New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter V - Rates And Rating Organizations
Subchapter F - Treatment Of Excess Profits In Motor Vehicle Insurance
Part 166 - Treatment Of Excess Profits In Motor Vehicle Insurance
Subpart 166-1 - General Rules
Section 166-1.0 - Introduction

(a) Section 2329 of the New York State Insurance Law, as amended, requires insurers to return to consumers any "excess profits" on automobile insurance written in New York State for the period specified in section 2329.

(b) This regulation presents a reasonably simple, practical, and conceptually defensible approach to the determination of excess profits which takes into account the interests of all concerned--comsumers, insurers, regulators and investors.

(c) To comply with the statute, the "excess" point must be set at a level which permits an economically acceptable return over many years, since no retrospective recovery is possible following years of poor results. The statute states: "An excess profit shall be... so far above a reasonable profit as to amount to an excess profit (taking into consideration the fact that losses or profits below a reasonable average profit will not be recouped from such policyholders)."

(d) This regulation relies to a considerable extent on the work of Professor C. Arthur Williams of the University of Minnesota College of Business Administration, who was engaged as a consultant to the department to develop a methodology for implementing this statute.

(e) The rules for measuring profitability and for determining excess profits are in sections 166-1.1 through 166-1.7 of this Subpart.

(f) See section 166-2.0 of this Part for discussion of this section.