DFS Statement Regarding the Issuance of Stop Loss Coverage and Fully-Insured Group Insurance by Authorized Insurers to New York Small Group Employers

Posted October 27, 2016

It has come to the Department's attention that some authorized accident and health insurers and Article 43 corporations (collectively "insurers") may be assisting employers in New York's small group market (1 to 100 employees) establish self-funded health benefit plans and the insurers are issuing stop loss insurance policies to those employers by delivering the policies out of state. In addition, in some cases, these insurers are issuing fully-insured policies out of state to employers that have 50-100 employees and not complying with Insurance Law 3231(a)(1) or 4317(a)(1). Those employers may be incorporated or headquartered in a state other than New York but have a significant number of employees in New York. Virtually all of the activity pertaining to the sale of the policies including solicitation occurs in New York and the insurance producers are located in New York.

The practices described above directly and deleteriously impact the small group community rated pool in the State of New York. Evading the small group community rated market in New York by issuing these policies out-of-state may constitute an unfair method of competition or unfair or deceptive act or practice in violation of Insurance Law Article 24. Insurers are advised to promptly cease engaging in any such activity.