February 17, 1977
Circular Letter No. 4 (1977)
TO: ALL INSURERS AUTHORIZED TO WRITE AUTOMOBILE INSURANCE IN NEW YORK STATE
RE: IMPLEMENTATION OF CHAPTER 5 OF THE LAWS OF 1977 - AN ACT TO AMEND THE INSURANCE LAW, IN RELATION TO ADJUSTMENT OF AUTOMOBILE INSURANCE RATES -- (INSURANCE LAW § 677(3))
Governor Hugh L. Carey today signed into law Chapter 5 of the Laws of 1977, which extended to December 31, 1977 the requirement for approval by the Superintendent of all automobile rate changes prior to their being made effective.
In view of actions taken since February 1, 1977 by a number of automobile insurers, I am requiring, pursuant to the authority of Section 27 of the Insurance Law, that all automobile insurers furnish me by February 25, 1977, the following information subscribed and affirmed as true under the penalties of perjury by a responsible officer of your Company:
1) Did your company make or purport to make any changes in automobile rates, rating plans, rating rules, or rate manuals on or after February 1, 1977?
2) If your answer to Question 1 is "Yes," please furnish:
a) the dates of all such actions;
b) full and complete copies of all internal memoranda and all material sent to your field staff relating to such changes, including the specific text of your company's "effective date" rule with respect to new and to renewal business;
c) copies of all purported changes in rates, rating rules, rating manuals and schedules of rates for all classifications and territories, together with a summary showing, by automobile insurance coverage, the statewide average percentage changes;
d) copies of all statistical, rating and other information in support of such changes; and
e) how and when all such actions with respect to rate changes described above were officially authorized by your company.
Section 1 of Chapter 5 of the Laws of 1977 provides that no rate change "shall be made effective" between February 1, 1974 and December 31, 1977 until it has been approved by the Superintendent. It is this Department's position that an announcement or decision by an insurer prior to February 17, 1977 that it would change its automobile rates either for its new or for its renewal business, where such change would commence on or after February 17, is not a change which was, prior to February 17, "made effective" within the meaning and express terms of Section 677(3) of the Insurance Law. Accordingly, all insurers which intend to change rates for new or for renewal business where such changes would commence on or after February 17 are advised that any such changes are subject to the prior approval requirements of Section 677, are ineffective without the Superintendent's prior approval, and, if implemented, would be violative of law. Pursuant to the requirements of Articles VII-A and VIII prohibiting rates which are "unfairly discriminatory," you are directed not to implement any rate changes which result in rates which are unfairly discriminatory. A dual rate structure under which new business would be charged a different rate from that applicable to comparably situated renewal business would be "unfairly discriminatory."
For your further information and guidance, please be advised that all rate filings which were submitted to the Department but were not approved before February 1, 1977 have been rendered null and void. It is, therefore, necessary for any insurer which now wishes to revise its rates to file its rate application and supporting data with the Department in accordance with the provisions of Section 677. In connection with any such filing, all of the provisions of Circular Letter No. 24(1976) remain applicable.
All replies should be directed to my personal attention in an envelope with the additional caption of "Reply to Circular Letter No. 4."
Very truly yours,
THOMAS A. HARNETT
Superintendent of Insurance