New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter VII - Credit And Creditor Insurance
Part 187 - Credit Unemployment Insurance
Section 187.9 - Dividends, retrospective rate credits, and retrospective premiums

Universal Citation: 11 NY Comp Codes Rules and Regs ยง 187.9

Current through Register Vol. 46, No. 39, September 25, 2024

(a) For the purposes of this section, the following definitions apply:

(1) Retrospective rate credit or retrospective rate refund is an amount payable under nonparticipating group policies. It reflects the difference between the premium charged and the actual experience as calculated at the end of the policy year based upon a formula approved by the insurer's board of directors. It is analogous to a dividend payable to a participating group policyholder.

(2) Deposit premium is the scheduled premium paid by the creditor during the policy year before the determination of the retrospective premium.

(3) Standards premium is the maximum premium calculated in accordance with the provisions of section 187.7 of this Part.

(4) Retrospective premium is the premium calculated at the end of the policy year based upon a formula and factors stated in the policy and the actual incurred losses.

(b) Dividends and retrospective rate credits must be based upon an equitable, objective formula applicable to all credit unemployment insurance policies, which is set forth explicitly and in writing, which is uniformly applied, and which has been approved by the insurer's board of directors.

(c) No insurer issuing group credit unemployment insurance may, by contract or otherwise, guarantee a dividend or retrospective rate credit or guarantee the amount of premium to be retained by the company for expenses, risk, and profit, as used in calculating such dividend or retrospective rate credit. Any "retention" letter or other statement given to a policyholder illustrating or describing the operation of dividends or retrospective rate credits must clearly state that it is not a guaranty and that the dividends or retrospective rate credit is fully subject to change by the insurance company.

(d) Any dividends or retrospective rate credit or retrospective rate refund may be applied to reduce the creditor's cash contribution, if any. Any excess thereof must be distributed in one of the following ways:

(1) refunded to those debtors insured on the date of payment to the policyholder, if distributed by the policyholder, or on the date of mailing if distributed directly by the insurer. The insurer shall be responsible for determining the allocation of the refund to debtors. In the event the policyholder distributes the refunds, the insurer shall be responsible to ascertain that in fact such refunds are made and in accordance with the allocation procedure set by the insurer. In the event the policyholder fails to make such refunds, then the insurer shall notify the Superintendent of Insurance and thereafter shall make the refunds directly or shall use one of the other acceptable procedures below;

(2) applied to reduce future premiums and in turn the future contributions of existing insured debtors or future insured debtors or both; or

(3) any retrospective premium determination must be based on loss ratios at least as high as those underlying the standard premium under section 187.6 of this Part.

(e) The requirements for the distribution of any dividend or retrospective rate credit or retrospective refund as set forth in subdivision (d) of this section shall apply to the policy year commencing on or after the effective date of this Part and each succeeding policy year thereafter.

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