N.Y. Insurance Law § 4706: Reserve and surplus requirements

§ 4706. Reserve and surplus requirements. (a) Notwithstanding any

provision of law, the governing board of a municipal cooperative health

benefit plan shall establish a reserve fund, and the plan's chief fiscal

officer shall cause to be paid into the reserve fund the amounts

necessary to satisfy all contractual obligations and liabilities of the

plan, including:

(1) a reserve for payment of claims and expenses thereon reported but

not yet paid, and claims and expenses thereon incurred but not yet

reported which shall not be less than an amount equal to twenty-five

percent of expected incurred claims and expenses thereon for the current

plan year, unless a qualified actuary has demonstrated to the

superintendent's satisfaction that a lesser amount will be adequate;

(2) a reserve for unearned premium equivalents;

(3) a claim stabilization reserve;

(4) a reserve for other obligations of the municipal cooperative

health benefit plan; and

(5) a surplus account, established and maintained for the sole purpose

of satisfying unexpected obligations of the municipal cooperative health

benefit plan in the event of termination or abandonment of the plan,

which shall not be less than:

(A) five percent of the annualized earned premium equivalents during

the current fiscal year of a municipal cooperative health benefit plan

which consists of five or more participating municipal corporations and

covers two thousand or more employees and retirees; or

(B) seven percent of the annualized earned premium equivalents during

the current fiscal year of the municipal cooperative health benefit plan

which consists of four or fewer participating municipal corporations or

covers fewer than two thousand employees and retirees.

(b) The moneys in the plan's reserve funds and surplus account shall

be deposited in one or more banks or trust companies designated by the

governing board in accordance with the municipal cooperation agreement,

in one or more separate segregated accounts, subject to investment in

obligations specified in the general municipal law or education law (as

applicable) for investment of moneys in reserve funds or as otherwise

expressly permitted by the superintendent. Any such bank or trust

company shall be located in this state and shall be duly chartered

pursuant to federal law or the laws of this state. Any interest earned

or capital gain realized on the money so deposited or invested shall

accrue to and become part of the plan's reserve funds or surplus

account, as applicable.

(c) The plan's chief fiscal officer shall account for the plan's

reserve funds separate and apart from all other funds of the municipal

cooperative health benefit plan, and such accounting shall show:

(1) the purpose, source, date and amount of each sum paid into the

fund;

(2) the interest earned by such funds;

(3) capital gains or losses resulting from the sale of investments of

the plan's reserve funds;

(4) the order, purpose, date and amount of each payment from the

reserve fund; and

(5) the assets of the fund, indicating cash balance and schedule of

investments.

(d) The plan's chief fiscal officer, within ninety days of the end of

each fiscal year, shall furnish a detailed report of the operations and

condition of the plan's reserve funds to the governing board.

(e) An expenditure from the plan's reserve funds shall be made only

for the payment of benefits and other obligations of the municipal

cooperative health benefit plan or expenses incurred in administering

such plan.

(f) If the municipal cooperative health benefit plan ceases to provide

plan benefits on a shared-funding basis, the moneys remaining in the

plan's reserve funds not needed to satisfy plan liabilities incurred

prior to such cessation shall be disposed of in the manner provided in

the municipal cooperation agreement.

(g) If a municipal corporation withdraws from a municipal cooperative

health benefit plan operating under a certificate of authority, the

governing board shall, in accordance with the municipal cooperation

agreement, determine the amount, if any, of the plan's reserve funds

attributable to such municipal corporation, after considering all plan

liabilities, and dispose of such amount in the manner provided in the

municipal cooperation agreement.