N.Y. Insurance Law § 2344: Flexible rate limitations in problem markets

* § 2344. Flexible rate limitations in problem markets. (a) As used in

this section:

(1) "Market" means a line, subline or classification (other than a

classification delineated by geographic location) of property/casualty

insurance risks whose coverages are not subject to subsection (b) of

section two thousand three hundred five, section two thousand three

hundred twenty-eight, section three thousand four hundred twenty-five,

or three thousand four hundred forty-six of this chapter.

(2) "Rate" means charge per unit of exposure (whether such rate is

manually generated or based upon judgment) for a particular market.

(b) The superintendent shall by regulation establish annual

limitations upon rate level increases or decreases which may take effect

without prior approval with respect to a market. The regulation shall be

designed to restore and promote stability in such markets. Upon a

determination made that, as to a particular market, competition is

either sufficient to assure that rates will not be excessive or that

such market is conducted in a manner not resulting in inadequate rates,

not destructive of competition or detrimental to the solvency of

insurers, the superintendent shall exempt such market from the

limitations set forth in such regulation. The superintendent, upon a

determination that annual limitations are necessary to restore and

promote stability in such a market, shall thereafter withdraw or modify

such exemption. The superintendent shall whenever he deems it

appropriate hold a hearing, on a record and at which representatives of

consumers and other interested parties may participate, for the purpose

of determining, on the basis of findings of fact and conclusions,

whether an exemption (or withdrawal or modification thereof) of any

market is appropriate. The initial hearing for such purpose shall be

held within sixty days of the effective date of this section, and the

superintendent shall act expeditiously in determining whether to exempt

any market.

(c) Limitations established or modified pursuant to subsection (b) of

this section may vary by market and, in establishing or modifying such

limitations, the superintendent may consider such factors as: the extent

and nature of competition; size and significance of the coverage; level

and range of rates and rate changes among insurers; investment and

underwriting experience of insurers; reinsurance availability; extent of

consumer complaints to the department of financial services; extent of

denials and restrictions of coverage; volume of cancellations and

nonrenewals; or changing conditions in the economic, judicial and social

environment.

(d) (1) Notwithstanding any other provisions of this article, in any

market governed by such regulation and not exempted by the

superintendent pursuant to this section, filings that produce rate level

changes within the limitations specified in such regulation shall become

effective without prior approval pursuant to subsection (a) of section

two thousand three hundred five of this article; filings which produce

rate level changes beyond such limitations shall not become effective

until approved by the superintendent pursuant to subsection (b) of

section two thousand three hundred five of this article, except that

filings shall be deemed approved unless disapproved by the

superintendent within thirty days, which the superintendent may with

cause extend an additional thirty days and with further cause extend an

additional fifteen days.

(2) No insurer shall cause an expiring policy to be renewed with

another insurer under common control, as defined by paragraph sixteen of

subsection (a) of section one hundred seven of this chapter in order to

avoid the limitations established by this section. An insurer may renew

an expiring policy with another insurer under common control based upon

underwriting criteria or other valid business reasons.

(e) The superintendent shall by regulation establish reasonable

standards for rating plans (including experience rating plans, schedule

rating plans, individual risk premium modification plans and expense

reduction plans) designed to modify rates in the development of premiums

for individual risks insured in a property/casualty market. Such

standards shall permit recognition of expected differences in loss or

expense characteristics, and shall be designed so that such plans are

reasonable and equitable in their application, and are not unfairly

discriminatory, violative of public policy or otherwise contrary to the

best interests of the people of this state. Such standards shall not

prevent the development of new or innovative rating methods which

otherwise comply with this article. Such rating plans shall be filed or

refiled by insurers in compliance with the regulation. The

superintendent shall review such plans, and may without a hearing

disapprove a plan that does not comply with the regulation. The

regulation shall establish maximum debits and credits that may result

from the application of a rating plan, shall encourage loss control,

safety programs and other methods of risk management, and shall require

insurers to maintain documentation of the basis for the debits or

credits applied under any plan. Once it has been filed and approved, use

of the rating plan shall become mandatory and such plan shall be applied

uniformly for eligible risks in a manner that is not unfairly

discriminatory.

(f) The superintendent shall review all rates filed between June

first, nineteen hundred eighty-six, and the effective date of the

regulation promulgated pursuant to subsection (b) of this section, and

shall, on a selective basis, review rates established prior to June

first, nineteen hundred eighty-six, including rates not manually rated,

to determine whether they comply with the applicable standards

prescribed by this article for purposes of the annual limitations

established or modified pursuant to subsection (b) of this section. In

establishing priorities for such selective review, the superintendent

shall give consideration to markets which have been subject to the

largest rate changes in the twelve month period prior to June first,

nineteen hundred eighty-six and to markets affecting the greatest number

of risks; the superintendent shall to the extent material also give

consideration to the criteria set forth in subsection (c) of this

section. In addition, the superintendent shall to the fullest extent

possible review markets not manually rated, for the purpose of

determining whether a manual rate is appropriate and shall, upon a

determination of appropriateness, require that a manual rate be

developed for such market. If the superintendent determines that the

reviewed rate pursuant to the mandatory or selective review specified by

this subsection does not comply with the applicable standards prescribed

by this article, the insurer shall be afforded an opportunity to be

heard and shall file in accordance with such determination prospective

rates applicable to new and renewal policies. Except as to the

procedures set forth in this subsection, nothing contained in this

subsection shall be construed to alter, limit, modify, enlarge or

abrogate any right of any insurer or any power or authority of the

superintendent under any other provision of this chapter.

(g) (1) Within ninety days after the effective date of this section

every insurer licensed to write property/casualty coverages in regard to

a market not exempted pursuant to subsection (b) of this section and

affected by the statutory provisions specified in this paragraph shall

file with the superintendent rates, for each such market written by the

insurer, appropriately modified to reflect the likely reductive cost

effects reasonably attributable to any newly enacted statutory

provisions of the civil practice law and rules, court of claims act and

not-for-profit corporation law. Such filings shall contain a specific

explanation of the reductive cost effects (which shall also be expressed

in amounts or percentages) ascribed to such statutory provisions, in a

form prescribed by the superintendent. In regard to a market not subject

to this section or exempted pursuant to this section, subsequent filings

shall reflect likely reductive cost effects reasonably attributable to

such statutory provisions appropriate to such market.

(2) The superintendent shall determine whether the rates filed

pursuant to paragraph one of this subsection reasonably reflect the

likely reductive cost effects attributable to the statutory provisions

specified in paragraph one of this subsection.

(3) In the event that the superintendent determines that the likely

reductive cost effects are not properly reflected in such rates, the

basis for such determination shall be stated and, within thirty days

after receipt of such determination, the affected insurer may request a

hearing. All policies written or renewed on or after the effective date

of the statutory provisions specified in paragraph one of this

subsection shall be subject to appropriate premium adjustments in the

event the superintendent's determination is sustained, and the insurer

shall maintain its records in regard to each such policy for a period of

no less than six years in order to verify that appropriate adjustments

have been made.

(4) For purposes of the annual limitations established pursuant to

subsection (b) of this section, the rates determined by the

superintendent to reasonably reflect the likely reductive cost effects

of the provisions specified in paragraph one of this subsection shall be

treated as if they had been in effect for the twelve month period prior

to the date of such determination.

(h) This section shall cease to be of any force or effect during the

period August third, two thousand one through the day before the

effective date of the property/casualty insurance availability act, and

after June thirtieth, two thousand twenty-nine, except that rates shall

reflect the likely reductive cost effects reasonably attributable to the

statutory provisions specified in paragraph one of subsection (g) of

this section.

* NB Expires July 1, 2029