1. (a) No policy shall contain a provision which permits the policy to be cancelled or nonrenewed except for the following reasons stated in the policy:

   1. (1) nonpayment of premium;
   2. (2) the insured has attained the age limit, if any, prescribed in the policy, or with respect to insurance defined in sections 52.5, 52.6, 52.7 and 52.10 of this Part, has become eligible for any coverage under Medicare by reason of age;
   3. (3) the insured's employment in the eligible classes terminates, the insured retires, or ceases to be engaged in an occupation or profession, or ceases to be a member of the association or union, or a supplier, with respect to which the franchise policies were issued;
   4. (4) the insurer cancels or nonrenews the insurance for all employees of the employer or all members of the union or association or all suppliers after 60 days' notice;
   5. (5) if the plan is terminated by the employer or by the sponsor and the insurer cancels or nonrenews all policies issued to all insured employees of the employer or to all insured members of the association or union or all suppliers;
   6. (6) participation falls below the minimum stated in the policy, and the insurer cancels or nonrenews all policies issued to all insured employees of the same class or classes or to all insured members of the association or union or all suppliers;
   7. (7) if contributions are required of insured employees at a rate greater than that stated in the policy and the insurer terminates or nonrenews all policies issued to all insured employees of the employer; and
   8. (8) any other condition specifically set forth in the policy at issue.
2. (b) Any policy in which one-third or more of the total premium is allocable to any combination of hospital, surgical or medical expense benefits shall contain a conversion privilege at least equal to that required under section 3221(e) of the Insurance Law if coverage be terminated pursuant to either paragraph (a)(2) of this section, if the insured is not eligible for coverage under Medicare or, in the case of employer-employee franchise, pursuant to paragraph (a)(3) of this section or, in the case of association franchise, pursuant to paragraph (a)(3), (4), (5), (6) or (8) of this section.
3. (c) Whenever a policy contains a conversion privilege, the insured individual shall be given written notice of the right to convert not more than 15 days after termination of insurance. If such notice is given more than 15 days but less than 90 days after termination of insurance, the time allowed for the exercise of the privilege of conversion shall be extended for 15 days after the giving of such notice. If such notice is not given within 90 days after the termination of insurance, the time allowed for the exercise of such conversion privilege shall expire at the end of such 90 days. Written notice given to the insured individual by the employer, or sponsor or insurer, to the insured individual at his last known address shall be deemed full compliance with the above.
4. (d) The insurer's right pursuant to paragraphs (a)(4)-(8) of this section to cancel or nonrenew any policy of insurance subject to section 3216(g) of the Insurance Law shall be as prescribed in and limited by section 3216(g) of the Insurance Law and an insurer desiring to cancel or nonrenew for such reasons shall give at least 30 days' notice of such intention to the superintendent. Unless within such period the superintendent objects, the termination or nonrenewal shall be deemed for approved reasons.
5. (e) In lieu of termination of insurance pursuant to subdivision (a) of this section, provision may be made for direct premium notice billing on an individual basis. If any increase in premium is required for such direct premium notice billing, it shall be reasonably related to the increase in the cost of collection and administration of the policy.
6. (f) Where the insurer reserves the right to change the premium rate, a statement to that effect shall be made on the face page or first page of the policy, either as part of the brief description or elsewhere.
7. (g) When rates are based on attained age, other than for policies which provide hospital, medical or surgical expense benefits, the policy shall include the applicable schedule of rates.
8. (h) The policy shall specify the ages, if any, to which the insurance provided shall be limited.
9. (i) No policy shall be delivered or issued for delivery in this State unless it conforms in substance to the provisions of section 3216 of the Insurance Law, or contains provisions which in the opinion of the superintendent are more favorable to policyholders.
10. (j) With respect to employer-employee franchise, where disability insurance benefits are integrated with social security benefits, the policy shall provide that the amount of any disability benefits actually being paid to a disabled person shall not subsequently be reduced by changes in the level of social security benefits resulting from changes in the Social Security Law which become effective after the first day for which disability benefits become payable.
11. (k) Unless otherwise stated herein, section 52.17 of this Part shall apply to franchise insurance.

The following provisions shall apply to franchise insurance: