N.Y. ISC. LAW § 1322 : NY Code - Section 1322: Risk-based capital for life and accident and health insurance companies

Search N.Y. ISC. LAW § 1322 : NY Code - Section 1322: Risk-based capital for life and accident and health insurance companies

(a) Definitions. In this section:    (1) "Adjusted RBC report" means a RBC report which has  been  adjusted
  by  the  superintendent in accordance with paragraph three of subsection
  (c) of this section.
    (2) "Corrective order" means an order  issued  by  the  superintendent
  specifying  corrective  actions  which the superintendent has determined
  are required.
    (3) "Domestic insurer" means any authorized life insurance company  or
  accident  and  health  insurance company incorporated or organized under
  any law of this state.
    (4) "Foreign insurer" means any authorized life insurance  company  or
  accident  and  health  insurance company incorporated or organized under
  the laws of any state, other than this state.
    (5) "Negative trend" means a negative trend over a period of time,  as
  determined  in  accordance with the "trend test calculation" included in
  the RBC instructions defined in paragraph seven of this subsection.
    (6) "RBC" means risk-based capital.
    (7) "RBC instructions"  means  the  RBC  report  including  risk-based
  capital instructions, which in addition to any other matter which may be
  required  to  be  stated therein, either by law or by the superintendent
  pursuant to law, shall conform substantially to the form of  the  report
  and  instructions  adopted  from time to time for such purpose by, or by
  the authority of, the National Association of  Insurance  Commissioners,
  together  with  such  additions,  omissions  or modifications, similarly
  adopted from time to time, as may be approved by the superintendent.
    (8)  "RBC  level"  means  an  insurer's  company  action  level   RBC,
  regulatory  action level RBC, authorized control level RBC, or mandatory
  control level RBC where:
    (A) "Company action level RBC"  means  the  product  of  2.0  and  the
  insurer's authorized control level RBC;
    (B)  "Regulatory  action  level  RBC" means the product of 1.5 and the
  insurer's authorized control level RBC;
    (C) "Authorized control level RBC" means the number  determined  under
  the risk-based capital formula in accordance with the RBC instructions;
    (D)  "Mandatory  control  level  RBC" means the product of .70 and the
  insurer's authorized control level RBC.
    (9) "RBC plan" means a comprehensive  financial  plan  containing  the
  elements  specified  in paragraph two of subsection (d) of this section.
  If the superintendent rejects the RBC plan, and it  is  revised  by  the
  insurer,  with  or without the superintendent's recommendation, the plan
  shall be called the "Revised RBC plan."
    (10) "RBC report" means the report required in subsection (c) of  this
  section.
    (11) "Total adjusted capital" means the sum of:
    (A) An insurer's statutory capital and surplus; and
    (B) Such other items, if any, as the RBC instructions may provide.
    (b)  Applicability.  This section shall apply to every authorized life
  insurance company and accident and health insurance company.
    (c) RBC reports. (1) Every domestic insurer shall, on or prior to each
  March  fifteenth  (the  "filing  date"),  prepare  and  submit  to   the
  superintendent  a report of its RBC levels as of the end of the calendar
  year just ended, in  a  form  and  containing  such  information  as  is
  required  by  the  RBC instructions. In addition, the insurer shall file
  the RBC report:
    (A) With  the  National  Association  of  Insurance  Commissioners  in
  accordance with the RBC instructions; and

    (B)  With the insurance commissioner in any state in which the insurer
  is authorized to do business, upon the written request of the  insurance
  commissioner. The insurer shall file the RBC report by the later of:
    (i) The filing date; or
    (ii) Fifteen days after the date of the request.
    (2)  An  insurer's  RBC  shall  be  determined  in accordance with the
  formula set  forth  in  the  RBC  instructions.  The  formula  shall  be
  determined  in each case by applying the factors in the manner set forth
  in the RBC instructions, and shall take into account (and may adjust for
  the covariance between):
    (A) The risk with respect to the insurer's assets;
    (B) The risk of adverse  insurance  experience  with  respect  to  the
  insurer's liabilities and obligations;
    (C) The interest rate risk with respect to the insurer's business; and
    (D)  All other business risks and such other relevent risks as are set
  forth in the RBC instructions.
    (3) If a domestic insurer files a RBC report which the  superintendent
  determines  is  inaccurate, then the superintendent shall adjust the RBC
  report to correct the inaccuracy and shall notify  the  insurer  of  the
  adjustment.  The  notice shall contain a statement of the reason for the
  adjustment. A RBC report as so adjusted is referred to as  an  "Adjusted
  RBC report."
    (d)  Company  action  level  event.  (1)  "Company action level event"
  means, with respect to a domestic insurer:
    (A) The filing by the insurer of a RBC report indicating that: (i) The
  insurer's total adjusted  capital  is  greater  than  or  equal  to  its
  regulatory  action level RBC but less than its company action level RBC;
  or
    (ii) (I) The insurer has total adjusted capital which is greater  than
  or  equal  to  its company action level RBC but less than the product of
  2.5 and its authorized control level RBC; and
    (II) there is a negative trend;
    (B) The notification by  the  superintendent  to  the  insurer  of  an
  adjusted  RBC report that indicates the occurrence of an event described
  in item (i) or (ii) of subparagraph (A) of this paragraph, provided  the
  insurer  does not challenge the adjusted RBC report under subsection (h)
  of this section; or
    (C) If, under subsection (h) of this section, the  insurer  challenges
  an  adjusted  RBC  report  that  indicates  the  occurrence  of an event
  described in item (i) or (ii) of subparagraph (A) of this paragraph, the
  notification  by  the   superintendent   to   the   insurer   that   the
  superintendent has, after a hearing, rejected the insurer's challenge.
    (2)  If  there  is  a company action level event, the domestic insurer
  shall prepare and submit to the superintendent a RBC plan which:
    (A) Identifies the conditions in the insurer which contribute  to  the
  company action level event;
    (B) Contains proposals of corrective actions which the insurer intends
  to  take  and  would  be  expected  to  result in the elimination of the
  company action level event;
    (C) Provides projections of the insurer's  financial  results  in  the
  current year and at least the four succeeding years, both in the absence
  of  proposed  corrective  actions  and  giving  effect  to  the proposed
  corrective actions, including projections of statutory operating income,
  net income, and capital and surplus. The projections for  both  new  and
  renewal business may include separate projections for each major line of
  business  and  separately  identify each significant income, expense and
  benefit component;

    (D) Identifies the key assumptions impacting the insurer's projections
  and the sensitivity of the projections to the assumptions; and
    (E)  Identifies  the  quality  of,  and  problems associated with, the
  insurer's business, including its assets,  anticipated  business  growth
  and  associated  surplus  strain, extraordinary exposure to risk, mix of
  business and use of reinsurance.
    (3) The RBC plan shall be submitted within forty-five days  after  the
  occurrence of the company action level event.
    (4)  (A) Within sixty days after the submission by an insurer of a RBC
  plan to the superintendent, the superintendent shall notify the  insurer
  whether the RBC plan is satisfactory, unsatisfactory, or unacceptable.
    (B) If the RBC plan is satisfactory, the insurer shall implement it.
    (C) If the RBC plan is unsatisfactory, the notification to the insurer
  shall  set  forth  the  reasons for the determination, and may set forth
  proposed revisions which will render the RBC plan  satisfactory  to  the
  superintendent.  Upon  notification from the superintendent, the insurer
  shall prepare a revised RBC plan, which may incorporate by reference any
  revisions proposed by the superintendent, and shall submit  the  revised
  RBC plan to the superintendent:
    (i)   Within   forty-five   days   after  the  notification  from  the
  superintendent; or
    (ii) If, under subsection (h) of this section, the insurer  challenges
  the notification from the superintendent, within forty-five days after a
  notification  to  the  insurer  that  the  superintendent  has,  after a
  hearing, rejected the insurer's challenge.
    (D) If the RBC plan is unacceptable because  it  does  not  adequately
  address  all  of  the  elements  specified  in  paragraph  two  of  this
  subsection, the notification to the insurer shall set forth the  reasons
  for  the determination and shall state that the notification constitutes
  a regulatory action level event.
    (5) (A) Every domestic insurer that files a RBC plan  or  revised  RBC
  plan  with  the  superintendent  shall  file  a  copy with the insurance
  commissioner of any state in which  the  insurer  is  authorized  to  do
  business, upon the written request of the insurance commissioner, if the
  state  has  a  RBC  provision  substantially similar to paragraph one of
  subsection (i) of this section.
    (B) The insurer shall file a copy of the RBC plan or revised RBC  plan
  in that state by the later of:
    (i)  The date on which the RBC plan or revised RBC plan is filed under
  paragraph three or four of this subsection; or
    (ii) Fifteen days after the date of the request.
    (e) Regulatory action level event. (1) "Regulatory action level event"
  means, with respect to a domestic insurer:
    (A) The filing by the insurer of a  RBC  report  indicating  that  the
  insurer's  total  adjusted  capital  is  greater  than  or  equal to its
  authorized control level RBC but less than its regulatory  action  level
  RBC;
    (B)  The  notification  by  the  superintendent  to  the insurer of an
  adjusted RBC report that indicates the occurrence of an event  described
  in  subparagraph  (A)  of  this paragraph, provided the insurer does not
  challenge the adjusted RBC report under subsection (h) of this section;
    (C) If, under subsection (h) of this section, the  insurer  challenges
  an  adjusted  RBC  report  that  indicates  the  occurrence  of an event
  described in subparagraph (A) of this paragraph, the notification by the
  superintendent to the insurer  that  the  superintendent  has,  after  a
  hearing, rejected the insurer's challenge;

    (D) The failure of the insurer to timely file a RBC report, unless the
  insurer  provides the superintendent with a satisfactory explanation for
  the failure and cures the failure within ten days after the filing date;
    (E)  The  failure  of  the  insurer  to  timely submit a RBC plan or a
  revised RBC plan to the superintendent;
    (F)  Notification  by  the  superintendent  that  the  RBC   plan   is
  unacceptable  or  the  revised  RBC plan is unsatisfactory, provided the
  insurer does not challenge the determination  under  subsection  (h)  of
  this section;
    (G) If, under subsection (h) of this section, the insurer challenges a
  determination  by  the  superintendent  under  subparagraph  (F) of this
  paragraph, the notification by the superintendent to  the  insurer  that
  the superintendent has, after a hearing, rejected the challenge;
    (H) Notification by the superintendent to the insurer that the insurer
  has  failed  to adhere to its RBC plan or revised RBC plan, and that the
  failure has a substantial adverse effect on  the  insurer's  ability  to
  eliminate  the company action level event, provided the insurer does not
  challenge the determination under subsection (h) of this section; or
    (I) If, under subsection (h) of this section, the insurer challenges a
  determination by the  superintendent  under  subparagraph  (H)  of  this
  paragraph,  the  notification  by the superintendent to the insurer that
  the superintendent has, after a hearing, rejected the challenge.
    (2) If there is a regulatory action level  event,  the  superintendent
  shall:
    (A)  Require  the  insurer  to  prepare  and  submit a RBC plan or, if
  applicable, a revised RBC plan, unless the RBC plan is unacceptable  (in
  which  case  the  superintendent  may require a revised RBC plan) or the
  revised RBC plan has already been submitted;
    (B) Perform such examination or analysis as the  superintendent  deems
  necessary  of  the  assets,  liabilities  and operations of the insurer,
  including a review of the RBC plan or revised RBC plan; and
    (C) Subsequent to the examination  or  analysis,  issue  a  corrective
  order.
    (3)  In  determining  corrective  actions, the superintendent may take
  into account such  factors  as  are  deemed  relevant,  based  upon  the
  superintendent's  examination or analysis of the assets, liabilities and
  operations of the insurer, including  the  results  of  any  sensitivity
  tests undertaken pursuant to the RBC instructions.
    (4) The RBC plan or revised RBC plan shall be submitted:
    (A)  Within  forty-five  days  after  the occurrence of the regulatory
  action level event; or
    (B) If, under subsection (h) of this section, the  insurer  challenges
  the  superintendent's  determination  that a RBC plan is unsatisfactory,
  within forty-five days  after  notification  to  the  insurer  that  the
  superintendent has, after a hearing, rejected the insurer's challenge.
    (5)  The  superintendent  may retain actuaries, investment experts and
  other consultants as the superintendent deems necessary  to  review  the
  insurer's  RBC  plan or revised RBC plan, examine or analyze the assets,
  liabilities and operations of the insurer, and formulate the  corrective
  order.  The  fees,  costs  and expenses relating to consultants shall be
  borne by the affected insurer as directed by the superintendent.
    (f) Authorized control level  event.  (1)  "Authorized  control  level
  event" means, with respect to a domestic insurer:
    (A)  The  filing  by  the  insurer of a RBC report indicating that the
  insurer's total adjusted  capital  is  greater  than  or  equal  to  its
  mandatory  control  level RBC but less than its authorized control level
  RBC;

    (B) The notification by  the  superintendent  to  the  insurer  of  an
  adjusted  RBC report that indicates the occurrence of an event described
  in subparagraph (A) of this paragraph, provided  the  insurer  does  not
  challenge the adjusted RBC report under subsection (h) of this section;
    (C)  If,  under subsection (h) of this section, the insurer challenges
  an adjusted RBC  report  that  indicates  the  occurrence  of  an  event
  described  in  subparagraph  (A)  of this paragraph, notification by the
  superintendent to the insurer  that  the  superintendent  has,  after  a
  hearing, rejected the insurer's challenge;
    (D) The failure of the insurer to respond, in a manner satisfactory to
  the  superintendent, to a corrective order, provided the insurer has not
  challenged the corrective order under subsection (h) of this section; or
    (E) If, under subsection (h) of this section, the insurer challenges a
  corrective order and the superintendent, after a  hearing,  rejects  the
  challenge  or  modifies the corrective order, the failure of the insurer
  to respond, in a manner  satisfactory  to  the  superintendent,  to  the
  corrective   order  subsequent  to  rejection  or  modification  by  the
  superintendent.
    (2) If there is an authorized control level event, the  superintendent
  shall take such actions as are:
    (A) Required under subsection (e) of this section regarding an insurer
  with respect to which a regulatory action level event has occurred; or
    (B)  Necessary  to cause the insurer to be placed under rehabilitation
  or liquidation under article seventy-four of this chapter.
    (g) Mandatory control level event. (1) "Mandatory control level event"
  means, with respect to a domestic insurer:
    (A) The filing by the insurer of a RBC  report,  indicating  that  the
  insurer's  total  adjusted  capital  is  less than its mandatory control
  level RBC;
    (B) Notification by the superintendent to the insurer of  an  adjusted
  RBC  report  that  indicates  the  occurrence  of  an event described in
  subparagraph (A) of  this  paragraph,  provided  the  insurer  does  not
  challenge  the adjusted RBC report under subsection (h) of this section;
  or
    (C) If, under subsection (h) of this section, the  insurer  challenges
  an  adjusted  RBC  report  that  indicates  the  occurrence  of an event
  described in subparagraph (A) of this  paragraph,  notification  by  the
  superintendent  to  the  insurer  that  the  superintendent has, after a
  hearing, rejected the insurer's challenge.
    (2) If there is a mandatory control level  event,  the  superintendent
  shall  take  such  actions  as  are necessary to cause the insurer to be
  placed under rehabilitation or liquidation under article seventy-four of
  this chapter. However, the superintendent may forgo  action  for  up  to
  ninety  days  after the occurrence of a mandatory control level event if
  the superintendent determines that there  is  a  reasonable  expectation
  that  the  mandatory  control  level  event may be eliminated within the
  period.
    (h) Hearings. (1) A domestic insurer shall have the right to a hearing
  upon notification to the insurer by the superintendent;
    (A) Of an adjusted RBC report;
    (B) That the insurer's RBC plan is unsatisfactory or  unacceptable  or
  the revised RBC plan is unsatisfactory;
    (C)  That  the insurer has failed to adhere to its RBC plan or revised
  RBC plan and that the failure has a substantial adverse  effect  on  the
  ability of the insurer to eliminate the company action level event; or
    (D) Of a corrective order.
    (2)   If   a   hearing   is  requested  within  five  days  after  the
  superintendent gives a notification specified in paragraph one  of  this

  subsection,  the  superintendent  shall  give  notice  and  a hearing in
  accordance with the provisions of article three of this chapter.
    (3)  The  superintendent  shall set a date for the hearing, which date
  shall be no less than ten nor more than thirty days after  the  date  of
  the insurer's hearing request.
    (i)  Confidentiality  and  prohibition  on  announcements. (1) All RBC
  reports and adjusted RBC reports (to the extent the information  therein
  is not required to be set forth in a publicly available annual statement
  schedule),  RBC  plans,  revised  RBC  plans,  results  or report of any
  examination or analysis of an insurer  performed  pursuant  hereto,  and
  corrective  orders  filed  with  or issued by the superintendent contain
  information that may be damaging to the insurer if made available to its
  competitors, and shall be confidential and not made public or subject to
  subpoena, except to the  extent  the  superintendent  finds  release  of
  information necessary to protect the public.
    (2)(A) The comparison of an insurer's total adjusted capital to any of
  its  RBC  levels  is  a  regulatory tool which may indicate the need for
  possible corrective action with respect  to  the  insurer,  and  is  not
  intended  as  a  means  to  rank  insurers generally, and the use of the
  information to rank insurers may be misleading to the general public.
    (B) Except as otherwise required under the provisions of this section,
  no authorized insurer,  licensed  insurance  agent,  licensed  insurance
  broker,  or any person on behalf of the insurer, agent or broker, or any
  other person licensed pursuant to this  chapter  shall,  make,  publish,
  disseminate, circulate or place before the public, or cause, directly or
  indirectly,  to  be  made, published, disseminated, circulated or placed
  before the public, in a newspaper, magazine or other publication, or  in
  the  form of a notice, circular, pamphlet, letter or poster, or over any
  radio or television station, or in  any  other  way,  an  advertisement,
  announcement  or  statement  containing  an assertion, representation or
  statement with regard to the RBC  Levels  of  any  insurer,  or  of  any
  component derived in the calculation.
    (C)   Notwithstanding   subparagraph  (B)  of  this  paragraph,  if  a
  materially false or  inappropriate  statement,  comparing  an  insurer's
  total adjusted capital or other amount to one or more of its RBC levels,
  is  published  in  a  written  publication,  and  the insurer is able to
  demonstrate to the superintendent the falsity  or  inappropriateness  of
  the statement, then the insurer may publish an announcement in a written
  publication to rebut the statement.
    (j)  Foreign  insurers.  (1) A foreign insurer shall, upon the written
  request of the superintendent, submit to the superintendent a RBC report
  as of the end of the calendar year just ended by the later of:
    (A) The date a RBC report would be required to be filed by a  domestic
  insurer under this section; or
    (B) Fifteen days after the date of the request.
    (2)  A  foreign  insurer  shall,  upon  the  written  request  of  the
  superintendent, within five days, submit to the superintendent a copy of
  its RBC plan or revised RBC  plan  that  is  filed  with  the  insurance
  commissioner of any other state.
    (3)  (A)  If  there is a company action level event, regulatory action
  level event, or  authorized  control  level  event,  and  the  insurance
  commissioner  of  the  state  of  incorporation  or  organization of the
  insurer  does  not  require  the  insurer  to  file  a  RBC  plan,   the
  superintendent  may  require  the  insurer  to file an RBC plan with the
  superintendent  within   forty-five   days   of   the   superintendent's
  notification.
    (B)  If  the  RBC  plan  is  unsatisfactory or if the insurer fails to
  timely file the RBC plan with the superintendent, the superintendent may

  order the insurer not to issue any new insurance policies  or  contracts
  in this state.
    (4)  If  there  is a mandatory control level event, the superintendent
  may make application under article seventy-four of this chapter.
    (k) Notices. Unless a later date  is  specified,  any  notice  by  the
  superintendent  to  an  insurer  under  this section which may result in
  regulatory action hereunder shall be  effective  upon  delivery,  except
  that, if the notice is mailed, it shall be effective three days after it
  is mailed.
    (l)  Phase-in  provision.  For  RBC  reports  required  to be filed in
  nineteen hundred ninety-four with  respect  to  calendar  year  nineteen
  hundred  ninety-three,  the  following  requirements  shall apply to the
  provisions of subsections (d), (e), (f) and (g) of this section:
    (1) In the event of a company action level event  with  respect  to  a
  domestic  insurer,  the  superintendent  shall take no regulatory action
  hereunder.
    (2)  In  the  event  of  an  regulatory  action  level   event   under
  subparagraph  (A), (B) or (C) of paragraph one of subsection (e) of this
  section  the  superintendent  shall  take  the  actions  required  under
  subsection (d) of this section.
    (3)   In   the  event  of  an  regulatory  action  level  event  under
  subparagraph (D), (E),  (F),  (G),  (H)  or  (I)  of  paragraph  one  of
  subsection (e) of this section or an authorized control level event, the
  superintendent  shall  take the actions required under subsection (e) of
  this section with respect to the insurer.
    (4) In the event of a mandatory control level event with respect to an
  insurer, the  superintendent  shall  take  the  actions  required  under
  subsection (f) of this section with respect to the insurer.