N.Y. Insurance Law § 4309: Limitation on expenses

§ 4309. Limitation on expenses. (a) No corporation subject to the

provisions of this article shall, during any one year, disburse more

than the percentages hereafter prescribed of the aggregate amount of the

premiums received during such year as expenditures for expenses, which,

for the purposes of this article, shall include all expenses paid or

incurred by the corporation which do not constitute benefit payments

made to or on behalf of persons covered under contracts issued by such

corporations:

(1) For hospital service corporations: fifteen per centum reduced by

one per centum for each five million dollars or fraction thereof above

one million dollars of premiums received to ten per centum.

(2) All other corporations: twenty per centum reduced by one per

centum for each five million dollars or fraction thereof above one

million dollars of premiums received to fifteen per centum except that

for any corporation which derives more than fifty per centum of its

premiums received from the sale of contracts which provide hospital

service benefits: seventeen and one-half per centum reduced by one per

centum for each five million dollars or fraction thereof above one

million dollars of premiums received to twelve and one-half per centum.

(3) Upon written application, the superintendent may waive the

limitations in paragraph one or two of this subsection for any

corporation which has not attained the level of enrollment which it

needs to attain a break-even position. The break-even position is

attained when the amount of annual losses and expenses incurred by the

corporation is equal to the amount of premiums earned during this

period. Such corporation shall be subject to such limitations in the

calendar year following the year in which it attains a break-even

position.

(b) If any such corporation shall in any calendar year make or incur

expenses as hereinabove defined in excess of its expense limit the

superintendent may, upon written application of such corporation and a

showing that such corporation has taken steps in accordance with a plan

submitted by the corporation and approved by the superintendent which

will enable it to comply with the provisions of this section during the

next calendar year, suspend the expense limit for such corporation for

the calendar year in which the excess was incurred but the

superintendent shall not suspend the expense limit for any such

corporation for more than two calendar years in succession.