N.Y. Insurance Law § 2313: Rate service organization; defined

§ 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