New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on February 22, 2002, representing the position of the New York State Insurance Department.

Re: Applicability of Regulation 62 and Regulation 123 Requirements

Question Presented:

Does a conflict exist between N.Y. Comp. Codes R. & Regs. tit. 11, § 52.45(f) (1998) (Regulation 62) and N.Y. Comp. Codes R. & Regs. tit. 11, § 59.5 (1995) (Regulation 123) in regards to the minimum benefit/loss ratio standard for group and blanket accident and health insurance policies?

Conclusion:

No. A conflict does not exist between N.Y. Comp. Codes R. & Regs. tit. 11, § 52.45(f) (1998) (Regulation 62) and N.Y. Comp. Codes R. & Regs. tit. 11, § 59.5 (1995) (Regulation 123) in regards to the minimum benefit/loss ratio standard for group and blanket accident and health insurance policies.

Facts:

For purposes of this response, we are assuming that this inquiry does not concern the following: Community rated small group health insurance policies subject to N.Y. Comp. Codes R. & Regs. tit. 11, Part 360 (2001) (Regulation 145); group Medicare supplement insurance policies/certificates; long term care insurance, nursing home insurance only, home care insurance only, nursing home and home care insurance; or specified disease coverage.

A recent accident and health filing was submitted by a life insurance company to be marketed to groups defined in N.Y. Ins. Law § 4235(c)(1)(K-M) (McKinney 2000), which was allegedly rejected by the Department because the rating plan was developed in accordance with section 59.5 of Regulation 123, instead of section 52.45(f) of Regulation 62.

Analysis:

N.Y. Comp. Codes R. & Regs. tit. 11, § 59.5 (1995) (Regulation 123) describes the minimum benefit ratio standard as a 60 percent benefit ratio1 for life and accident and health insurance, except in certain enumerated circumstances not relevant herein. N.Y. Comp. Codes R. & Regs. tit. 11, § 52.45 (1998) (Regulation 62) states that the minimum loss ratio2 for group and blanket health insurance shall be 65 percent, except in certain enumerated circumstances not relevant herein. While the two regulations seemingly overlap, they actually address different situations.

N.Y. Comp. Codes R. & Regs. tit. 11, Part 59 (1995) (Regulation 123) was promulgated in 1986. According to the Preamble (section 59.0):

(a)  One of the major provisions of chapter 369 of the Laws of 1985 requires approval of certificates by the Superintendent of Insurance in accordance with section 3201(b)(1) of the Insurance Law when such certificates insure New York residents under a group insurance policy delivered outside of New York to a group which, as of January 1, 1986, is a newly recognized group under New York law or is a group not specifically described in section 4216(b), 4235(c)(1) or 4237(a)(3) of the Insurance Law. This approval procedure was required to provide the basic protection of New York law and regulations to residents of this State when they purchase insurance coverage through out-of-state group arrangements where the individual insured has no close association or affiliation with the group policyholder.

(b)  In order to provide the basic protections of New York law and regulations, the same substantive standards applicable to traditional groups should apply to all certificates deemed to have been delivered in this State pursuant to the above statute. However, the provision that basic group standards be applied has been modified in two instances:

(1)  for existing group contracts where solicitation occurs prior to April 1, 1986; and
(2)  for certificates delivered in New York under a group contract delivered to a group outside this State which is not recognized as one of the groups enumerated in the law or as an eligible discretionary group in New York.

(c)  In addition, for the newly recognized groups and those groups not specifically described in the Insurance Law, benefit ratio standards will apply to life, accident and health, and blanket insurance for New York residents regardless of where the group policy is delivered. (emphasis added).

Regulation 123 and not Regulation 62 would apply to groups defined in section 4235(c)(1)(K-M), since, as stated in section 59.2 of Regulation 123:

This Part shall apply to all group life, group accident, group health, group accident and health, or blanket accident and health insurance certificates deemed to have been delivered in this State under section 3201(b)(1) of the Insurance Law, and, in addition, sections 59.5 and 59.7 of this Part shall apply to certificates on New York residents covered under group and blanket policies issued in this State pursuant to sections 4216(b)(12-14), 4235(c)(1)(D) . . . 4235(c)(1)(K-M) and 4237(a)(3)(F)(ii) of the Insurance Law. (emphasis added).

Therefore, despite the apparent unrestricted scope of Regulation 62, in relation to health insurance, it is Regulation 123 that governs exclusively for those policies specified in section 59.2 of Regulation 123.

For further information, you may contact Senior Attorney Meredith Kaufer at the New York City Office.


1 N.Y. Comp. Codes R. & Regs. tit. 11, § 59.5 (b)(2) (1995) defines the benefit ratio to mean the ratio at the time of rate filing of the present value of future benefits to the present value of future premiums.
2 N.Y. Comp. Codes R. & Regs. tit. 11, § 52.2 (g) (1998) defines the expected future loss ratio to mean the ratio at the time of rate filing of the present value of future benefits to the present value of future premiums