New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter III - Policy and Certificate Provisions
Subchapter A - Life, Accident and Health Insurance
Part 59 - Minimum Standards For The Form, Content And Sale Of Group And Blanket Insurance Certificates Deemed To Have Been Delivered In This State Pursuant To Section 3201(b) Of The Insurance Law
Section 59.5 - Minimum benefit ratio standards
Universal Citation: 11 NY Comp Codes Rules and Regs ยง 59.5
Current through Register Vol. 46, No. 39, September 25, 2024
Minimum benefit ratio standards shall apply to life, accident and health, and blanket insurance certificates which are subject to this Part. Monitoring procedures to assure that such standards are met are contained in section 59.7 of this Part.
(a) Life insurance. The following standards will apply to group life insurance certificates, except where the policyholder pays the entire premium.
(1) For certificates
providing term insurance, the following minimum benefit ratios are applicable:
(i) A 60-percent benefit ratio.
(ii) The minimum benefit ratio in
subparagraph (i) of this paragraph shall be modified as follows:
(a) If the expected average annual premium
per certificate is less than $210, the minimum benefit ratio shall be decreased
by five percentage points.
(b) If
the expected average annual premium per certificate exceeds $600, the minimum
benefit ratio shall be increased by five percentage points.
(c) In 1987 and subsequent years, the dollar
amounts in clauses (a) and (b) of this subparagraph will be multiplied by an
"inflation factor." The inflation factor shall be the ratio of the Consumer
Price Index for urban wage earners, as compiled by the U.S. Bureau of Labor
Statistics, of the current to the previous calendar year.
(2) In any case where it has been
demonstrated to the superintendent's satisfaction that a particular policy form
is of special or unique value to the public, considering such matters as
availability and consumer demand, and where it has been demonstrated that the
policy form cannot reasonably meet the otherwise applicable minimum benefit
ratio standard, the superintendent may modify these standards.
(3) An actuarial memorandum shall be
submitted demonstrating, in accordance with subparagraph (i) or (ii) of this
paragraph, that the minimum benefit ratio is expected to be met over a period
of 10 years, or a period longer than 10 years if justified by the insurer and
approved by the superintendent. This actuarial memorandum shall be hereinafter
referred to as the filing memorandum.
(i) The
demonstration should use reasonable assumptions as to mortality, morbidity,
lapse rates and interest (not less than four percent per annum). The
demonstrated benefit ratio should be the present value of expected incurred
losses divided by the present value of the difference of the expected incurred
premiums and any dividends expected to be paid.
(ii) Such other demonstration appropriate to
the business written and subject to the approval of the
superintendent.
(4) For
certificates providing other than term insurance, the insurer shall demonstrate
that the premiums are reasonable in relation to the benefits provided. Such
demonstration should be consistent with the requirements of paragraphs (1)-(3)
of this subdivision, modified to reflect the benefits provided, including the
expected payments of any cash surrender values.
(b) Accident and health insurance. The following standards will apply to group accident and health and blanket insurance certificates, except where the policyholder pays the entire premium.
(1) The minimum benefit ratios of
certificates providing accident and health and blanket insurance are as
follows:
(i) For all certificates subject to
this Part, except those covered by subparagraphs (ii) and (iii) of this
paragraph, the minimum benefit ratio shall be 60 percent.
(ii) For certificates issued to persons 65
and over, the minimum benefit ratio shall be 65 percent.
(iii) The minimum benefit ratio required by
subparagraph (i) of this paragraph is modified as follows:
(a) If the expected average annual premium
per certificate is less than $240, the minimum benefit ratio shall be decreased
by five percentage points.
(b) If
the expected average annual premium per certificate exceeds $1,200, the minimum
benefit ratio shall be increased by five percentage points.
(c) In 1987 and subsequent years, the dollar
amounts in clauses (a) and (b) of this subparagraph will be multiplied by an
"inflation factor." The inflation factor shall be the ratio of the Consumer
Price Index for urban wage earners, as compiled by the U.S. Bureau of Labor
Statistics, of the current to the previous calendar year.
(iv) In any case where it has been
demonstrated to the superintendent's satisfaction that a particular policy form
is of special or unique value to the public, considering such matters as
availability and consumer demand, and where it has been demonstrated that the
policy form cannot reasonably meet the otherwise applicable benefit ratio
standard, the superintendent may modify these standards.
(2) The superintendent will require, using
reasonable assumptions as to mortality, morbidity, lapse rates and interest, an
actuarial memorandum demonstrating that the benefit ratio is expected to equal
or exceed the applicable minimum benefit ratio. The benefit ratio means the
ratio at the time of rate filing of the present value of future benefits to the
present value of future premiums.
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