of payment.  [(c)] THIS SUBSECTION SHALL NOT APPLY TO DOMESTIC
RECIPROCAL MEDICAL MALPRACTICE INSURERS.
  (D) IN THE CASE OF A DOMESTIC RECIPROCAL MEDICAL MALPRACTICE  INSURER,
IF  CONVERTED  INTO  A STOCK INSURANCE CORPORATION, SUBSCRIPTIONS TO THE
CAPITAL SHARES MAY BE MADE, IN WHOLE OR IN PART, ONLY  BY  THE  CLINICAL
PRACTICE   PLANS  REPRESENTED  ON  ITS  ADVISORY  COMMITTEE,  AND  THEIR
SUBSCRIPTIONS MAY BE PAID IN TO THE EXTENT OF THEIR RESPECTIVE SUBSCRIB-
ERS' OPERATING RESERVE  ACCUMULATIONS  BY  A  TRANSFER  THEREOF  OR  ANY
PORTION  THEREOF  TO  SUCH  CORPORATION.   THE CONTINGENT SURPLUS OF THE
RECIPROCAL INSURER ACCUMULATED PURSUANT TO SUBSECTION (A) OF SECTION SIX
THOUSAND ONE HUNDRED FIVE OF THIS CHAPTER SHALL BE INCLUDED IN THE CAPI-
TAL AND SURPLUS OF THE CORPORATION  AND  SHARES  REPRESENTING  THE  SAME

S. 971                              3

SHALL  BE  ISSUED TO SUCH CLINICAL PRACTICE PLANS AT THE RATE DETERMINED
AS PROVIDED IN THE NEXT SENTENCE FOR EACH DOLLAR OF  PAR  VALUE  OF  THE
SHARES  OF  SUCH  NEW  CORPORATION,  IN  PROPORTION  TO THEIR RESPECTIVE
SUBSCRIBERS'  SHARE IN THE AGGREGATE OPERATING RESERVES AT THE TIME WHEN
THE PROPOSAL TO CONVERT IS ADOPTED. THE RATE OF PAYMENT FOR EACH  DOLLAR
OF PAR VALUE OF THE STOCK OF SUCH NEW CORPORATION SHALL BE DETERMINED BY
AGREEMENT  BETWEEN  THE ADVISORY COMMITTEE OF THE RECIPROCAL INSURER AND
THE BOARD OF DIRECTORS OF THE STOCK INSURANCE COMPANY. EVERY SUCH  CLIN-
ICAL  PRACTICE PLAN SHALL BE ENTITLED IN THE SUBSCRIPTION TO THE CAPITAL
SHARES OF SUCH CORPORATION TO A  PRIORITY  IN  SUBSCRIBING  THERETO  FOR
THIRTY DAYS AFTER THE OPENING OF THE BOOKS OF SUBSCRIPTION IN PROPORTION
TO  ITS INTEREST IN SUCH RECIPROCAL INSURER AT SUCH DATE BUT AT THE RATE
OF PAYMENT FIXED BY THE BOARD OF DIRECTORS. AT THE  EXPIRATION  OF  SUCH
THIRTY  DAYS  THE BOARD OF DIRECTORS MAY SELL AND DISPOSE OF THE CAPITAL
SHARES WHICH HAVE NOT BEEN TAKEN OR SUBSCRIBED, AS AFORESAID, BUT AT NOT
LESS THAN THE SAME RATE OF PAYMENT.
  (E)  If  after  examination,  the  superintendent   finds   that   the
proceedings for the conversion to a corporation of any such insurer have
been  regularly  taken  in conformity with law, and that the corporation
meets with the requirements of this chapter, he may issue a  license  to
such insurer to do business under the provisions of this chapter. There-
upon, the remaining assets shall be forthwith transferred to it, and the
predecessor reciprocal insurer or insurers shall cease to have authority
to  do business as such and shall be deemed extinguished. Every such new
corporation formed by conversion shall assume and succeed to all of  the
obligations  and liabilities of the converting reciprocal insurer and be
held liable to pay and discharge all such debts and liabilities  in  the
same  manner  as  if  they had been incurred or contracted by the corpo-
ration, but, EXCEPT IN THE CASE OF A DOMESTIC RECIPROCAL  MEDICAL  MALP-
RACTICE INSURER, the subscribers of the reciprocal insurer shall contin-
ue  subject  to all the liabilities, claims and demands which shall then
exist, or which may thereafter accrue against them, or any of  them,  by
reason  of  any  obligations incurred by them or in their behalf as such
subscribers before the date of conversion.
  (F) Upon the conversion of any reciprocal insurer, OTHER THAN A DOMES-
TIC RECIPROCAL MEDICAL INSURER, dissenting subscribers, meaning  thereby
subscribers  who  shall  not within thirty days after the opening of the
books of subscription have subscribed to shares of the  corporation  and
applied  their  accumulated  operating  reserves  to payment therefor as
provided in subsection (b) [hereof] OF THIS SECTION, shall  be  entitled
to the conditional withdrawal of their accumulated operating reserves on
deposit  with  the reciprocal insurer as of the date of conversion but a
sufficient amount thereof shall be retained  by  the  corporation  as  a
deposit  until  all  of the obligations incurred on its behalf have been
extinguished. When all of such obligations have been paid, discharged or
terminated, and the superintendent after an examination  shall  have  so
certified,  the  said  subscribers'  deposits  or  the  balances thereof
remaining to their credit shall be returned and released, whereupon  the
powers  of  the attorney-in-fact relating thereto shall cease and termi-
nate.
  (G) UPON THE CONVERSION OF ANY DOMESTIC RECIPROCAL MEDICAL MALPRACTICE
INSURER, ALL SUBSCRIBERS SHALL BE ENTITLED TO THE CONDITIONAL WITHDRAWAL
OF THEIR ACCUMULATED OPERATING RESERVES ON DEPOSIT WITH  THE  RECIPROCAL
INSURER  AS  OF  THE  DATE OF CONVERSION BUT A SUFFICIENT AMOUNT THEREOF
SHALL BE RETAINED BY THE CORPORATION AS A DEPOSIT UNTIL ALL OF THE OBLI-
GATIONS INCURRED ON ITS BEHALF HAVE BEEN EXTINGUISHED. WHEN ALL OF  SUCH

S. 971                              4

OBLIGATIONS  HAVE  BEEN  PAID,  DISCHARGED OR TERMINATED, AND THE SUPER-
INTENDENT AFTER AN EXAMINATION SHALL HAVE SO CERTIFIED,  SUCH  SUBSCRIB-
ERS' DEPOSITS OR THE BALANCES THEREOF REMAINING TO THEIR CREDIT SHALL BE
RETURNED  AND  RELEASED,  WHEREUPON  THE  POWERS OF THE ATTORNEY-IN-FACT
RELATING THERETO SHALL CEASE AND TERMINATE.
  S 2. Paragraph 2 of subsection (c) of section 5502  of  the  insurance
law is amended by adding a new subparagraph (E) to read as follows:
  (E)  THE  SURCHARGES ON PREMIUMS IMPOSED PURSUANT TO SECTION FORTY, AS
AMENDED, OF CHAPTER TWO  HUNDRED  SIXTY-SIX  OF  THE  LAWS  OF  NINETEEN
HUNDRED  EIGHTY-SIX  SHALL  APPLY  TO  ANY  PLAN  OR POOL ESTABLISHED IN
ACCORDANCE WITH SUBPARAGRAPH (D) OF THIS PARAGRAPH TO SATISFY ANY  ACTU-
ARIALLY  PROJECTED DEFICIENCY THAT IS ATTRIBUTABLE TO THE PREMIUM LEVELS
FOR POLICIES PROVIDING COVERAGE  FOR  PHYSICIANS  AND  SURGEONS  MEDICAL
MALPRACTICE  FOR  THE  PERIODS  COMMENCING  JULY FIRST, NINETEEN HUNDRED
EIGHTY-FIVE AND ENDING JUNE THIRTIETH, TWO THOUSAND FIFTEEN.  NO  MEMBER
OF  SUCH  PLAN  OR POOL SHALL BE REQUIRED TO SATISFY ANY PORTION OF SUCH
DEFICIENCY FROM ITS OWN ASSETS UNLESS THE  SUPERINTENDENT  OF  FINANCIAL
SERVICES  IMPOSES SUCH A SURCHARGE, AND THE AMOUNT OF SUCH DEFICIENCY IS
NOT SATISFIED WITHIN TWENTY-FOUR MONTHS OF THE  DATE  THE  SURCHARGE  IS
IMPOSED,  AND  IN THAT EVENT SUCH MEMBERS SHALL ONLY BE LIABLE FOR THEIR
PROPORTIONATE SHARE OF ANY DEFICIENCY REMAINING AFTER SUCH PLAN OR  POOL
HAS  BEEN  LIQUIDATED  IN  ACCORDANCE  WITH ARTICLE SEVENTY-FOUR OF THIS
CHAPTER, AND THEN ONLY TO THE EXTENT CLAIMS AGAINST INSUREDS COVERED  BY
SUCH  PLAN  OR POOL ARE NOT COVERED BY THE PROPERTY AND LIABILITY INSUR-
ANCE SECURITY FUND ESTABLISHED BY ARTICLE SEVENTY-SIX OF THIS CHAPTER.
  S 3. Section 40 of chapter 266 of the laws of 1986, amending the civil
practice law and rules  and  other  laws  relating  to  malpractice  and
professional  medical  conduct,  as  amended  by section 18 of part C of
chapter 59 of the laws of 2011, is amended to read as follows:
  S 40. The  superintendent  of  [insurance]  FINANCIAL  SERVICES  shall
establish  rates  for  policies  providing  coverage  for physicians and
surgeons medical malpractice for the periods commencing July 1, 1985 and
ending June 30, 2014; provided, however, that ANY INSURER FOR  WHICH  AT
LEAST NINETY PERCENT OF ITS PREMIUM WRITINGS IN THE YEAR ENDING DECEMBER
31  PRIOR  TO  MAKING  A FILING WERE DERIVED FROM INSURING PHYSICIANS OR
DENTISTS WHO HAD AN ACADEMIC APPOINTMENT AT ANY STATE UNIVERSITY OF  NEW
YORK  MEDICAL  SCHOOL OR FACILITY, OR WHO HAD AN ACADEMIC APPOINTMENT AT
NEW YORK MEDICAL COLLEGE, MAY FILE ITS MEDICAL MALPRACTICE PREMIUM RATES
WITH THE DEPARTMENT OF  FINANCIAL  SERVICES.  SUCH  RATES  SHALL  BECOME
EFFECTIVE WITHOUT PRIOR APPROVAL PROVIDED THAT THE OVERALL EFFECT OF THE
FILING  DOES INCREASE OR DECREASE SUCH INSURER'S AGGREGATE PREMIUM RATES
BY MORE THAN FIVE PERCENT OVER THE  PREMIUM  RATES  ESTABLISHED  BY  THE
SUPERINTENDENT  OF  FINANCIAL  SERVICES FOR SUCH INSURER AS OF JULY 1 OF
SUCH PRECEDING YEAR. PROVIDED, FURTHER, THAT notwithstanding  any  other
provision  of law, the superintendent shall not establish or approve any
increase in rates for the period commencing July 1, 2009 and ending June
30, 2010. The superintendent shall direct insurers to  establish  segre-
gated  accounts  for  premiums, payments, reserves and investment income
attributable to such premium periods and shall require periodic  reports
by the insurers regarding claims and expenses attributable to such peri-
ods to monitor whether such accounts will be sufficient to meet incurred
claims  and expenses. On or after July 1, 1989, the superintendent shall
impose a surcharge on premiums to satisfy a projected deficiency that is
attributable to the premium levels established pursuant to this  section
for  such  periods;  provided, however, that such annual surcharge shall
not exceed eight percent of the established rate until July 1, 2014,  at

S. 971                              5

which  time  and  thereafter such surcharge shall not exceed twenty-five
percent of the approved adequate rate, and that such  annual  surcharges
shall continue for such period of time as shall be sufficient to satisfy
such  deficiency.  The  superintendent  shall  not impose such surcharge
during the period commencing July 1, 2009 and ending June 30, 2010.   On
and  after  July 1, 1989, the surcharge prescribed by this section shall
be retained by insurers to the extent that they insured  physicians  and
surgeons  during  the July 1, 1985 through June 30, 2014 policy periods;
in the event and to the extent physicians and surgeons were  insured  by
another  insurer  during  such  periods,  all or a pro rata share of the
surcharge, as the case may be, shall be remitted to such  other  insurer
in accordance with rules and regulations to be promulgated by the super-
intendent.    Surcharges collected from physicians and surgeons who were
not insured during such policy periods shall be  apportioned  among  all
insurers  in  proportion  to  the premium written by each insurer during
such policy periods; if a physician or surgeon was insured by an insurer
subject to rates established by the superintendent  during  such  policy
periods,  and  at  any  time  thereafter  a hospital, health maintenance
organization, employer or institution is responsible for  responding  in
damages for liability arising out of such physician's or surgeon's prac-
tice of medicine, such responsible entity shall also remit to such prior
insurer  the  equivalent  amount  that  would  then  be  collected  as a
surcharge if the physician or surgeon had continued to remain insured by
such prior insurer. In the event  any  insurer  that  provided  coverage
during  such  policy  periods  is  in liquidation, the property/casualty
insurance security fund shall receive the portion of surcharges to which
the insurer in liquidation would  have  been  entitled.  The  surcharges
authorized  herein  shall be deemed to be income earned for the purposes
of section 2303 of the insurance law.  The superintendent, in establish-
ing adequate rates and in determining any projected deficiency  pursuant
to  the  requirements  of this section and the insurance law, shall give
substantial weight, determined in his discretion and  judgment,  to  the
prospective  anticipated  effect of any regulations promulgated and laws
enacted and the public benefit of   stabilizing  malpractice  rates  and
minimizing  rate  level  fluctuation during the period of time necessary
for the development of more reliable statistical experience  as  to  the
efficacy  of  such  laws  and  regulations  affecting medical, dental or
podiatric malpractice enacted or promulgated in 1985, 1986, by this  act
and  at  any other time.  Notwithstanding any provision of the insurance
law, rates already established and to be established by the  superinten-
dent pursuant to this section are deemed adequate if such rates would be
adequate   when  taken  together  with  the  maximum  authorized  annual
surcharges to be imposed for a reasonable period of time whether or  not
any such annual surcharge has been actually imposed as of the establish-
ment of such rates.
  S 4. This act shall take effect immediately.

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