S T A T E   O F   N E W   Y O R K
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                                 4540--A

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             March 26, 2015
                               ___________

Introduced  by  Sens. SEWARD, VALESKY -- read twice and ordered printed,
  and when printed to be committed to  the  Committee  on  Insurance  --
  recommitted  to  the  Committee on Insurance in accordance with Senate
  Rule  6,  sec.  8  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

AN  ACT  to amend the insurance law, in relation to rating of individual
  and small group health  insurance  policies;  and  to  repeal  certain
  provisions of such law relating thereto

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

  Section 1. Subsections (d) and (e) of section 3231  of  the  insurance
law,  subsection (d) as amended by section 1 of part A of chapter 494 of
the laws of 2009, subsection (e) as amended by chapter 107 of  the  laws
of  2010,  subparagraph (A) of paragraph 1 of subdivision (e) as further
amended by section 104 of part A of chapter 62 of the laws of  2011  and
subparagraph  (B) of paragraph 1 of subsection (e) as amended by section
61 of part D of chapter 56 of the laws of 2013, are amended to  read  as
follows:
  (d)  (1)  Notwithstanding  any  other provision of this chapter to the
contrary, no NEW OR INITIAL policy form subject to this section shall be
issued or delivered, nor any insurance contract entered into, unless and
until the insurer has filed with the superintendent a schedule of premi-
ums, not to exceed twelve months in duration, to be paid under the poli-
cy forms and obtained the superintendent's approval thereof. The  super-
intendent may refuse such approval if he or she finds that such premiums
are  excessive,  inadequate, or unfairly discriminatory. The superinten-
dent may consider the financial condition of such insurer  in  approving
or disapproving any premium. In determining whether to approve the sche-
dule  of  premiums  filed,  the  superintendent  shall,  subject  to the
provisions of section three thousand two hundred  thirty-three  of  this
article,  consider  the prior experience of the insurer's community pool

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10031-02-6
              

S. 4540--A                          2

and the insurer's projections relating to claim costs,  utilization  and
administrative  expenses  and shall not adjust the insurer's rates based
upon the rates approved for other insurers.
  (2) An insurer shall provide specific claims experience to a municipal
corporation, as defined in subsection (f) of section four thousand seven
hundred  two  of  this chapter, covered by the insurer under a community
rated policy when the municipal corporation requests its claims  experi-
ence  for  purposes of forming or joining a municipal cooperative health
benefit plan certified pursuant to article forty-seven of this  chapter.
Notwithstanding the forgoing provisions, no insurer shall be required to
provide  more  than three years' claims experience to a municipal corpo-
ration making this request.
  (e) (1) (A) An insurer desiring to increase or decrease  premiums  for
any PREVIOUSLY APPROVED policy form subject to this section shall submit
a rate filing [or application] to the superintendent[.
  An  insurer shall send written notice of the proposed rate adjustment,
including the specific change  requested,  to  each  policy  holder  and
certificate  holder 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  insurer  through  which  a
person may, within thirty days from the date the rate filing or applica-
tion  is  submitted  to  the  superintendent,  contact the department of
financial services or insurer 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 insurer shall provide a copy of the  notice  to  the  superintendent
with the rate filing or application. The superintendent shall immediate-
ly  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  insurer
when  approving,  modifying  or disapproving any premium adjustment. The
determination of the superintendent shall be supported by sound actuari-
al 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 addi-
tional information from the insurer in order to  make  a  determination,
the  superintendent  shall  require the insurer to furnish such informa-
tion, and in such event, the sixty days shall be tolled and shall resume
as of the date the insurer furnishes the information to the  superinten-
dent.  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. An  insurer  shall  not  implement  a  rate
adjustment unless the insurer provides at least sixty days advance writ-
ten notice of the premium rate adjustment approved by the superintendent
to  each  policy  holder  and  certificate  holder  affected by the rate
adjustment.

S. 4540--A                          3

  (B) The expected minimum loss ratio for a policy form subject to  this
section, for which a rate filing or application is made pursuant to this
paragraph, other than a medicare supplemental insurance policy, or, with
the  approval of the superintendent, an aggregation of policy 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  solven-
cy.  No later than July thirty-first of each year, every insurer 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
insurer 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.
  (2)  (A)  Until September thirtieth, two thousand ten, as an alternate
procedure to the requirements of paragraph one of  this  subsection,  an
insurer  desiring  to  increase or decrease premiums for any policy form
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: (i) the anticipated minimum loss  ratio  for  a
policy  form  shall  not be less than eighty-two percent of the premium;
and (ii) the insurer 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 the insurer is in compliance with
the provisions of this paragraph, based upon that person's  examination,
including  a  review  of  the  appropriate  records and of the actuarial
assumptions and methods used by  the  insurer  in  establishing  premium
rates  for  policy  forms subject to this section. [An insurer shall not
utilize the alternate procedure pursuant to this paragraph to  implement
a  change  in rates to be effective on or after October first, two thou-
sand ten.] AN INSURER SHALL NOT  IMPLEMENT  A  PREMIUM  RATE  ADJUSTMENT
UNLESS  THE  INSURER  PROVIDES  AT LEAST ONE HUNDRED TWENTY DAYS ADVANCE
NOTICE OF THE PREMIUM RATE ADJUSTMENT BY WRITTEN NOTICE TO  EACH  POLICY
HOLDER AND CERTIFICATE HOLDER AFFECTED BY THE RATE ADJUSTMENT.
  (B) Each calendar year, an insurer shall return, in the form of aggre-
gate  benefits  for  each  policy  form [filed pursuant to the alternate
procedure set forth in this paragraph] at least  eighty-two  percent  of
the  aggregate premiums collected for the policy form during that calen-
dar year. Insurers shall annually report, no later than [June thirtieth]
JULY THIRTY-FIRST of each year, the loss ratio  calculated  pursuant  to
this paragraph for each such policy form for the previous calendar year.
In each case where the loss ratio for a policy form fails to comply with
the eighty-two percent loss ratio requirement, the insurer shall issue a
dividend  or  credit against future premiums for all policy holders with
that policy form in an amount sufficient to assure  that  the  aggregate
benefits paid in the previous calendar year plus the amount of the divi-
dends and credits shall equal eighty-two percent of the aggregate premi-
ums  collected  for  the  policy form in the previous calendar year. The
dividend or credit shall be issued to each policy holder who had a poli-
cy which was in effect at any time during the applicable year. The divi-
dend or credit shall be prorated based on the direct premiums earned for
the applicable year among all policy holders eligible  to  receive  such

S. 4540--A                          4

dividend or credit. An insurer shall make a reasonable effort to identi-
fy  the  current  address  of, and issue dividends or credits to, former
policy holders entitled to the dividend or  credit.  An  insurer  shall,
with respect to dividends or credits to which former policy holders that
the insurer is unable to identify after a reasonable effort would other-
wise  be  entitled,  have the option, as deemed acceptable by the super-
intendent, of prospectively adjusting premium rates  by  the  amount  of
such dividends or credits, issuing the amount of such dividends or cred-
its  to existing policy 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 chapter, or utilizing any other meth-
od  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  this  paragraph  shall
include  an  insurer's calculation of the dividends and credits, as well
as an explanation of the insurer'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  superinten-
dent  by  regulation.  Such regulations shall include provisions for the
distribution of a dividend or credit in the  event  of  cancellation  or
termination by a policy holder.
  [(3)  All policy forms subject to this subsection, other than medicare
supplemental insurance policy forms, issued or in effect during calendar
year two thousand ten shall be subject to a minimum loss ratio  require-
ment of eighty-two percent. Insurers may use the alternate filing proce-
dure  set  forth  in  paragraph two of this subsection 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.]
  S  2. Subsections (c) and (d) of section 4308 of the insurance law are
REPEALED and two new subsections (c)  and  (d)  are  added  to  read  as
follows:
  (C)  A  CORPORATION SUBJECT TO THE PROVISIONS OF THIS ARTICLE DESIRING
TO INCREASE OR DECREASE PREMIUMS FOR ANY PREVIOUSLY  APPROVED  COMMUNITY
RATED CONTRACT SUBJECT TO THIS SECTION SHALL SUBMIT A RATE FILING TO THE
SUPERINTENDENT  AND  SUCH FILING SHALL BE DEEMED APPROVED, PROVIDED THAT
(1) THE ANTICIPATED INCURRED LOSS RATIO FOR A CONTRACT FORM, OTHER  THAN
A  MEDICARE  SUPPLEMENTAL  INSURANCE  CONTRACT,  SHALL  NOT BE LESS THAN
EIGHTY-TWO PERCENT, AND (2) 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 SUCH CORPO-
RATION 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  CORPO-
RATION  IN  ESTABLISHING  PREMIUM  RATES  FOR  CONTRACTS SUBJECT TO THIS
SECTION. THE EXPECTED MINIMUM LOSS RATIO  FOR  A  MEDICARE  SUPPLEMENTAL
INSURANCE  CONTRACT FORM SHALL BE NOT LESS THAN EIGHTY PERCENT. A CORPO-
RATION SHALL NOT IMPLEMENT A PREMIUM RATE ADJUSTMENT UNLESS  THE  CORPO-
RATION  PROVIDES  AT LEAST ONE HUNDRED TWENTY DAYS ADVANCE NOTICE OF THE
PREMIUM RATE ADJUSTMENT BY WRITTEN NOTICE  TO  EACH  POLICY  HOLDER  AND
CERTIFICATE HOLDER AFFECTED BY THE RATE ADJUSTMENT.
  (D) (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  PROCEDURE  SET  FORTH  IN
SUBSECTION  (C)  OF THIS SECTION, AT LEAST EIGHTY-TWO PERCENT, OR IN THE

S. 4540--A                          5

CASE OF MEDICARE SUPPLEMENTAL INSURANCE CONTRACT FORM, AT  LEAST  EIGHTY
PERCENT  OF  THE  AGGREGATE PREMIUMS EARNED FOR THE CONTRACT FORM IN THE
PREVIOUS CALENDAR YEAR. CORPORATIONS SUBJECT TO THE PROVISIONS  OF  THIS
ARTICLE  SHALL  ANNUALLY REPORT, NO LATER THAN JULY THIRTY-FIRST 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 MINIMUM LOSS RATIO REQUIREMENT, AS SET  FORTH  IN  PARA-
GRAPH  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 BENE-
FITS INCURRED IN THE PREVIOUS CALENDAR YEAR PLUS THE AMOUNT OF THE DIVI-
DENDS AND CREDITS SHALL EQUAL NO LESS THAN EIGHTY-TWO PERCENT (OR EIGHTY
PERCENT IN THE CASE OF A MEDICARE SUPPLEMENTAL INSURANCE CONTRACT FORM),
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 ACCEPTA-
BLE 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 REQUIRE-
MENTS WERE NOT SATISFIED. THE ANNUAL REPORT REQUIRED BY PARAGRAPH ONE OF
THIS SUBSECTION SHALL INCLUDE A CORPORATION'S CALCULATION OF  THE  DIVI-
DENDS  AND  CREDITS, AS WELL AS AN EXPLANATION OF THE CORPORATION'S PLAN
TO ISSUE DIVIDENDS OR CREDITS. THE INSTRUCTIONS AND FORMAT FOR CALCULAT-
ING 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.
  S  3. Subsections (e) and (f) of section 4308 of the insurance law, as
amended by chapter 107 of the laws of  2010,  are  amended  to  read  as
follows:
  (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 whenev-
er  in  the judgment of the superintendent, losses sustained by a corpo-
ration jeopardize its ability to provide meaningful coverage at afforda-
ble 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 citi-
zens,  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

S. 4540--A                          6

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 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 [three
hundred thirty-two of this chapter] TWO HUNDRED  SIX  OF  THE  FINANCIAL
SERVICES LAW.
  (f)  The  results  of any audit conducted pursuant to [subsections (d)
and] SUBSECTION (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  superinten-
dent  shall  first consider any written response submitted by the corpo-
ration 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 recom-
mendations  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.
  S  4.  Subsections (g), (h), (i) and (j) of section 4308 of the insur-
ance law are REPEALED.
  S 5. This act shall take effect immediately.