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A09151 Summary:

BILL NOA09151
 
SAME ASSAME AS S03575
 
SPONSORStern
 
COSPNSR
 
MLTSPNSR
 
Amd §§3231 & 4308, Ins L
 
Requires actuarial certification of certain rate determinations made by the superintendent, in accordance with practice standards established by the actuarial standards board.
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A09151 Actions:

BILL NOA09151
 
01/31/2022referred to insurance
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A09151 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A9151
 
SPONSOR: Stern
  TITLE OF BILL: An act to amend the insurance law, in relation to requiring actuarial certification of certain rate determinations made by the superintendent of financial services   PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to require that all rate determinations made by the superintendent be reviewed and certified by a licensed actuary.   SUMMARY OF PROVISIONS: Section 1 amends paragraph 1 of subsection (d) and subparagraph (A) of paragraph 1 of subsection (e) of section 3231 of the insurance law, paragraph 1 of subsection (d) as amended by section 1 of part A of chap- ter 494 of the laws of 2009, and subparagraph (A) of paragraph 1 of subsection (e) as amended by chapter 107 of the laws of 2010 and as further amended by section 104 of part A of chapter 62 of the laws of 2011 to require that all rate determinations made by the superintendent be reviewed and certified by a licensed actuary. Section 2 amends subsection (b) and paragraph 2 of subsection (c) of section 4308 of the insurance law, as amended by chapter 107 of the laws of 2010, and paragraph 2 of subsection (c) as further amended by section 104 of part A of chapter 62 of the laws of 2011 to require that all rate determinations made by the superintendent be reviewed and certified by a licensed actuary. Section 3 provides the effective date.   JUSTIFICATION: Currently, health plans that operate in New York are required to file a schedule of annual premiums for review and approval by the Department of Financial Services (DFS). As part of this filing, the plans are required to demonstrate that the proposed rates were reviewed and certified by a licensed actuary, with a detailed description of the actuarial assump- tions and methods used to calculate the proposed premiums. While DES has the authority to adjust plan proposed rates, there is no requirement that the DES actuaries must certify that the rates they approve are actuarially sound. It is reasonable to require DES to certi- fy that its rates are actuarially appropriate and sound just as health plans are required to do. The current process has resulted in a lack of transparency and predictability in the current rate setting process. Currently, Department of Health actuaries are already required to certi- fy that Medicaid rates are actuarially sound. This certification will help ensure that approved rates are actuarially sound when annual rates are finalized for each year.   PRIOR LEGISLATIVE HISTORY: S.5928: 2019-2020   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: This act shall take effect immediately.
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A09151 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          9151
 
                   IN ASSEMBLY
 
                                    January 31, 2022
                                       ___________
 
        Introduced  by M. of A. STERN -- read once and referred to the Committee
          on Insurance
 
        AN ACT to amend the insurance law, in relation  to  requiring  actuarial
          certification  of  certain rate determinations made by the superinten-
          dent of financial services
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section 1. Paragraph 1 of subsection (d) and subparagraph (A) of para-
     2  graph  1  of  subsection (e) of section 3231 of the insurance law, para-
     3  graph 1 of subsection (d) as amended by section 1 of part A  of  chapter
     4  494  of  the  laws  of  2009,  and  subparagraph  (A)  of paragraph 1 of
     5  subsection (e) as amended by chapter 107 of the  laws  of  2010  and  as
     6  further  amended  by  section 104 of part A of chapter 62 of the laws of
     7  2011, are amended to read as follows:
     8    (1) Notwithstanding any other provision of this chapter to the contra-
     9  ry, no policy form subject to this section shall be issued or delivered,
    10  nor any insurance contract entered into, unless and  until  the  insurer
    11  has  filed with the superintendent a schedule of premiums, not to exceed
    12  twelve months in duration,  to  be  paid  under  the  policy  forms  and
    13  obtained  the  superintendent's approval thereof. The superintendent may
    14  refuse such approval if he or she finds that such  premiums  are  exces-
    15  sive,  inadequate,  or  unfairly  discriminatory. The superintendent may
    16  consider the financial condition of such insurer in approving or  disap-
    17  proving  any  premium. In determining whether to approve the schedule of
    18  premiums filed, the superintendent shall, subject to the  provisions  of
    19  section three thousand two hundred thirty-three of this article, consid-
    20  er  the  prior experience of the insurer's community pool and the insur-
    21  er's projections relating to claim costs, utilization and administrative
    22  expenses and shall not adjust the insurer's rates based upon  the  rates
    23  approved  for  other insurers.  All premium rate determinations shall be
    24  certified by an actuary designated by the superintendent who  meets  the
    25  qualification  standards  established by the American academy of actuar-
    26  ies, who shall follow the practice standards established by the actuari-
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD07617-01-1

        A. 9151                             2
 
     1  al standards board, and who  shall  describe  in  detail  the  actuarial
     2  assumptions and methods used in the superintendent's determination.
     3    (A) An insurer desiring to increase or decrease premiums for any poli-
     4  cy  form  subject to this section shall submit a rate filing or applica-
     5  tion to the superintendent.
     6    An insurer shall send written notice of the proposed rate  adjustment,
     7  including  the  specific  change  requested,  to  each policy holder and
     8  certificate holder affected by the adjustment on or before the date  the
     9  rate  filing  or  application  is  submitted  to the superintendent. The
    10  notice shall prominently include mailing and website addresses for  both
    11  the  department  of  financial  services and the insurer through which a
    12  person may, within thirty days from the date the rate filing or applica-
    13  tion is submitted to  the  superintendent,  contact  the  department  of
    14  financial  services  or  insurer to receive additional information or to
    15  submit written comments to the department of financial services  on  the
    16  rate filing or application. The superintendent shall establish a process
    17  to  post  on  the department's website, in a timely manner, all relevant
    18  written comments received pertaining to rate  filings  or  applications.
    19  The  insurer  shall  provide  a copy of the notice to the superintendent
    20  with the rate filing or application. The superintendent shall immediate-
    21  ly cause the  notice  to  be  posted  on  the  department  of  financial
    22  services' website. The superintendent shall determine whether the filing
    23  or  application  shall become effective as filed, shall become effective
    24  as modified, or shall be disapproved. The superintendent may  modify  or
    25  disapprove  the  rate  filing or application if the superintendent finds
    26  that the premiums are unreasonable, excessive, inadequate,  or  unfairly
    27  discriminatory,  and may consider the financial condition of the insurer
    28  when approving, modifying or disapproving any  premium  adjustment.  The
    29  determination of the superintendent shall be supported by sound actuari-
    30  al  assumptions  and  methods,  and shall be rendered in writing between
    31  thirty and sixty days from the date the rate filing  or  application  is
    32  submitted to the superintendent. Should the superintendent require addi-
    33  tional  information  from  the insurer in order to make a determination,
    34  the superintendent shall require the insurer to  furnish  such  informa-
    35  tion, and in such event, the sixty days shall be tolled and shall resume
    36  as  of the date the insurer furnishes the information to the superinten-
    37  dent. If the superintendent requests additional  information  less  than
    38  ten  days  from the expiration of the sixty days (exclusive of tolling),
    39  the superintendent may extend the sixty day period an additional  twenty
    40  days  to  make  a  determination. The application or rate filing will be
    41  deemed approved if a determination  is  not  rendered  within  the  time
    42  allotted under this section.  All rate determinations shall be certified
    43  by  an actuary designated by the superintendent who meets the qualifica-
    44  tion standards established by the American academy of actuaries and  who
    45  shall  follow the practice standards established by the actuarial stand-
    46  ards board. An insurer shall not implement a rate adjustment unless  the
    47  insurer  provides  at  least  sixty  days  advance written notice of the
    48  premium rate adjustment approved by the superintendent  to  each  policy
    49  holder and certificate holder affected by the rate adjustment.
    50    §  2. Subsection (b) and paragraph 2 of subsection (c) of section 4308
    51  of the insurance law, as amended by chapter 107 of the laws of 2010, and
    52  paragraph 2 of subsection (c) as further amended by section 104 of  part
    53  A of chapter 62 of the laws of 2011, are amended to read as follows:
    54    (b)  No  corporation  subject  to the provisions of this article shall
    55  enter into any contract unless and until it shall have  filed  with  the
    56  superintendent  a  schedule  of  the premiums or, if appropriate, rating

        A. 9151                             3
 
     1  formula from which  premiums  are  determined,  to  be  paid  under  the
     2  contracts and shall have obtained the superintendent's approval thereof.
     3  The superintendent may refuse such approval if he or she finds that such
     4  premiums,  or  the  premiums derived from the rating formula, are exces-
     5  sive, inadequate or  unfairly  discriminatory,  provided,  however,  the
     6  superintendent  may also consider the financial condition of such corpo-
     7  ration in approving or disapproving any premium or rating formula.   Any
     8  adjustments  to  an  approved  schedule  of  premiums or to the approved
     9  rating formula for non-community rated contracts shall also  be  subject
    10  to  the  approval  of the superintendent provided, however, such adjust-
    11  ments shall not be subject to the requirements of subsection (c) of this
    12  section. Any premium or formula approved  by  the  superintendent  shall
    13  make  provision  for  such  increase  as  may  be  necessary to meet the
    14  requirements of a plan approved by  the  superintendent  in  the  manner
    15  prescribed  in  section  four thousand three hundred ten of this article
    16  for restoration of the statutory reserve fund required by such  section.
    17  Notwithstanding  any other provision of law, the superintendent, as part
    18  of the rate increase approval process, may defer,  reduce  or  reject  a
    19  rate  increase  if,  in  the  judgment of the superintendent, the salary
    20  increases for senior level  management  executives  employed  at  corpo-
    21  rations  subject  to  the  provisions  of  this article are excessive or
    22  unwarranted given the financial condition or overall performance of such
    23  corporation.  All rate determinations shall be certified by  an  actuary
    24  designated  by  the superintendent who meets the qualification standards
    25  established by the American academy of actuaries and  who  shall  follow
    26  the practice standards established by the actuarial standards board. The
    27  superintendent  is  authorized to promulgate rules and regulations which
    28  the superintendent deems necessary to carry out such deferral, reduction
    29  or rejection.
    30    (2) A corporation desiring to increase or decrease  premiums  for  any
    31  contract subject to this subsection shall submit a rate filing or appli-
    32  cation to the superintendent. A corporation shall send written notice of
    33  the  proposed  rate adjustment, including the specific change requested,
    34  to each contract holder and subscriber affected by the adjustment on  or
    35  before  the  date  the  rate  filing  or application is submitted to the
    36  superintendent. The notice shall prominently include mailing and website
    37  addresses for both the department of financial services and  the  corpo-
    38  ration  through which a person may, within thirty days from the date the
    39  rate filing or application is submitted to the  superintendent,  contact
    40  the  department  of  financial  services or corporation to receive addi-
    41  tional information or to submit written comments to  the  department  of
    42  financial services on the rate filing or application. The superintendent
    43  shall  establish  a  process  to  post on the department's website, in a
    44  timely manner, all relevant written comments received pertaining to rate
    45  filings or applications. The corporation shall provide  a  copy  of  the
    46  notice  to  the  superintendent with the rate filing or application. The
    47  superintendent shall immediately cause the notice to be  posted  on  the
    48  department  of  financial  services'  website.  The superintendent shall
    49  determine whether the filing or application shall  become  effective  as
    50  filed,  shall become effective as modified, or shall be disapproved. The
    51  superintendent may modify or disapprove the rate filing  or  application
    52  if  the  superintendent finds that the premiums are unreasonable, exces-
    53  sive, inadequate, or  unfairly  discriminatory,  and  may  consider  the
    54  financial condition of the corporation in approving, modifying or disap-
    55  proving  any premium adjustment. The determination of the superintendent
    56  shall be supported by sound actuarial assumptions and methods, and shall

        A. 9151                             4
 
     1  be rendered in writing between thirty and sixty days from the  date  the
     2  rate  filing  or  application is submitted to the superintendent. Should
     3  the superintendent require additional information from  the  corporation
     4  in  order  to make a determination, the superintendent shall require the
     5  corporation to furnish such information, and in such  event,  the  sixty
     6  days  shall  be  tolled  and shall resume as of the date the corporation
     7  furnishes the information to the superintendent. If  the  superintendent
     8  requests  additional  information less than ten days from the expiration
     9  of the sixty days (exclusive of tolling), the superintendent may  extend
    10  the sixty day period an additional twenty days, to make a determination.
    11  The  application  or  rate  filing will be deemed approved if a determi-
    12  nation is not rendered within the time allotted under this section.  All
    13  rate determinations shall be certified by an actuary designated  by  the
    14  superintendent  who meets the qualification standards established by the
    15  American academy of actuaries and who shall follow the  practice  stand-
    16  ards  established  by the actuarial standards board. A corporation shall
    17  not implement a rate adjustment unless the corporation provides at least
    18  sixty days  advance  written  notice  of  the  premium  rate  adjustment
    19  approved  by  the  superintendent to each contract holder and subscriber
    20  affected by the rate adjustment.
    21    § 3. This act shall take effect immediately.
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