(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 3901et 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)]/220) 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.
N.Y. Comp. Codes R. & Regs. Tit. 11 § 70.9