Current through Register Vol. 46, No. 39, September 25, 2024
(a)
Annually, the Insurance Department shall determine the total amount of excess
profit dollars to be distributed, in accordance with the following procedure: A
six-year excess profit shall equal the six-year average of the annual rates of
return on net worth (computed in accordance with section 166- 1.6 of this
Subpart), minus 21.0 percent. The resulting figure, if positive, shall be
divided by the average countrywide earned premium-to-net worth ratio of the
six-year period, thus stating the excess profit as a percentage of premiums.
This percentage shall then be multiplied by the six-year total direct earned
premiums for New York motor vehicle insurance, to produce the total dollar
amount to be returned to New York policyholders.
(b) A group or fleet of insurers shall be
deemed, with respect to this regulation, to be a single insurer.
(c) Insurers with an overall six-year average
rate of return of 21 percent or less (computed using the method described in
subdivision (d) of this section) shall be exempted from returning excess
profits.
(d) Insurers not subject
to subdivision (c) of this section shall have their share of total New York
excess profits computed in accordance with the following procedure:
(1) Each insurer's annual return on net worth
shall be computed using the formulas and the industrywide values from section
166-1.6 of this Subpart, except
that:
(i) the Underwriting Gain Ratio
NYshall be replaced by the individual insurer's
comparable Underwriting Gain Ratio (derived from New York's Loss and Expense
Ratios); and
(ii) the Dividends to
Policyholders CTY shall be replaced by the ratio of the
individual insurer's total dividends paid on New York motor vehicle business to
its New York earned premiums for the motor vehicle lines, multiplied by
industrywide Earned Premium CTY. Individual insurer New
York dividend and earned premium data will be taken from page 14 of the
insurer's annual statement; industrywide Earned Premium
CTY will be the value used in section
166-1.6 of this Subpart (as
derived from Best's Aggregates and Averages).
(2) For each insurer, a six-year average of
its annual rates of return on net worth (computed as in paragraph [1] of this
subdivision) shall then be calculated, and 21.0 percent shall be subtracted
from that average. The resulting figure, if positive, shall be divided by the
average industrywide, countrywide earned premium-to-net worth ratio of the
six-year period (i.e., the same value as computed in subdivision [a] of this
section). This ratio shall then be multiplied by the individual insurer's
six-year total direct earned premiums for New York motor vehicle insurance, to
produce a total dollar amount. If the resulting figure, as calculated above, is
not positive, the insurer's total dollar amount shall be set at zero, and the
insurer shall be exempted from returning excess profits, in accordance with
subdivision (c) of this section.
(3) The total dollar amount for each insurer,
as calculated in paragraph (2) of this subdivision, shall be divided by the sum
of the total dollar amounts similarly calculated for all insurers. The
resulting ratio shall then be multiplied by the industrywide total dollar
amount to be returned to New York policyholders (as calculated in subdivision
[a] of this section) to determine the individual insurer's total dollar amount
to be returned to its New York policyholders.
(e) The Insurance Department shall determine
annually the liability of each insurer for its share of any excess profit to be
returned, and notify such insurer thereof.
(f) Procedures which insurers shall follow in
returning excess profits.
(1) Each insurer's
share of total excess profits to be returned, as determined by the Insurance
Department, shall be allocated to each of its current New York insureds who is
of record as of the date of distribution, in accordance with a fair,
practicable and nondiscriminatory plan for refunds or credits, which shall be
established by such insurer.
(2)
Distribution of excess profits to individual insureds shall be made among all
of an insurer's New York motor vehicle business (including assigned risks and
commercial risks).
(3) Insurers'
allocation of excess profits to individual insureds shall be accomplished
within 90 days of receipt of notification from the department pursuant to
subdivision (e) of this section.
(g) The superintendent may waive or modify
any requirement for an individual insurer's refund or credit which the
superintendent determines to be de minimis, impracticable, or otherwise
unreasonable.
(h) See section
166-2.7 of this Part for
discussion of this section.
