Legislation

Search OpenLegislation Statutes
This entry was published on 2017-04-21
The selection dates indicate all change milestones for the entire volume, not just the location being viewed. Specifying a milestone date will retrieve the most recent version of the location before that date.
SECTION 2313
Rate service organization; defined
Insurance (ISC) CHAPTER 28, ARTICLE 23
§ 2313. Rate service organization; defined. (a) In this article, "rate
service organization" means a person or any other entity which makes or
files rates as permitted by this article, or which assists insurers in
rate making or filing by collecting, compiling and furnishing loss or
expense statistics, or by recommending rates or rate information, or
which inspects risks, tests appliances, formulates rules or establishes
standards, as such activities relate to rate making or to administration
of rates. It shall include a person or entity which prepares and files
policy forms and endorsements on behalf of insurers. It shall not
include a joint underwriting association under section two thousand
three hundred seventeen of this article, or any employee of an insurer,
or in the case of insurers under common control or management an
employee of any such insurer or their manager, nor shall it include
actuaries, certified public accountants, attorneys or other
professionals who in their respective vocations may advise insurers on
rate questions.

(b) Except as provided in subsection (j) hereof, no insurer shall
utilize the services of a rate service organization unless the
organization has obtained a license as provided by this section.

(c) No rate service organization shall refuse to supply any services
which it is permitted to render in this state to any insurer authorized
to do business in this state and offering to pay the fair and usual
compensation for the services.

(d) A rate service organization applying for a license as required by
subsection (b) hereof shall include with its application:

(1) a copy of its constitution, charter, articles of organization,
agreement, association or corporation, and a copy of its by-laws, plan
of operation and any other rules or regulations governing the conduct of
its business;

(2) a list of its members and its subscribers;

(3) the name and address of one or more residents of this state upon
whom notices, process affecting it or orders of the superintendent may
be served;

(4) where appropriate a statement indicating one or more kinds of
insurance, or classes of risks, or any part or combination of the
foregoing, for which it seeks to obtain a license;

(5) a statement showing its technical qualifications for acting in the
capacity for which it seeks a license; and

(6) any other relevant information and documents that the
superintendent may require.

(e) The officers, members of the governing board or committee, and
other persons in control of a corporation or of an unincorporated
association, for the time being, and each partner of a partnership,
shall be held individually responsible for knowingly violating any
provisions of this article applicable to such corporation, association
or partnership as a rate service organization.

(f) Every organization which has applied for a license pursuant to
subsection (d) hereof shall thereafter promptly notify the
superintendent of every material change in the facts or in the documents
as filed.

(g) If the superintendent finds that the applicant and the natural
persons through whom it acts are competent, trustworthy, and technically
qualified to provide the services proposed, and that all requirements of
law are met, he shall issue a license specifying the authorized activity
of the applicant.

(h) Licenses issued pursuant to this section shall remain in effect
until the licensee withdraws from the state or until the license is
suspended or revoked.

(i) Any amendment to a document filed pursuant to paragraph one of
subsection (d) hereof shall be filed at least thirty days before it
becomes effective. Failure to comply shall be a ground for revocation of
the license granted pursuant to subsection (h) hereof.

(j) A rate service organization which does not make or file rates, as
permitted by this article, is not required to obtain a license under
this section but no insurer shall utilize the services of such a rate
service organization unless the organization has filed with the
superintendent the information and documents prescribed in subsection
(d) hereof and shall thereafter promptly notify the superintendent of
every material change in the information or documents. The
superintendent may order any insurer or rate service organization found
to be in violation of this subsection to discontinue such violation.

(k) If, after a hearing, the superintendent finds that the furnishing
of such information or assistance by a rate service organization subject
to subsection (j) hereof involves any act or practice which is unfair or
unreasonable or otherwise inconsistent with the provisions of this
article, he may issue a written order specifying in what respects the
act or practice is unfair or unreasonable or otherwise inconsistent with
the provisions of this article, and requiring the discontinuance of the
act or practice.

(l) No rate service organization shall directly or indirectly require
the payment of any licensing, registration or membership fee by any
broker, as such, who is licensed under this chapter; nor shall any rate
service organization or any other association or bureau refuse to do
business with, or prohibit or prevent the payment of commissions to, any
person licensed as an insurance broker under this chapter.

(m) No rate service organization shall adopt any rule, the effect of
which would be to prohibit or regulate the payment of dividends to
policyholders.

(n) A rate service organization may subscribe for or purchase
actuarial, technical or other services, and such services shall be
available to all members and subscribers without discrimination.

(o) Cooperation among rate service organizations or among rate service
organizations and insurers in rate making or in other matters within the
scope of this article is hereby authorized, provided the filing
resulting from such cooperation is subject to all the provisions of this
article which are applicable to filings generally. The superintendent
may review such cooperative activities and practices and if, after a
hearing, he finds that any such activity or practice is unfair or
unreasonable or otherwise inconsistent with this article, he may issue
an order specifying in what respects such activity or practice is unfair
or unreasonable or otherwise inconsistent with this article, and
requiring the discontinuance of such activity or practice.

(p) A rate service organization which pursuant to subsection (j)
hereof is not required to obtain a license is expressly prohibited from
using or permitting the use of the phrase "supervised by the department
of financial services of the state of New York" or any comparable
phrase, or one which is likely to create the impression that such
organization is supervised or subject to supervision by it.

(q) Any rate service organization may provide for the examination of
policies, daily reports, binders, renewal certificates, endorsements, or
the cancellation thereof, and may make reasonable rules governing their
submission. Such rules shall contain a provision that in the event an
insurer does not within sixty days furnish satisfactory evidence to the
rate service organization of the correction of any error or omission
previously called to its attention by the rate service organization, it
shall be the duty of the rate service organization to notify the
superintendent. All information so submitted for examination shall be
confidential.

(r) A rate service organization licensed pursuant to this section
which files rates, rating plans or other statistical information
pursuant to paragraph one of subsection (b) of section two thousand
three hundred five of this article or otherwise relating to or in
support of coverages written by its members or subscribers pursuant to
paragraph fifteen of subsection (a) of section one thousand one hundred
thirteen of this chapter shall be subject to audit by the superintendent
by December thirty-first, nineteen hundred ninety-seven and not less
than once every three years thereafter. Such audit shall examine the
finances and operations of such rating organization and shall further
make recommendations for actions to be taken by such rating organization
in furtherance of the findings of such audit. The superintendent shall
complete an audit report no later than sixty days after the conclusion
of the audit period and shall submit such audit report to the governor
and the legislature.

(s) Notwithstanding any other provision of this article, no rate
service organization may file rates for workers' compensation insurance
after February first, two thousand eight, but a rate service
organization may file loss costs or other statistical information,
including rating plans, until June second, two thousand eighteen.
Notwithstanding subsection (j) of this section, any such rate service
organization shall nonetheless be required to be licensed pursuant to
this section.

* (t) (1) The governing body of a workers' compensation rate service
organization shall be comprised of nine voting members. Four members
shall represent insurers authorized to write workers' compensation
insurance in this state, and shall be selected in such manner as is
determined by the members of the rate service organization. One member
of the governing body shall be a representative of the state insurance
fund. Each of the remaining four members of the governing body shall
serve for a term of two years and until his or her successor shall have
been appointed and approved, provided that the appointing entity
appoints a successor member within one hundred twenty days of the
expiration of the term of office, and shall not be employed by, or serve
as an officer or director of, an insurer authorized to write workers'
compensation insurance in this state, or any parent, subsidiary, or
affiliate thereof. One such member of the governing body shall be
appointed by the superintendent. The other three such members shall be
appointed subject to the approval of the superintendent by the
following: (A) the workers' compensation board; (B) the Business Council
of New York State, Inc.; and (C) the American Federation of Labor -
Congress of Industrial Organizations of New York State. Any vacancy on
the governing body shall be filled in the same manner as the initial
appointment. The governing body shall select a chief executive officer
who shall serve at the pleasure of the governing body and whose terms
and conditions of employment shall be approved by the governing body. No
restriction in this subsection shall apply if compliance is prevented by
the failure of any appointing authority to make an appointment, or of
the superintendent to approve such appointment.

(2) The governing body of a workers' compensation rate service
organization shall have charge of the general activities of the
organization, including control and supervision over its finances and
authority to establish budgets, approve assessments and impose fines on
members of the rate service organization.

(3) A workers' compensation rate service organization shall have an
underwriting committee and a medical and claims committee, and such
other committees as the governing body deems appropriate. The
underwriting committee shall have the same allocation of voting members
as the workers' compensation rate service organization governing body,
and it shall be the responsibility of the underwriting committee to
address matters with respect to policy forms and endorsements, loss
costs, rating and statistical plans, payroll audits and other employer
related issues. It shall be the responsibility of the medical and claims
committee to study the administration of claims under the workers'
compensation law, and medical, surgical and hospital care of injured
workers.

(4) A workers' compensation rate service organization shall have an
actuarial committee. It shall be the responsibility of the actuarial
committee to review methodology and data collection processes used to
develop loss costs. The American Federation of Labor - Congress of
Industrial Organizations of New York State and the Business Council of
New York State, Inc. shall together appoint one independent casualty
actuary who is a fellow or associate of the casualty actuarial society
to serve as a member of the actuarial committee. The appointment of such
actuary, and his or her compensation and terms and conditions of
retention, shall be subject to the approval of the superintendent as
reasonable and customary for such professional. The actuary shall be
paid by the workers' compensation rate service organization. Such
actuary shall have the same access to the workers' compensation rate
service organization data and documents as the other members of that
committee. The governing body of a workers' compensation rate service
organization shall select a chief actuary of the actuarial committee,
who shall serve at the pleasure of the governing body and whose terms
and conditions of employment shall be approved by the governing body.
The public actuary shall issue a report on or before June first, two
thousand eighteen and each of the next ten years, indicating the overall
savings in the workers' compensation system as a result of the two
thousand seventeen reforms.

(5) A workers' compensation rate service organization shall assess
insurers that write workers' compensation coverage in New York state for
expenses it incurs in its operation. Nothing in this paragraph shall
prevent a workers' compensation rate service organization from also
obtaining funds from any other source.

(6) A workers' compensation rate service organization shall retain all
data used to calculate rates, class relativities, and experience
modifications, as well as all data underlying any loss cost or other
filing made with the department, and any other data the superintendent
may direct, for such period of time as the superintendent shall direct.

* NB Repealed June 2, 2028