N.Y. Insurance Law § 6613: Limitation of expenses; co-operative property/casualty insurance companies

§ 6613. Limitation of expenses; co-operative property/casualty

insurance companies. (a) The expenses of management of any co-operative

property/casualty insurance company shall not exceed in any one calendar

year forty-two and one-half percent of its net premiums written for such

year. The term "net premiums written" means direct premiums written plus

reinsurance assumed less return premiums and reinsurance ceded. In the

event expenses incurred in making a new system upgrade result in this

subsection's management expenses limit being exceeded, then the insurer

shall inform the superintendent sixty days in advance of the expense

limit being exceeded. Subject to approval by the superintendent, the

limit shall be temporarily raised to the amount necessary to encompass

the aforestated new system upgrade, provided that in no event shall the

limit be raised more than five percentage points and shall not be in

effect for more than three years, and provided further that an insurer

may submit to the superintendent, for the superintendent's prior

approval, a written request to temporarily raise the limit for up to an

additional three years, for a total of no more than six years. An

insurer shall submit such written request to the superintendent at least

sixty days but not more than one hundred twenty days before the

expiration of the initial period during which the limit was raised. The

insurer shall not increase premiums solely as a result of the management

expenses cap limit being exceeded. For purposes of this subsection, a

new system upgrade is defined as the acquisition of electronic data

processing apparatus and related equipment constituting a data

processing, record keeping or accounting system and operating and

non-operating software.

(b) Management expenses shall include all the expenses of such

company, except expenses incurred in the investigation, adjustment and

settlement of claims, taxes, fees, expenses of examination, and taxes,

repairs, and expenses on real estate.

(c) This section shall not apply to any assessment corporation which

is limited to the business permitted under subsection (a) of section six

thousand six hundred five of this article. Furthermore, the

superintendent may grant an annual exemption from compliance with the

provisions of subsection (a) of this section to any co-operative

property/casualty insurance company which, in the next preceding

calendar year, had net premiums written of less than three million

dollars. A written application for such an exemption must be submitted

by the first day of June in the year for which the exemption is

requested and shall contain such information as is deemed necessary by

the superintendent.