S T A T E   O F   N E W   Y O R K
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    S. 8088                                                 A. 11369

                      S E N A T E - A S S E M B L Y

                              June 7, 2010
                               ___________

IN  SENATE  --  Introduced  by  COMMITTEE ON RULES -- (at request of the
  Governor) -- read twice and ordered printed, and when  printed  to  be
  committed to the Committee on Finance

IN  ASSEMBLY  --  Introduced by COMMITTEE ON RULES -- (at request of the
  Governor) -- read once and referred to the Committee on Ways and Means

AN ACT to amend the insurance law, in  relation  to  prior  approval  of
  health insurance premium rates

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subsection (e) of section 3231 of  the  insurance  law,  as
added  by chapter 501 of the laws of 1992, subparagraph (B) of paragraph
2 as amended by chapter 237 of the laws of 2009, is amended to  read  as
follows:
  (e)  (1)  (A)  An  insurer  desiring  to increase or decrease premiums
[after April first, nineteen hundred ninety-three] for any  policy  form
subject to this section shall submit a rate filing or application to the
superintendent.
  AN  INSURER SHALL SEND WRITTEN NOTICE OF THE PROPOSED RATE ADJUSTMENT,
INCLUDING THE SPECIFIC CHANGE  REQUESTED,  TO  EACH  POLICY  HOLDER  AND
CERTIFICATE  HOLDER AFFECTED BY THE ADJUSTMENT ON OR BEFORE THE DATE THE
RATE FILING OR APPLICATION IS SUBMITTED  TO  THE  SUPERINTENDENT.    THE
NOTICE  SHALL PROMINENTLY INCLUDE MAILING AND WEBSITE ADDRESSES FOR BOTH
THE INSURANCE DEPARTMENT AND THE INSURER THROUGH  WHICH  A  PERSON  MAY,
WITHIN  THIRTY  DAYS  FROM  THE  DATE  THE RATE FILING OR APPLICATION IS
SUBMITTED TO THE SUPERINTENDENT, CONTACT  THE  INSURANCE  DEPARTMENT  OR
INSURER  TO RECEIVE ADDITIONAL INFORMATION OR TO SUBMIT WRITTEN COMMENTS
TO THE INSURANCE DEPARTMENT ON THE RATE  FILING  OR  APPLICATION.    THE
SUPERINTENDENT  SHALL  ESTABLISH  A  PROCESS TO POST ON THE DEPARTMENT'S
WEBSITE, IN A TIMELY MANNER,  ALL  RELEVANT  WRITTEN  COMMENTS  RECEIVED
PERTAINING TO RATE FILINGS OR APPLICATIONS.  THE INSURER SHALL PROVIDE A
COPY  OF THE NOTICE TO THE SUPERINTENDENT WITH THE RATE FILING OR APPLI-
CATION. THE SUPERINTENDENT SHALL IMMEDIATELY  CAUSE  THE  NOTICE  TO  BE
POSTED  ON  THE INSURANCE DEPARTMENT'S WEBSITE. The superintendent shall

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD12267-01-0

S. 8088                             2                           A. 11369

determine whether the filing or application shall  become  effective  as
filed,  shall become effective as modified, or shall be disapproved. THE
SUPERINTENDENT MAY MODIFY OR DISAPPROVE THE RATE FILING  OR  APPLICATION
IF  THE  SUPERINTENDENT FINDS THAT THE PREMIUMS ARE UNREASONABLE, EXCES-
SIVE, INADEQUATE, OR  UNFAIRLY  DISCRIMINATORY,  AND  MAY  CONSIDER  THE
FINANCIAL  CONDITION  OF THE INSURER WHEN APPROVING, MODIFYING OR DISAP-
PROVING ANY PREMIUM ADJUSTMENT.  THE DETERMINATION OF THE SUPERINTENDENT
SHALL BE SUPPORTED BY SOUND ACTUARIAL ASSUMPTIONS AND METHODS, AND SHALL
BE RENDERED IN WRITING BETWEEN THIRTY AND SIXTY DAYS FROM THE  DATE  THE
RATE  FILING  OR  APPLICATION IS SUBMITTED TO THE SUPERINTENDENT. SHOULD
THE SUPERINTENDENT REQUIRE ADDITIONAL INFORMATION FROM  THE  INSURER  IN
ORDER  TO  MAKE  A  DETERMINATION,  THE SUPERINTENDENT SHALL REQUIRE THE
INSURER TO FURNISH SUCH INFORMATION, AND IN SUCH EVENT, THE  SIXTY  DAYS
SHALL  BE  TOLLED  AND SHALL RESUME AS OF THE DATE THE INSURER FURNISHES
THE INFORMATION TO THE SUPERINTENDENT. IF  THE  SUPERINTENDENT  REQUESTS
ADDITIONAL  INFORMATION  LESS  THAN  TEN DAYS FROM THE EXPIRATION OF THE
SIXTY DAYS (EXCLUSIVE OF TOLLING), THE  SUPERINTENDENT  MAY  EXTEND  THE
SIXTY DAY PERIOD AN ADDITIONAL TWENTY DAYS TO MAKE A DETERMINATION.  THE
APPLICATION OR RATE FILING WILL BE DEEMED APPROVED IF A DETERMINATION IS
NOT  RENDERED  WITHIN  THE TIME ALLOTTED UNDER THIS SECTION.  AN INSURER
SHALL NOT IMPLEMENT A RATE ADJUSTMENT UNLESS  THE  INSURER  PROVIDES  AT
LEAST  SIXTY  DAYS ADVANCE WRITTEN NOTICE OF THE PREMIUM RATE ADJUSTMENT
APPROVED BY THE SUPERINTENDENT TO EACH  POLICY  HOLDER  AND  CERTIFICATE
HOLDER AFFECTED BY THE RATE ADJUSTMENT.
  (B)  THE EXPECTED MINIMUM LOSS RATIO FOR A POLICY FORM SUBJECT TO THIS
SECTION, FOR WHICH A RATE FILING OR APPLICATION IS MADE PURSUANT TO THIS
PARAGRAPH, OTHER THAN A MEDICARE SUPPLEMENTAL INSURANCE POLICY, OR, WITH
THE APPROVAL OF THE SUPERINTENDENT, AN AGGREGATION OF POLICY FORMS  THAT
ARE  COMBINED  INTO  ONE  COMMUNITY  RATING  EXPERIENCE  POOL  AND RATED
CONSISTENT WITH COMMUNITY RATING REQUIREMENTS, SHALL NOT  BE  LESS  THAN
EIGHTY-TWO  PERCENT.  IN  REVIEWING  A  RATE  FILING OR APPLICATION, THE
SUPERINTENDENT MAY MODIFY THE EIGHTY-TWO PERCENT EXPECTED  MINIMUM  LOSS
RATIO  REQUIREMENT  IF THE SUPERINTENDENT DETERMINES THE MODIFICATION TO
BE IN THE INTERESTS OF THE PEOPLE OF THIS STATE OR IF THE SUPERINTENDENT
DETERMINES THAT A MODIFICATION IS NECESSARY TO MAINTAIN INSURER  SOLVEN-
CY.  NO LATER THAN JUNE THIRTIETH OF EACH YEAR, EVERY INSURER SUBJECT TO
THIS  SUBPARAGRAPH  SHALL  ANNUALLY REPORT THE ACTUAL LOSS RATIO FOR THE
PREVIOUS CALENDAR YEAR IN A FORMAT ACCEPTABLE TO THE SUPERINTENDENT.  IF
AN  EXPECTED  LOSS  RATIO  IS NOT MET, THE SUPERINTENDENT MAY DIRECT THE
INSURER TO TAKE CORRECTIVE ACTION, WHICH MAY INCLUDE THE SUBMISSION OF A
RATE FILING TO REDUCE FUTURE PREMIUMS, OR TO  ISSUE  DIVIDENDS,  PREMIUM
REFUNDS OR CREDITS, OR ANY COMBINATION OF THESE.
  (2)  (A) [Beginning October first, nineteen hundred ninety-four] UNTIL
SEPTEMBER THIRTIETH, TWO THOUSAND TEN, as an alternate procedure to  the
requirements of paragraph one of this subsection, an insurer desiring to
increase  or  decrease  premiums  for  any  policy  form subject to this
section may instead submit a rate filing or application  to  the  super-
intendent  and  such  application  or  filing  shall be deemed approved,
provided that: (i) the anticipated minimum loss ratio for a policy  form
shall  not  be less than [seventy-five] EIGHTY-TWO percent of the premi-
um[,]; and (ii) the insurer submits, as part of such filing,  a  certif-
ication  by a member of the American Academy of Actuaries or other indi-
vidual  acceptable  to  the  superintendent  that  the  insurer  is   in
compliance  with  the  provisions  of  this  paragraph,  based upon that
person's examination, including a review of the appropriate records  and
of  the  actuarial assumptions and methods used by the insurer in estab-

S. 8088                             3                           A. 11369

lishing premium rates for policy forms subject  to  this  section.    AN
INSURER SHALL NOT UTILIZE THE ALTERNATE PROCEDURE PURSUANT TO THIS PARA-
GRAPH TO IMPLEMENT A CHANGE IN RATES TO BE EFFECTIVE ON OR AFTER OCTOBER
FIRST, TWO THOUSAND TEN.
  (B) Each calendar year, an insurer shall return, in the form of aggre-
gate  benefits  for  each  policy  form  filed pursuant to the alternate
procedure set forth in this paragraph at least [seventy-five] EIGHTY-TWO
percent of the aggregate premiums collected for the policy  form  during
that  calendar  year. Insurers shall annually report, no later than [May
first] JUNE THIRTIETH of each year, the loss ratio  calculated  pursuant
to  this  paragraph  for each such policy form for the previous calendar
year. In each case where the loss ratio  for  a  policy  form  fails  to
comply  with  the  [seventy-five] EIGHTY-TWO percent loss ratio require-
ment, the insurer shall issue a dividend or credit against future premi-
ums for all policy holders with that policy form in an amount sufficient
to assure that the aggregate benefits paid in the previous calendar year
plus the amount of the dividends and credits shall equal  [seventy-five]
EIGHTY-TWO  percent  of  the aggregate premiums collected for the policy
form in the previous calendar year. The  dividend  or  credit  shall  be
issued to each policy holder who had a policy which was in effect at any
time  during  the  applicable  year.  The  dividend  or  credit shall be
prorated based on the direct premiums earned  for  the  applicable  year
among all policy holders eligible to receive such dividend or credit. An
insurer  shall  make a reasonable effort to identify the current address
of, and issue dividends or credits to, former policy holders entitled to
the dividend or credit. An insurer shall, with respect to  dividends  or
credits  to  which  former  policy holders that the insurer is unable to
identify after a reasonable effort would otherwise be entitled, have the
option, as deemed acceptable by  the  superintendent,  of  prospectively
adjusting  premium  rates  by  the  amount of such dividends or credits,
issuing the amount of such dividends or credits to existing policy hold-
ers, depositing the amount of such dividends  or  credits  in  the  fund
established pursuant to section four thousand three hundred twenty-two-a
of  this chapter, or utilizing any other method which offsets the amount
of such dividends or  credits.    All  dividends  and  credits  must  be
distributed  by  September  thirtieth of the year following the calendar
year in which the loss ratio requirements were not satisfied. The annual
report required by this paragraph shall include an insurer's calculation
of the dividends and credits, as well as an explanation of the insurer's
plan to issue dividends or credits.  The  instructions  and  format  for
calculating  and  reporting loss ratios and issuing dividends or credits
shall be specified by the superintendent by regulation. Such regulations
shall include provisions for the distribution of a dividend or credit in
the event of cancellation or termination by a policy holder.
  (3) ALL POLICY FORMS SUBJECT TO THIS SUBSECTION, OTHER  THAN  MEDICARE
SUPPLEMENTAL INSURANCE POLICY FORMS, ISSUED OR IN EFFECT DURING CALENDAR
YEAR  TWO THOUSAND TEN SHALL BE SUBJECT TO A MINIMUM LOSS RATIO REQUIRE-
MENT OF EIGHTY-TWO PERCENT. INSURERS MAY USE THE ALTERNATE FILING PROCE-
DURE SET FORTH IN PARAGRAPH TWO OF THIS  SUBSECTION  TO  ADJUST  PREMIUM
RATES IN ORDER TO MEET THE REQUIRED MINIMUM LOSS RATIO FOR CALENDAR YEAR
TWO  THOUSAND TEN.  THE RATE FILING OR APPLICATION SHALL BE SUBMITTED NO
LATER THAN SEPTEMBER THIRTIETH, TWO THOUSAND TEN.
  S 2. Section 4308 of the insurance law, subsection (b) as amended  and
subsections  (d),  (e)  and  (f)  as added by chapter 501 of the laws of
1992, paragraph 3 of subsection (c) as amended by  chapter  520  of  the
laws  of 1999, subsections (g), (h), (i) and (j) as added by chapter 504

S. 8088                             4                           A. 11369

of the laws of 1995 and paragraph 2 of  subsection  (h)  as  amended  by
chapter 237 of the laws of 2009, is amended to read as follows:
  S  4308.  Supervision  of  superintendent[;  public  hearings]. (a) No
corporation subject to the provisions of this article shall  enter  into
any  contract  unless and until it shall have filed with the superinten-
dent a copy of the contract or  certificate  and  of  all  applications,
riders  and  endorsements  for  use  in  connection with the issuance or
renewal thereof, to be formally approved by him  as  conforming  to  the
applicable  provisions  of  this  article  and not inconsistent with any
other provision of law applicable  thereto.  The  superintendent  shall,
within  a  reasonable time after the filing of any such form, notify the
corporation filing the same either of his approval or of his disapproval
of such form.
  (b) No corporation subject to the provisions  of  this  article  shall
enter  into  any  contract unless and until it shall have filed with the
superintendent a schedule of the premiums  or,  if  appropriate,  rating
formula  from  which  premiums  are  determined,  to  be  paid under the
contracts and shall have obtained the superintendent's approval thereof.
The superintendent may refuse such approval if he finds that such premi-
ums, or the premiums derived from the  rating  formula,  are  excessive,
inadequate  or  unfairly  discriminatory,  provided, however, the super-
intendent may also consider the financial condition of such  corporation
in approving or disapproving any premium or rating formula.  ANY ADJUST-
MENTS  TO  AN  APPROVED  SCHEDULE  OF PREMIUMS OR TO THE APPROVED RATING
FORMULA FOR NON-COMMUNITY RATED CONTRACTS SHALL ALSO BE SUBJECT  TO  THE
APPROVAL OF THE SUPERINTENDENT PROVIDED, HOWEVER, SUCH ADJUSTMENTS SHALL
NOT  BE  SUBJECT  TO THE REQUIREMENTS OF SUBSECTION (C) OF THIS SECTION.
Any premium  or  formula  approved  by  the  superintendent  shall  make
provision for such increase as may be necessary to meet the requirements
of  a  plan  approved  by the superintendent in the manner prescribed in
section four thousand three hundred ten of this article for  restoration
of  the statutory reserve fund required by such section. Notwithstanding
any other provision of law, the superintendent,  as  part  of  the  rate
increase  approval  process, may defer, reduce or reject a rate increase
if, in the judgment of the  superintendent,  the  salary  increases  for
senior  level  management executives employed at corporations subject to
the provisions of this article are excessive or  unwarranted  given  the
financial  condition  or  overall  performance  of such corporation. The
superintendent is authorized to promulgate rules and  regulations  which
the superintendent deems necessary to carry out such deferral, reduction
or rejection.
  (c)  (1)  [Except  for  an  application  pursuant to subsection (f) of
section four thousand  three  hundred  four  of  this  article,  no]  AN
increase  or decrease in premiums with respect to [individual] COMMUNITY
RATED contracts [issued pursuant to  the  provisions  of  such  section]
shall  NOT  be approved by the superintendent unless it is in compliance
with the provisions of this  subsection  as  well  as  other  applicable
provisions of law.
  (2)  [Prior  to  any  such  filing or application by or on behalf of a
corporation for an increase or decrease in premiums for such  contracts,
such  corporation,  when directed by the superintendent, shall conduct a
public hearing with respect to the terms of such filing or  application.
Notice of such hearing shall be published on three successive days in at
least  two newspapers having general circulation within the territory or
district wherein such corporation seeking  approval  of  the  filing  is
authorized  to  do business. The date specified for the hearing shall be

S. 8088                             5                           A. 11369

not less than ten nor more than thirty days from the date of  the  first
publication  of  the  hearing.  The  notice  of  hearing shall state the
purpose thereof, the time when and the place where  the  public  hearing
will  be  held.  The public hearing shall be held at a time and location
deemed by the superintendent to  be  most  convenient  to  the  greatest
number  of  persons  affected by such filing. At such hearing any person
may be heard in favor of, or against, the terms of the filing or  appli-
cation.
  (3)  Following  the  public  hearing held pursuant to paragraph two of
this subsection, a transcript of the testimony therein shall be  submit-
ted  together  with a rate filing or application, to the superintendent.
Upon receipt of such filing or application by or on behalf of  a  corpo-
ration,  the  superintendent  shall  order that a public hearing be held
with respect to the terms of such filing or application. Notice of  such
hearing  shall  be  published  on  three successive days in at least two
newspapers having general circulation within the territory  or  district
wherein  such  corporation seeking approval of the filing or application
is authorized to do business. For a corporation writing more than  three
billion  dollars  in  premiums  as  of  December  thirty-first, nineteen
hundred ninety-six and whose service territory is greater than ten coun-
ties, such notice is to be published in at least  one  newspaper  having
general circulation in each county where persons in the service territo-
ry are affected by the proposed change. The date specified for the hear-
ing  shall  be not less than ten nor more than thirty days from the date
of the last publication of the hearing. The notice of hearing shall also
state the purpose thereof, the time when and the place where the  public
hearing  will  be  held.  For those corporations writing more than three
billion dollars  in  premiums  as  of  December  thirty-first,  nineteen
hundred  ninety-six,  and  whose territory is greater than ten counties,
the notice of  hearing  shall  also  state  the  changes  proposed,  the
contracts  to  be  affected  and  the  time when such changes would take
effect. The notice of hearing shall state, in prominent display, a toll-
free telephone number of the insurance department that may be  contacted
to  receive  additional information on the subject rate application. The
public hearing shall be held at a time and location deemed by the super-
intendent to be most  convenient  to  the  greatest  number  of  persons
affected by such filing or application. A copy of such notice of hearing
shall be forwarded by the superintendent by registered or certified mail
to  the  principal  address  of the corporation seeking approval of such
filing or application. The hearing may be continued  or  adjourned  from
day to day within the discretion of the superintendent.  At such hearing
any person may be heard in favor of, or against, the terms of the filing
or  application.  After conclusion of the public hearing the superinten-
dent shall render a written decision determining whether the  filing  or
application  shall  become effective as filed, shall become effective as
modified, or shall be disapproved. If, subsequent to  the  hearing,  but
prior  to the issuing of the superintendent's written decision on a rate
increase request, the corporation increases its requested rate  for  any
contract  by  two percent or more, a re-hearing shall be held. The time,
location, and notice requirements for such re-hearing  shall  be  deter-
mined by the superintendent.
  (4)]  A  CORPORATION DESIRING TO INCREASE OR DECREASE PREMIUMS FOR ANY
CONTRACT SUBJECT TO THIS SUBSECTION SHALL SUBMIT A RATE FILING OR APPLI-
CATION TO THE SUPERINTENDENT.  A CORPORATION SHALL SEND  WRITTEN  NOTICE
OF   THE   PROPOSED  RATE  ADJUSTMENT,  INCLUDING  THE  SPECIFIC  CHANGE
REQUESTED, TO EACH  CONTRACT  HOLDER  AND  SUBSCRIBER  AFFECTED  BY  THE

S. 8088                             6                           A. 11369

ADJUSTMENT  ON  OR  BEFORE  THE  DATE  THE RATE FILING OR APPLICATION IS
SUBMITTED TO THE SUPERINTENDENT.  THE NOTICE SHALL  PROMINENTLY  INCLUDE
MAILING  AND WEBSITE ADDRESSES FOR BOTH THE INSURANCE DEPARTMENT AND THE
CORPORATION THROUGH WHICH A PERSON MAY, WITHIN THIRTY DAYS FROM THE DATE
THE  RATE  FILING  OR  APPLICATION  IS  SUBMITTED TO THE SUPERINTENDENT,
CONTACT THE INSURANCE DEPARTMENT OR CORPORATION  TO  RECEIVE  ADDITIONAL
INFORMATION OR TO SUBMIT WRITTEN COMMENTS TO THE INSURANCE DEPARTMENT ON
THE  RATE  FILING OR APPLICATION.   THE SUPERINTENDENT SHALL ESTABLISH A
PROCESS TO POST ON THE DEPARTMENT'S WEBSITE, IN  A  TIMELY  MANNER,  ALL
RELEVANT  WRITTEN COMMENTS RECEIVED PERTAINING TO RATE FILINGS OR APPLI-
CATIONS.  THE CORPORATION SHALL PROVIDE A COPY  OF  THE  NOTICE  TO  THE
SUPERINTENDENT  WITH THE RATE FILING OR APPLICATION.  THE SUPERINTENDENT
SHALL IMMEDIATELY CAUSE THE NOTICE TO BE POSTED ON THE INSURANCE DEPART-
MENT'S WEBSITE.  THE SUPERINTENDENT SHALL DETERMINE WHETHER  THE  FILING
OR  APPLICATION  SHALL BECOME EFFECTIVE AS FILED, SHALL BECOME EFFECTIVE
AS MODIFIED, OR SHALL BE DISAPPROVED. THE SUPERINTENDENT MAY  MODIFY  OR
DISAPPROVE  THE  RATE  FILING OR APPLICATION IF THE SUPERINTENDENT FINDS
THAT THE PREMIUMS ARE UNREASONABLE, EXCESSIVE, INADEQUATE,  OR  UNFAIRLY
DISCRIMINATORY,  AND  MAY CONSIDER THE FINANCIAL CONDITION OF THE CORPO-
RATION IN APPROVING, MODIFYING OR DISAPPROVING ANY  PREMIUM  ADJUSTMENT.
THE  DETERMINATION  OF  THE  SUPERINTENDENT  SHALL BE SUPPORTED BY SOUND
ACTUARIAL ASSUMPTIONS AND METHODS, AND  SHALL  BE  RENDERED  IN  WRITING
BETWEEN  THIRTY AND SIXTY DAYS FROM THE DATE THE RATE FILING OR APPLICA-
TION IS SUBMITTED  TO  THE  SUPERINTENDENT.  SHOULD  THE  SUPERINTENDENT
REQUIRE  ADDITIONAL  INFORMATION FROM THE CORPORATION IN ORDER TO MAKE A
DETERMINATION, THE  SUPERINTENDENT  SHALL  REQUIRE  THE  CORPORATION  TO
FURNISH  SUCH  INFORMATION,  AND  IN SUCH EVENT, THE SIXTY DAYS SHALL BE
TOLLED AND SHALL RESUME AS OF THE DATE  THE  CORPORATION  FURNISHES  THE
INFORMATION  TO THE SUPERINTENDENT. IF THE SUPERINTENDENT REQUESTS ADDI-
TIONAL INFORMATION LESS THAN TEN DAYS FROM THE EXPIRATION OF  THE  SIXTY
DAYS (EXCLUSIVE OF TOLLING), THE SUPERINTENDENT MAY EXTEND THE SIXTY DAY
PERIOD AN ADDITIONAL TWENTY DAYS, TO MAKE A DETERMINATION.  THE APPLICA-
TION  OR  RATE  FILING WILL BE DEEMED APPROVED IF A DETERMINATION IS NOT
RENDERED WITHIN THE TIME ALLOTTED UNDER THIS  SECTION.    A  CORPORATION
SHALL NOT IMPLEMENT A RATE ADJUSTMENT UNLESS THE CORPORATION PROVIDES AT
LEAST  SIXTY  DAYS ADVANCE WRITTEN NOTICE OF THE PREMIUM RATE ADJUSTMENT
APPROVED BY THE SUPERINTENDENT TO EACH CONTRACT  HOLDER  AND  SUBSCRIBER
AFFECTED BY THE RATE ADJUSTMENT.
  (3)(A)  THE EXPECTED MINIMUM LOSS RATIO FOR A CONTRACT FORM SUBJECT TO
THIS SUBSECTION FOR WHICH A RATE FILING OR APPLICATION IS MADE  PURSUANT
TO   THIS  PARAGRAPH,  OTHER  THAN  A  MEDICARE  SUPPLEMENTAL  INSURANCE
CONTRACT, OR, WITH THE APPROVAL OF THE SUPERINTENDENT, AN AGGREGATION OF
CONTRACT FORMS THAT ARE COMBINED INTO ONE  COMMUNITY  RATING  EXPERIENCE
POOL  AND RATED CONSISTENT WITH COMMUNITY RATING REQUIREMENTS, SHALL NOT
BE LESS THAN EIGHTY-TWO PERCENT. IN REVIEWING A RATE FILING OR  APPLICA-
TION,  THE  SUPERINTENDENT  MAY  MODIFY  THE EIGHTY-TWO PERCENT EXPECTED
MINIMUM LOSS RATIO REQUIREMENT  IF  THE  SUPERINTENDENT  DETERMINES  THE
MODIFICATION  TO  BE  IN THE INTERESTS OF THE PEOPLE OF THIS STATE OR IF
THE SUPERINTENDENT DETERMINES THAT A MODIFICATION IS NECESSARY TO  MAIN-
TAIN INSURER SOLVENCY.  NO LATER THAN JUNE THIRTIETH OF EACH YEAR, EVERY
CORPORATION SUBJECT TO THIS SUBPARAGRAPH SHALL ANNUALLY REPORT THE ACTU-
AL  LOSS  RATIO FOR THE PREVIOUS CALENDAR YEAR IN A FORMAT ACCEPTABLE TO
THE SUPERINTENDENT. IF AN EXPECTED LOSS RATIO IS  NOT  MET,  THE  SUPER-
INTENDENT  MAY  DIRECT  THE CORPORATION TO TAKE CORRECTIVE ACTION, WHICH
MAY INCLUDE THE SUBMISSION OF A RATE FILING TO REDUCE  FUTURE  PREMIUMS,

S. 8088                             7                           A. 11369

OR TO ISSUE DIVIDENDS, PREMIUM REFUNDS OR CREDITS, OR ANY COMBINATION OF
THESE.
  (B) THE EXPECTED MINIMUM LOSS RATIO FOR A MEDICARE SUPPLEMENTAL INSUR-
ANCE  CONTRACT FORM SHALL NOT BE LESS THAN EIGHTY PERCENT. NO LATER THAN
MAY FIRST OF EACH YEAR, EVERY CORPORATION SUBJECT TO  THIS  SUBPARAGRAPH
SHALL  ANNUALLY  REPORT  THE  ACTUAL  LOSS  RATIO FOR EACH CONTRACT FORM
SUBJECT TO THIS SECTION FOR THE  PREVIOUS  CALENDAR  YEAR  IN  A  FORMAT
ACCEPTABLE  TO THE SUPERINTENDENT. IN EACH CASE WHERE THE LOSS RATIO FOR
THE CONTRACT FORM FAILS TO COMPLY WITH THE  EIGHTY  PERCENT  LOSS  RATIO
REQUIREMENT,  THE  CORPORATION  SHALL SUBMIT A CORRECTIVE ACTION PLAN TO
THE SUPERINTENDENT FOR ASSURING COMPLIANCE WITH THE  APPLICABLE  MINIMUM
LOSS  RATIO  STANDARD.  THE CORRECTIVE ACTION PLAN SHALL BE SUBMITTED TO
THE SUPERINTENDENT WITHIN SIXTY DAYS OF THE CORPORATION'S SUBMISSION  OF
THE  ANNUAL REPORT REQUIRED BY THIS SUBPARAGRAPH. THE CORPORATION'S PLAN
MAY UTILIZE PREMIUM REFUNDS OR CREDITS, SUBJECT TO THE APPROVAL  OF  THE
SUPERINTENDENT.
  (4)  In  case  of  conflict  between  this  subsection  and  any other
provision of law, this subsection shall prevail.
  (d) The superintendent  shall  order  an  independent  management  and
financial  audit of corporations subject to the provisions of this arti-
cle with a combined premium volume exceeding two billion dollars annual-
ly in order to develop a detailed understanding  of  such  corporation's
financial  status  and  to determine the viability of such corporation's
products.  Such  audit  shall  be  performed  by  an  organization  upon
submission  of  a  program  plan  in  response to a request for proposal
approved by the superintendent in consultation with the commissioner  of
health  and  the state comptroller. Such audit shall not be performed by
any organization that has in any way performed or furnished services  of
any  kind  to  the  corporation within the past five years, unless it is
adequately demonstrated that such services  would  not  compromise  that
organization's performance and objectivity. The audit shall be completed
and  a  report  submitted by May first, nineteen hundred ninety-three to
the superintendent, the commissioner of health, and the  chairs  of  the
senate and assembly committees on health and insurance. The scope of the
audit  shall  include,  but not be limited to, financial and competitive
position, corporate structure and governance, organization  and  manage-
ment, strategic direction, rate adequacy, and the regulatory and compet-
itive  environment  in  the  state  of New York. Specifically, the audit
shall include, but not be limited to:
  (i) determining  the  corporation's  financial  and  market  position,
including  its reserves, trends in membership, market share, and profit-
ability by market segment;
  (ii) evaluating the corporation's product offerings  with  respect  to
market  requirements  and trends, the corporation's responses to the New
York health care market, and its management of medical claims costs;
  (iii) assessing the effectiveness of the organizational and management
structure and performance,  including,  but  not  limited  to,  possible
improvement  in  the  size,  structure, composition and operation of the
board  of  directors,  productivity  improvement,  information  systems,
management  development,  personnel  practices, mix and level of skills,
personnel turnover, investment practices and rate of return upon invest-
ment activities;
  (iv) analyzing the corporation's strategic directions, its adequacy to
meet competitive, market, and existing regulatory trends,  including  an
evaluation  of  the use of brokers in marketing products, and the impact

S. 8088                             8                           A. 11369

of those strategies on the corporation's  future  financial  performance
and on the health care system of New York;
  (v)  evaluating  the  adequacy of rates for existing products, partic-
ularly (but not limited to)  small  group,  medicare  supplemental,  and
direct payment to identify areas that may need immediate remedial atten-
tion;
  (vi)  identifying  any changes to the regulatory and legislative envi-
ronment that may need to be made to  ensure  that  the  corporation  can
continue to be financially viable and competitive;
  (vii)  identifying  and  assessing  specific  transactions such as the
procurement of reinsurance, sale of real property and the sale of future
investment income to improve the financial condition of the corporation;
and
  (viii) evaluating and identifying possible improvements in the  corpo-
ration's managed care strategies, operations and claims handling.
  (e)  Notwithstanding  any  other  provision of law, the superintendent
shall have the power to require  independent  management  and  financial
audits of corporations subject to the provisions of this article whenev-
er  in  the judgment of the superintendent, losses sustained by a corpo-
ration jeopardize its ability to provide meaningful coverage at afforda-
ble rates or when such audit would be necessary to protect the interests
of subscribers. The audit shall include,  but  not  be  limited  to,  an
investigation of the corporation's provision of benefits to senior citi-
zens,  individual  and  family,  and  small  group  and  small  business
subscribers in relation to the needs of  those  subscribers.  The  audit
shall  also include an evaluation of the efficiency of the corporation's
management, particularly with respect to lines  of  business  which  are
experiencing  losses.  In every case in which the superintendent chooses
to require an audit provided for in this subsection, the  superintendent
shall  have the authority to select the auditor. Any costs incurred as a
result of the operation of this subsection  shall  be  assessed  on  all
domestic  insurers  in  the same manner as provided for in section three
hundred thirty-two of this chapter.
  (f) The results of any audit conducted pursuant to subsections (d) and
(e) of this section shall be provided to the corporation and each member
of its board of directors. The superintendent shall have  the  authority
to  direct  the  corporation in writing to implement any recommendations
resulting from the audit that the superintendent finds to  be  necessary
and  reasonable;  provided, however, that the superintendent shall first
consider any written response submitted by the corporation or the  board
of  directors  prior  to making such finding. Upon any application for a
rate adjustment by the corporation, the superintendent shall review  the
corporation's  compliance  with  the directions and recommendations made
previously by the superintendent, as  a  result  of  the  most  recently
completed  management or financial audit and shall include such findings
in any written decision concerning such application.
  (g)(1) [Beginning January first, nineteen  hundred  ninety-six]  UNTIL
SEPTEMBER  THIRTIETH, TWO THOUSAND TEN, as an alternate procedure to the
requirements of subsection (c) of this section, a corporation subject to
the provisions of this article desiring to increase or decrease premiums
for any contract subject to this  section  may  instead  submit  a  rate
filing  or  application  to  the  superintendent and such application or
filing shall be deemed  approved,  provided  that  (A)  the  anticipated
incurred  loss ratio for a contract form shall not be less than [eighty-
five] EIGHTY-TWO percent for  individual  direct  payment  contracts  or
[seventy-five] EIGHTY-TWO percent for small group and small group remit-

S. 8088                             9                           A. 11369

tance  contracts,  nor,  except in the case of individual direct payment
contracts with a loss ratio of greater than  one  hundred  five  percent
during nineteen hundred ninety-four, shall the loss ratio for any direct
payment,  group  or  group  remittance contract be more than one hundred
five percent of the anticipated earned premium, and (B) the  corporation
submits,  as  part  of  such  filing, a certification by a member of the
American Academy of Actuaries or  other  individual  acceptable  to  the
superintendent   that   that  corporation  is  in  compliance  with  the
provisions of this subsection, based  upon  that  person's  examination,
including  a  review  of  the  appropriate  records and of the actuarial
assumptions and methods used by the corporation in establishing  premium
rates  for  contracts  subject  to this section. A CORPORATION SHALL NOT
UTILIZE THE ALTERNATE PROCEDURE PURSUANT TO THIS SUBSECTION TO IMPLEMENT
A CHANGE IN RATES TO BE EFFECTIVE ON OR AFTER OCTOBER FIRST,  TWO  THOU-
SAND TEN. For purposes of this section, a small group is any group whose
contract  is  subject to the requirements of section forty-three hundred
seventeen of this article.
  (2) Prior to January first, two thousand, no rate increase or decrease
may be deemed  approved  under  this  subsection  if  that  increase  or
decrease, together with any other rate increases or decreases imposed on
the  same  contract  form,  would  cause  the aggregate rate increase or
decrease for that contract form to exceed ten percent during any contin-
uous twelve month period. No rate increase may be  imposed  PURSUANT  TO
THIS  SUBSECTION  unless  at least thirty days advance written notice of
such increase has been provided to each contract holder and subscriber.
  (h)(1) Each calendar year, a corporation subject to the provisions  of
this  article  shall  return, in the form of aggregate benefits incurred
for each contract form filed pursuant to  the  alternate  procedure  set
forth  in subsection (g) of this section, at least [eighty-five] EIGHTY-
TWO percent for individual direct payment  contracts  or  [seventy-five]
EIGHTY-TWO percent for small group and small group remittance contracts,
but,  except  in  the case of individual direct payment contracts with a
loss ratio of greater than one hundred five percent in nineteen  hundred
ninety-four, for any direct payment, group or group remittance contract,
not  in  excess  of  one  hundred five percent of the aggregate premiums
earned for the contract form during  that  calendar  year.  Corporations
subject  to  the  provisions  of  this article shall annually report, no
later than [May first] JUNE THIRTIETH  of  each  year,  the  loss  ratio
calculated  pursuant  to this subsection for each such contract form for
the previous calendar year.
  (2) In each case where the loss ratio for a  contract  form  fails  to
comply  with  the  [eighty-five]  EIGHTY-TWO  percent minimum loss ratio
requirement for individual direct payment contracts,  or  the  [seventy-
five]  EIGHTY-TWO percent minimum loss ratio requirement for small group
and small group remittance contracts, as set forth in paragraph  one  of
this  subsection,  the  corporation  shall  issue  a  dividend or credit
against future premiums for all contract holders with that contract form
in an amount sufficient to assure that the aggregate  benefits  incurred
in the previous calendar year plus the amount of the dividends and cred-
its  shall equal no less than [eighty-five] EIGHTY-TWO percent for indi-
vidual direct payment contracts, or  [seventy-five]  EIGHTY-TWO  percent
for  small  group and small group remittance contracts, of the aggregate
premiums earned for the contract form in the previous calendar year. The
dividend or credit shall be issued to each contract holder or subscriber
who had a contract that was in effect at any time during the  applicable
year.  The  dividend  or  credit  shall  be prorated based on the direct

S. 8088                            10                           A. 11369

premiums earned for the applicable year among all  contract  holders  or
subscribers  eligible  to receive such dividend or credit. A corporation
shall make a reasonable effort to identify the current address  of,  and
issue  dividends  or  credits to, former contract holders or subscribers
entitled to the dividend or credit. A corporation shall, with respect to
dividends or credits to which former contract holders  that  the  corpo-
ration  is  unable to identify after a reasonable effort would otherwise
be entitled, have the option, as deemed acceptable  by  the  superinten-
dent,  of  prospectively  adjusting  premium rates by the amount of such
dividends or credits, issuing the amount of such dividends or credits to
existing contract holders, depositing the amount of  such  dividends  or
credits  in the fund established pursuant to section four thousand three
hundred twenty-two-a of this article,  or  utilizing  any  other  method
which offsets the amount of such dividends or credits. All dividends and
credits must be distributed by September thirtieth of the year following
the  calendar  year in which the loss ratio requirements were not satis-
fied. The annual report required by paragraph  one  of  this  subsection
shall  include a corporation's calculation of the dividends and credits,
as well as an explanation of the corporation's plan to  issue  dividends
or  credits.  The  instructions and format for calculating and reporting
loss ratios and issuing dividends or credits shall be specified  by  the
superintendent  by regulation. Such regulations shall include provisions
for the distribution of a dividend or credit in the event  of  cancella-
tion or termination by a contract holder or subscriber.
  (3)  In  each  case  where the loss ratio for a contract form fails to
comply with the one hundred five percent maximum loss ratio  requirement
of  paragraph  one of this subsection, the corporation shall institute a
premium rate increase in an amount sufficient to assure that the  aggre-
gate benefits incurred in the previous calendar year shall equal no more
than  one  hundred  five  percent  of  the sum of the aggregate premiums
earned for the contract form in  the  previous  calendar  year  and  the
aggregate  premium  rate increase. The rate increase shall be applied to
each contract that was in effect as  of  December  thirty-first  of  the
applicable  year  and remains in effect as of the date the rate increase
is imposed. All rate increases must be imposed by September thirtieth of
the year following the calendar year in which the  loss  ratio  require-
ments were not satisfied. The annual report required by paragraph one of
this subsection shall include a corporation's calculation of the premium
rate  increase,  as  well as an explanation of the corporation's plan to
implement the rate increase. The instructions and format for calculating
and reporting loss ratios and implementing rate increases shall be spec-
ified by the superintendent by regulation.
  (i) The alternate procedure described in subsections (g)  and  (h)  of
this  section  shall apply to individual direct payment contracts issued
pursuant to sections four thousand three  hundred  twenty-one  and  four
thousand  three  hundred twenty-two of this article on and after January
first, nineteen hundred ninety-seven. SUCH ALTERNATE PROCEDURE SHALL NOT
BE UTILIZED TO IMPLEMENT A CHANGE IN RATES TO BE EFFECTIVE ON  OR  AFTER
OCTOBER FIRST, TWO THOUSAND TEN.
  (j)  [The eighty-five percent minimum loss ratio for individual direct
payment contracts described in subsections (g) and (h) of  this  section
shall be reduced to eighty-two and one-half percent as of January first,
nineteen  hundred  ninety-seven  and  shall be further reduced to eighty
percent as of January first, nineteen hundred ninety-eight and thereaft-
er. The refund or credit requirements for failure to meet  minimum  loss
ratios  will  continue, but at these reduced percentages.] ALL COMMUNITY

S. 8088                            11                           A. 11369

RATED CONTRACTS, OTHER THAN MEDICARE SUPPLEMENTAL  INSURANCE  CONTRACTS,
ISSUED  OR  IN  EFFECT  DURING  CALENDAR  YEAR TWO THOUSAND TEN SHALL BE
SUBJECT TO A MINIMUM  LOSS  RATIO  REQUIREMENT  OF  EIGHTY-TWO  PERCENT.
CORPORATIONS MAY USE THE ALTERNATE PROCEDURE SET FORTH IN SUBSECTION (G)
OF  THIS  SECTION  TO ADJUST PREMIUM RATES IN ORDER TO MEET THE REQUIRED
MINIMUM LOSS RATIO FOR CALENDAR YEAR TWO THOUSAND TEN. THE  RATE  FILING
OR APPLICATION SHALL BE SUBMITTED NO LATER THAN SEPTEMBER THIRTIETH, TWO
THOUSAND TEN.
  S  3.  If any clause, sentence, paragraph, section or part of this act
shall be adjudged by any court of competent jurisdiction to be  invalid,
the judgment shall not affect, impair or invalidate the remainder there-
of,  but  shall  be  confined  in its operation to the clause, sentence,
paragraph, section or part thereof directly involved in the  controversy
in which such judgment shall have been rendered.
  S 4. This act shall take effect immediately.