NEW YORK STATE
SIXTH AMENDMENT TO REGULATION NO. 145
(11 NYCRR 360)
RULES TO ASSURE AN ORDERLY IMPLEMENTATION AND ONGOING OPERATION OF OPEN ENROLLMENT AND COMMUNITY RATING OF INDIVIDUAL AND SMALL GROUP HEALTH INSURANCE
I, NEIL D. LEVIN, Superintendent of Insurance of the State of New York, pursuant to the authority granted by Sections 201, 301, 1109, 3201, 3216, 3217, 3221, 3231, 3232, 3233, 4235, 4237, Article 43 and Article 45 of the Insurance Law, and Chapter 501 of the Laws of 1992, do hereby promulgate the following Sixth Amendment to Part 360 of Title 11 of the Official Compilation of Codes, Rules and Regulations of the State of New York (Regulation No. 145), to take effect upon publication in the State Register.
(MATERIAL UNDERLINED IS NEW; MATERIAL IN BRACKETS IS DELETED)
Section 360.10(d)(1) is hereby amended to read as follows:
(1) The new rating classification should parallel the existing rate structure, except to eliminate variations by age, sex, occupation, income, substandard rating factors and discount or loading factors related to marital status, smoking or other lifestyle choices or circumstance. [Policy discounts intended to reflect reduced expense liability, e.g., certain family policy discounts, can generally be retained, subject to Department review.]
Section 360.11 is hereby amended by adding new subdivisions (j) and (k) to read as follows:
(j) Rate differences intended to reflect differences in expenses such as per case charges, premium volume discount or load scales and similar rate differences are not permitted.
(k) Commissions and marketing practices in the small group market must be uniformly applied to all size cases. If an insurer pays commissions on any small group case, then that insurer must pay commissions on all small group cases, using the same commission scale. The commission scale must pay a flat percentage of premium or a percentage which decreases as premium increases or a flat dollar amount per person or a flat dollar amount per case. Payment of commissions or other sales compensation based on loss ratio or in any way reflecting or dependent upon the experience of any case or group of cases and payment of no commissions or reduced commissions on cases below a specified size are prohibited practices. An insurer is not prohibited from selecting, appointing or using the services of agents or brokers in accordance with its normal selection practice. However, the use of agents or brokers cannot be limited to a certain size market, such as, cases of ten or more lives. An insurer must notify every licensed agent or broker with whom it does business of current commission practices, revised if necessary to comply with this subdivision, by March 1, 2001 and at least annually thereafter.
Section 360.12 is hereby renumbered as section 360.20 and a new section 360.12 is added to read as follows:
Section 360.12 Applicability. The amendment to section 360.10(d)(1) and the new subdivisions (j) and (k) of section 360.11 shall take effect on March 1, 2001 and shall apply to all policies and contracts subject to Chapter 501 of the Laws of 1992 issued, renewed, modified, altered or amended on or after such date.
I, NEIL D. LEVIN, Superintendent of Insurance of the State of New York, do hereby certify that the foregoing Sixth Amendment to 11 NYCRR Part 360 (Regulation 145) was duly adopted by me on this day pursuant to the authority granted by Sections 201, 301, 1109, 3201, 3216, 3217, 3221, 3232, 3233, 4235, 4237, Article 43 and Article 45 of the Insurance Law and Chapter 501 of the Laws of 1992, to take effect upon publication in the State Register.
A prior notice of this regulation amendment was published in the State Register on October 4, 2000 as a Notice of Proposed Rulemaking. No other publication or prior notice is required by statute.
Neil D. Levin
Superintendent of Insurance
November 30, 2000