Current through Register Vol. 46, No. 39, September 25, 2024
(a) Pursuant to
section 40 of chapter 266 of the Laws of 1986, the superintendent was directed
to establish rates for policies providing coverage for physicians and surgeons
medical malpractice liability insurance for the periods commencing July 1, 1985
and ending June 30, 1988. It was not certain at that time whether the authority
of the superintendent to establish such rates would be extended for the policy
year commencing July 1, 1988 through June 30, 1989 or if the rates for such
period would revert to the prior approval requirements of article 23 of the
Insurance Law. Accordingly, all insurers that issue policies of physicians and
surgeons medical malpractice liability insurance, as defined in section
70.1(a) of this
Part, and all insurers with special licenses under section
6302 of the
Insurance Law that issue policies including such coverage of physicians and
surgeons, were directed to forthwith furnish their insureds with the following
endorsement in connection with all such policies in effect on and after July 1,
1988:
"THE PREMIUMS ON THIS POLICY FOR THE PERIOD OF COVERAGE
COMMENCING ON OR AFTER JULY 1, 1988 THROUGH JUNE 30, 1989 ARE PROVISIONAL AND
SUBJECT TO UPWARD OR DOWNWARD ADJUSTMENT. INSUREDS MAY BE REQUIRED TO PAY AN
AMENDED PREMIUM RETROACTIVE TO JULY 1, 1988, OR THE ANNIVERSARY DATE OF THE
POLICY, WHICHEVER IS LATER OR BE ENTITLED TO A CREDIT IF IT IS DETERMINED THAT
A DOWNWARD ADJUSTMENT IS NECESSARY IN ORDER TO MEET STATUTORY RATING
STANDARDS."
(b) Pursuant to
section 19 of chapter 184 of the Laws of 1988, the superintendent is directed
to establish rates for policies providing coverage for physicians medical
malpractice liability insurance for the periods commencing July 1, 1988 and
ending June 30, 1991. The rates established herein for policies issued or
renewed during the year July 1, 1988 through June 30, 1989 supersede any rates
that may have been charged or billed by insurers for such policies prior to the
promulgation of this Part.
(c)
Rates for occurrence policies issued or renewed during the period July
1, 1988 through June 30, 1989.
(1)
For primary coverage, up to $1 million/$3 million, the rate shall be five
percent greater than that established pursuant to section
70.8(e)(3)(i) of
this Part.
(2) For a first excess
layer providing $1 million/$3 million of excess coverage above $1 million/$3
million primary coverage, and purchased directly by a physician, the rate shall
be 46 percent of the $1 million/$3 million rate for primary coverage
established in paragraph (1) of this subdivision.
(3) For a first excess layer providing $1
million/$3 million of excess coverage above $1 million/$3 million primary
coverage, and purchased by a hospital in accordance with section 18 of chapter
184 of the Laws of 1988, the rate shall be 49.3 percent of the $1 million/$3
million rate for primary coverage established in paragraphs (1) of this
subdivision.
(4) For a second
excess layer providing $1 million/$3 million of excess coverage above the
underlying primary coverage and first layer of excess coverage, described in
paragraphs (2) and (3) of this subdivision, the rate shall be 30 percent of the
$1 million/$3 million rate for primary coverage established in paragraph (1) of
this subdivision.
(d)
Claims-made primary and excess coverage rates.
(1) Claims-made primary coverage rates. The
claims-made rate for a particular primary coverage policy shall be the
corresponding occurrence rate multiplied by the appropriate claims-made factor,
as follows:
|
Year in claims-made
program |
Claims-made
factor |
|
First: |
31% |
|
Second: |
64% |
|
Third: |
85% |
|
Fourth: |
94% |
|
Fifth: |
99% |
|
Sixth: |
102% |
|
Seventh: |
104% |
(2) Optional extended reporting period (tail)
primary coverage rates.
(i) The rate for
optional tail coverage that is required to be offered for a particular
claims-made primary coverage policy shall be the corresponding occurrence rate
multiplied by the appropriate tail factor, as follows:
|
Number of years
completed in claims-made program |
Tail
factor |
|
One: |
74.8% |
|
Two: |
122.1% |
|
Three: |
146.4% |
|
Four: |
162.4% |
|
Five: |
173.3% |
|
Six: |
181.0% |
|
Seven: |
186.7% |
(ii) For a policy terminated on a date other
than the policy anniversary date, the tail factor shall be obtained by
interpolating, on a daily basis, between the tail factors applicable to the
last and next policy anniversaries.
(iii) For any policy that was written at a
reduced rate because the insured was eligible for a new doctor discount, the
tail premium shall be reduced by the percentage that the current year's rate
(exclusive of any surplus contributions) was reduced as a result of such new
doctor discount.
(3)
Rates for claims-made and tail excess coverage policies purchased by hospitals.
The aggregate rate for a claims-made excess coverage policy and its
simultaneously issued tail (as mandated by this subdivision) purchased by a
general hospital on behalf of a physician, shall be equal to the corresponding
occurrence excess coverage rate.
(4) Rates for claims-made and tail excess
coverage policies purchased by physicians directly. The rates for the
claims-made and tail first and second excess layers required to be offered when
purchased directly by a physician, and the rates for any other claims-made and
tail excess layer other than as specified herein, shall be established by the
superintendent after a review of proposed rates and supporting documents to be
submitted by each insurer writing, or required to write, such coverage, in
accordance with paragraph (h)(2) of this section. The superintendent shall
consider such submissions, as well as any other relevant factors, and will
thereafter establish a rate for each such excess layer.
(e)
Excess coverage-types of policies;
required tail.
(1) Pursuant to section
18 of chapter 184 of the Laws of 1988, excess coverage policies providing $1
million/$3 million of excess coverage above $1 million/$3 million primary
coverage, purchased by general hospitals on behalf of physicians, shall provide
such coverage for occurrences between July 1, 1988 and June 30, 1989.
Accordingly, all physicians medical malpractice liability insurers which issue
such an excess policy on a claims-made basis shall simultaneously issue full
tail coverage.
(2) Except where
required to be issued on a claims-made basis pursuant to section
5504
(f) of the Insurance Law, excess coverage
policies issued or renewed on and after July 1, 1988 shall provide coverage on
either an occurrence or claims-made basis, subject to paragraph (1) of this
subdivision, provided that:
(i) An excess
coverage policy shall be renewed on the same basis (occurrence or claims-made)
as it was previously issued, except that the insured may choose to substitute
claims-made coverage for occurrence coverage.
(ii) If the insured so requests, an excess
coverage policy issued by the same insurer that issued the underlying primary
coverage shall be issued with the same type of coverage (occurrence or
claims-made) as the primary coverage.
(3) The provisions of section
70.7(b)(2) and
(d) of this Part continue to be applicable to
all medical malpractice liability insurers.
(g)
Required filings-primary
coverage.
All physicians medical malpractice liability insurers are
required to file, no later than September 1, 1988, amended rate manual pages
with the superintendent in accordance with the primary coverage rates
established by this Part.
(h)
Required filings-excess
coverage.
(1) All physicians medical
malpractice liability insurers are required to file, no later than September 1,
1988, amended rate manual pages with the superintendent in accordance with the
excess coverage rates established herein.
(2) Insurers writing, or required to write
excess layers other than for which rates are specifically established herein
shall file, no later than September 15, 1988, proposed rates with supporting
documentation.
(i)
Rate service organization.
(1) A
physicians medical malpractice liability insurance rate filed by a rate service
organization on behalf of its members and subscribers shall be established in
accordance with this Part. Any such organization shall make the appropriate
rate filing required by subdivisions (f) and (g) of this section no later than
September 1, 1988.
(2) A member or
subscriber of a rate service organization may adopt the established rates and
approved rating plan filed by the organization if said member or subscriber
notifies the department no later than September 15, 1988, and the department
determines that such filing is not inappropriate.
(j)
Purchasing groups.
The rates and rating plan for medical malpractice liability
insurance issued to a purchasing group and its members shall be established in
accordance with the provisions of this Part, except that, where the insurer and
the purchasing group have complied with all applicable provisions of the
Liability Risk Retention Act,
15 USC
3901
et seq., and Part 301
of this Title, if an insurer submits rates or a rating plan affording
advantages, based on the purchasing group's loss and expense experience, not
afforded to other persons, the superintendent shall review such submission, and
thereafter establish rates or a rating plan, as appropriate, reflecting such
advantages. Any such insurer shall file, no later than September 15, 1988,
proposed rates adequately supported.
(k)
Required filing-rating
plans.
(1) All physicians medical
malpractice liability insurers shall file with the superintendent by September
15, 1988 adequate support for their rating plans (as defined in this Part, but
excluding the merit rating plan). Such insurers shall include actuarial data
and other relevant considerations.
(2) Any insurer that has adopted the rating
plan of another insurer, may submit to the superintendent a statement to that
effect. Such statement will be deemed to be in compliance with paragraph (1) of
this subdivision.
(l)
Segregated and surcharge accounts report form.
NEW YORK STATE
DEPARTMENT OF FINANCIAL SERVICES
MEDICAL MALPRACTICE
REPORT OF SEGREGATED AND SURCHARGE ACCOUNTS
Insurer ____________ NAIC Company Code
This report includes all activity during the twelve months
ending June 30, 20__for the policy year beginning July 1, 20__
Primary Coverage
Excess Coverage
1)
Account balance as of June 30 of last year (line (9) of last year's report) $
_____ $ _____ ............................................................
2)
a) Direct written premium $ _____ $ _____
............................................................
b) Surcharge revenue paid from surcharge
account Total revenue received $ _____ $ _____
............................................................
3) Acquisition expenses and
premium taxes paid $ _____ $ _____
............................................................
4) Overhead costs paid $ _____ $ _____
............................................................
5) Unallocated loss adjustment expenses paid
$ _____ $ _____ ............................................................
6) Losses and allocated loss
adjustment expenses paid $ _____ $ _____
............................................................
7) Account balance as of June 30 before
investment income $ _____ $ _____
............................................................
8) Investment income earned on on the account
$ _____ $ _____ ............................................................
9) Account balance as of June 30
after investment income $ _____ $ _____
............................................................
10) Ultimate losses and all loss adjustment
expenses outstanding undiscounted $ _____ $ _____
............................................................
11) Ultimate losses and all loss adjustment
expenses outstanding discounted to June 30 of the current year $ _____ $ _____
............................................................
12) Estimated surplus (deficiency) for the
policy year $ _____ $ _____
............................................................
13) Total of all direct written premium for
the policy year as provided on all fiscal year reports to date (including this
report) $ _____ $ _____
............................................................
14) Deficiency as a ratio of the total of all
direct written premium for the policy year $ _____ $ _____
............................................................
15) Surcharge account balance as of June 30
of last year (line 20 of last year's report) $ _____ $ _____
............................................................
16) Surcharge income received for the policy
year $ _____ $ _____
............................................................
17) Surcharge income added to direct written
premium for the policy year $ _____ $ _____
............................................................
18) Account balance as of June 30 before
investment income $ _____ $ _____
............................................................
19) Investment income on surcharge account $
_____ $ _____ ............................................................
20) Account balance as of June 30
after investment income $ _____ $ _____
............................................................
(m)
Report of segregated
and surcharge accounts instructions.
NEW YORK STATE
DEPARTMENT OF FINANCIAL SERVICES
MEDICAL MALPRACTICE
REPORT OF SEGREGATED AND SURCHARGE ACCOUNTS
INSTRUCTIONS
A separate report shall be submitted as of every fiscal
year (12 month period) ending June 30 for each policy year under stabilized
rates. The first report should include all activity in all fiscal years up to
and including the fiscal year ending June 30, 1988. Dollars reported are
premiums written, expenses paid, and losses and allocated loss adjustment
expenses paid during the fiscal year for the appropriate policy year, or losses
and loss adjustment expenses outstanding (including IBNR) as of the end of the
fiscal year. All dollars are direct, that is before application of any
reinsurance ceded or assumed. The first report is due April 28, 1989.
Subsequent reports are due in the Department of Financial Services on or before
October 1, of each year and should be submitted to the following
address:
Preparation & Analysis Unit Property Bureau New York
State Department of Financial Services One State Street New York, New York
10004
Instructions by line
1) The account balance reported on line 9 of
the previous fiscal year's submission for this same policy year should be
included here. If the account balance does not agree with the previous year's
submission a reconciliation must be submitted. .......
2) The direct written premium shall include
premium written during the current fiscal year for the policy year being
reported only. Ceded reinsurance premiums should not be subtracted nor assumed
reinsurance premiums added. Premiums should be gross of all expenses. Surcharge
amounts shall be included in the fiscal year report representing the period
when the revenue is transferred from the surcharge account. Surcharge revenue
cannot be transferred unless the account balance (line 9) falls below
$1,000,000 and then only enough surcharge revenue to permit an account balance
of between $1,000,000 and $1,500,000 may be transferred. The total should be
the sum of the direct written premium and the surcharge revenue.
..............................................................................................................
3) Acquisition expenses should be those
expenses paid as a percentage of premium including commissions to agents,
attorney-in-fact and managing general agent fees, and premium taxes. Support
for the amount of acquisition expenses included must be attached to this
submission.
..............................................................................................................
4) Overhead expenses paid should include
general expenses, acquisition expenses not included above, and licenses and
fees not included above. Support for the amount of overhead expenses included
must be attached to this submission.
Note: All expenses must
be allocated per Department of Financial
Services..............................................................................................................
Regulation 30 except as specifically outlined
above...............................................................................................................
5) Unallocated loss adjustment
expenses paid should include all loss adjustment expenses that are not
specifically allocable to losses. Support for the amount of unallocated loss
adjustment expenses included must be attached to this submission. Unallocated
loss adjustment expenses paid should be allocated to policy years as follows:
.......
50% of all unallocated loss adjustment expenses paid during
the fiscal year are allocated to policy year in the same proportion as the
number of claims reported in the fiscal year for the policy year relate to the
total number of claims reported during the fiscal year for all policy years
combined.
50% of all unallocated loss adjustment expenses paid during
the fiscal year are allocated to policy year in the same proportion as the
number of claims closed (with and without payment) in the fiscal year for the
policy year relate to the total number of claims closed (with end without
payment) during the fiscal year for all policy years combined.
6) Losses and allocated loss
adjustment expenses paid include all claim payments made during the fiscal year
on losses and allocated loss adjustment expenses paid on policies written in
the policy year. Allocated loss adjustment expenses include all loss adjustment
expenses that are not included in 5) above. .......
7) Calculate this line as follows:
(7) = (1) + (2) - [(3) + (4) + (5) + (6)]
8) Investment income on the account is
calculated as follows:
a) Total investment
income excluding all capital gains (losses) earned in the fiscal year.
$ ________
..............................................................................................................
b) Less, total investment expenses
incurred in the fiscal year.
$ ________
...............................................................................................................
c) Plus (minus) all (realized and
unrealized) capital gains (losses) incurred in the
fiscal year. See special instructions before completing
this line. .......
$ ________
..............................................................................................................
d) Equals total investment gain in
the period ((d) = (a) - (b) + (c)).
$
________..............................................................................................................
e) Cash and invested assets as of
the end of the current fiscal year.
$ ________
...............................................................................................................
f) Cash and invested assets as of
the end of the prior fiscal year.
$
________..............................................................................................................
g) Average invested assets ((g) =
[(e) + (f)]/2).
$
________..............................................................................................................
h) Rate of return ((h) = (d)/(g)).
$ ________
..............................................................................................................
i) Investment income on the
account ((i) = (h) × [(1) + (7)]/2).
$
________..............................................................................................................
9) Calculate this line
as follows:
(9) = (7) + (8)
10) The undiscounted value of all losses and
loss adjustment expenses outstanding for the policy year as of June 30 must be
included. Support for this number must be attached to this submission. .......
11) The value discounted to June
30 of the losses and loss adjustment expenses on line 10 must be included.
Support for this number must be attached to this submission.
..............................................................................................................
12) Calculate this line as follows: (12) =
(9) - (11)
13) This line should be
the sum of line (2) (total only) for all previous fiscal year reports for this
policy year including this
report...............................................................................................................
14) Calculate this line as follows: (14) = [
- 1 × (12)/(13)]
15) The surcharge
account balance reported on line 20 of the previous fiscal year's submission
for this same policy year should be included here. If the account balance does
not agree with the previous years submission a reconciliation must be
submitted.
..............................................................................................................
16) The surcharge received for the policy
year in the fiscal period must be included here.
17) Any surcharge income removed from this
account and added to the direct written premium for the policy year must be
reported here. Insurers are not permitted to remove surcharge income from the
surcharge account until the account balance falls below $1,000,000. The amount
of surcharge income removed must be such that the account balance does not
exceed $1,500,000 as of June 30 of any fiscal
year...............................................................................................................
18) Calculate this line as follows: (18) =
(15) + (16) - (17).
19) Calculate
this line as follows: (19) = [(8)(i) i.e., rate of return] ×
[(15) + (18)]/2
20) Calculate this
line as follows: (20) = (18) + (19)
Special instructions for calculating capital gains or
losses:
Both realized and unrealized capital gains and losses
incurred during the fiscal year must be included. The insurer may opt to
calculate the capital gains and losses by using an average of the total gains
and losses as a percentage of cash and invested assets over the most recent 10
fiscal years. This percentage is then to be applied to the current fiscal
year's cash and invested assets in order to calculate the total capital gains
to be applied to the current fiscal year. This option must be exercised on the
first report or it is forfeited. Once exercised this averaging procedure must
be used on all subsequent reports submitted by the insurer for the stabilized
rate years. This option may only be exercised with the permission of the
Superintendent.
