Current through Register Vol. 46, No. 39, September 25, 2024
(a) Dividends may be declared and paid by the
insurer confined to group members or quasi-group participants, or for
distribution of such dividends by the group or the group master policyholder to
group members or by the sponsoring entity to quasi-group participants, pursuant
to a dividend plan approved by the superintendent.
(b) No group or quasi-group dividend plan
shall be approved, unless:
(1) the
declaration of dividends remains within the discretion of the insurer, which
shall not obligate itself to return to a group member or quasi-group
participant any portion of the premium through dividends;
(2) the method of determining and declaring
dividends is fair and equitable, not unfairly discriminatory, and disclosed to
group members or quasi-group participants; and
(3) records documenting financial and loss
experience for the group or quasi-group, and every dividend declaration or
distribution, are maintained subject to the superintendent's
inspection.
(c) In
addition to the requirements set forth in subdivision (b) of this section, the
following requirements shall apply in connection with any group or quasi-group
dividend plan based upon implementation of safety-related or other risk
management measures:
(1) group members or
quasi-group participants shall have like exposures to the hazards insured
against that can be materially affected by common safety-related or risk
management measures beyond those normally required by the insurer for like
risks not insured on a group or quasi-group basis;
(2) the insurer shall develop and monitor an
accident prevention and loss reduction plan, with mandatory adherence to such
plan by group members or quasi-group participants; and
(3) a safety committee is established to
monitor progress and problems in implementing the accident prevention and loss
reduction plan.
(d)
Dividends earned under a dividend plan approved under this section shall not be
paid by the insurer to be withheld in whole or part by the group, master
policyholder or sponsoring entity in order to accumulate funds, unless:
(1) the balance of the dividends not withheld
are promptly distributed to group members or quasi-group participants on a
basis that does not result in unfair discrimination;
(2) dividends withheld are used to benefit
the group or quasi-group, and the specific purpose is disclosed in writing to
the group members or quasi-group participants;
(3) every group member or quasi-group
participant whose dividends are withheld has given specific written
consent;
(4) dividends withheld are
maintained in separate, segregated accounts for the benefit of each consenting
group member or quasi-group participant;
(5) where the purpose for withholding
dividends is to provide funds to the master policyholder or sponsoring entity
to assist the insurer in administering an accident prevention and loss
reduction plan, a trust shall be established for the benefit of the group
members or quasi-group participants, and an annual accounting of expenditures
utilizing such withheld funds shall be made to group members or quasi-group
participants; and
(6) where the
purpose is to capitalize an insurer controlled by such group members or
quasi-group participants, any dividends so withheld and maintained shall be
promptly returned to any group member or quasi-group participant that, for any
reason, leaves the group or quasi-group program before such an insurer has been
duly organized.
(e) The
superintendent may modify or withdraw approval from a dividend plan, based upon
experience under, or unfair application of, such plan.
