NY State Senate Bill 2019-S5928

Senate Bill S5928

2019-2020 Legislative Session

Relates to requiring actuarial certification of certain rate determinations made by the superintendent of financial services

download bill text pdf

Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to insurance
May 16, 2019	referred to insurance

2019-S5928 (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §§3231 & 4308, Ins L
Versions Introduced in Other Legislative Sessions:: 2021-2022: S3575
2023-2024: S1464

2019-S5928 (ACTIVE) - Summary

Requires actuarial certification of certain rate determinations made by the superintendent, in accordance with practice standards established by the actuarial standards board.

2019-S5928 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5928

SPONSOR: BRESLIN
 
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:

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 of 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 DFS has the authority to adjust plan proposed rates, there is no
requirement that the DFS actuaries must certify that the rates they
approve are actuarially sound. It is reasonable to require DFS 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.

 
LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2019-S5928 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5928
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 16, 2019
                                ___________
 
 Introduced  by  Sen. BRESLIN -- read twice and ordered printed, and when
   printed to be committed 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:
 
   Section 1. Paragraph 1 of subsection (d) and subparagraph (A) of para-
 graph  1  of  subsection (e) of section 3231 of the insurance law, para-
 graph 1 of subsection (d) as amended by section 1 of part A  of  chapter
 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, are amended to read as follows:
   (1) Notwithstanding any other provision of this chapter to the contra-
 ry, no policy form subject to this section shall be issued or delivered,
 nor any insurance contract entered into, unless and  until  the  insurer
 has  filed with the superintendent a schedule of premiums, not to exceed
 twelve months in duration,  to  be  paid  under  the  policy  forms  and
 obtained  the  superintendent's approval thereof. The superintendent may
 refuse such approval if he or she finds that such  premiums  are  exces-
 sive,  inadequate,  or  unfairly  discriminatory. The superintendent may
 consider the financial condition of such insurer in approving or  disap-
 proving  any  premium. In determining whether to approve the schedule of
 premiums filed, the superintendent shall, subject to the  provisions  of
 section three thousand two hundred thirty-three of this article, consid-
 er  the  prior experience of the insurer's community pool and the insur-
 er's projections relating to claim costs, utilization and administrative
 expenses and shall not adjust the insurer's rates based upon  the  rates
 approved  for  other insurers.  ALL PREMIUM RATE DETERMINATIONS SHALL BE
 CERTIFIED BY AN ACTUARY DESIGNATED BY THE SUPERINTENDENT WHO  MEETS  THE
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD11630-01-9

 S. 5928                             2
 
 QUALIFICATION  STANDARDS  ESTABLISHED BY THE AMERICAN ACADEMY OF ACTUAR-
 IES, WHO SHALL FOLLOW THE PRACTICE STANDARDS ESTABLISHED BY THE ACTUARI-
 AL STANDARDS BOARD, AND WHO  SHALL  DESCRIBE  IN  DETAIL  THE  ACTUARIAL
 ASSUMPTIONS AND METHODS USED IN THE SUPERINTENDENT'S DETERMINATION.
   (A) An insurer desiring to increase or decrease premiums for any poli-
 cy  form  subject to this section shall submit a rate filing or applica-
 tion 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  department  of  financial  services and the insurer through which a
 person may, within thirty days from the date the rate filing or applica-
 tion is submitted to  the  superintendent,  contact  the  department  of
 financial  services  or  insurer to receive additional information or to
 submit written comments to the department of financial services  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 application. The superintendent shall immediate-
 ly cause the  notice  to  be  posted  on  the  department  of  financial
 services' 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 insurer
 when approving, modifying or disapproving any  premium  adjustment.  The
 determination of the superintendent shall be supported by sound actuari-
 al  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 addi-
 tional  information  from  the insurer in order to make a determination,
 the superintendent shall require the insurer to  furnish  such  informa-
 tion, and in such event, the sixty days shall be tolled and shall resume
 as  of the date the insurer furnishes the information to the superinten-
 dent. 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.  ALL RATE DETERMINATIONS SHALL BE CERTIFIED
 BY  AN ACTUARY DESIGNATED BY THE SUPERINTENDENT WHO MEETS THE QUALIFICA-
 TION STANDARDS ESTABLISHED BY THE AMERICAN ACADEMY OF ACTUARIES AND  WHO
 SHALL  FOLLOW THE PRACTICE STANDARDS ESTABLISHED BY THE ACTUARIAL STAND-
 ARDS BOARD. 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.
   §  2. 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, are amended to read as follows:

 S. 5928                             3
 
   (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 OR SHE finds that such
 premiums,  or  the  premiums derived from the rating formula, are exces-
 sive, inadequate or  unfairly  discriminatory,  provided,  however,  the
 superintendent  may also consider the financial condition of such corpo-
 ration in approving or disapproving any premium or rating formula.   Any
 adjustments  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 adjust-
 ments 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  corpo-
 rations  subject  to  the  provisions  of  this article are excessive or
 unwarranted given the financial condition or overall performance of such
 corporation.  ALL RATE DETERMINATIONS SHALL BE CERTIFIED BY  AN  ACTUARY
 DESIGNATED  BY  THE SUPERINTENDENT WHO MEETS THE QUALIFICATION STANDARDS
 ESTABLISHED BY THE AMERICAN ACADEMY OF ACTUARIES AND  WHO  SHALL  FOLLOW
 THE PRACTICE STANDARDS ESTABLISHED BY THE ACTUARIAL STANDARDS BOARD. The
 superintendent  is  authorized to promulgate rules and regulations which
 the superintendent deems necessary to carry out such deferral, reduction
 or rejection.
   (2) 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 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 department of financial services and  the  corpo-
 ration  through which a person may, within thirty days from the date the
 rate filing or application is submitted to the  superintendent,  contact
 the  department  of  financial  services or corporation to receive addi-
 tional information or to submit written comments to  the  department  of
 financial services 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 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
 department  of  financial  services'  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, exces-
 sive, inadequate, or  unfairly  discriminatory,  and  may  consider  the

 S. 5928                             4

 financial condition of the corporation in 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 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 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  determi-
 nation is not rendered within the time allotted under this section.  ALL
 RATE  DETERMINATIONS  SHALL BE CERTIFIED BY AN ACTUARY DESIGNATED BY THE
 SUPERINTENDENT WHO MEETS THE QUALIFICATION STANDARDS ESTABLISHED BY  THE
 AMERICAN  ACADEMY  OF ACTUARIES AND WHO SHALL FOLLOW THE PRACTICE STAND-
 ARDS ESTABLISHED BY THE ACTUARIAL STANDARDS BOARD. 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. This act shall take effect immediately.

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