1. (1) By July 1, 1987 each insurer, which has issued certificates subject to this Part, shall submit for approval a plan for the monitoring of experience of these certificates. Such monitoring plan shall include:

   1. (i) Provision for the combining of the experience of similar certificates. This may include, subject to the approval of the superintendent, the use of nationwide experience. Each such grouping shall be considered a monitoring unit. No monitoring unit shall be less than 5,000 lives, unless it is the only unit.
   2. (ii) Provision for demonstrating that the minimum benefit ratio requirements of section 59.5 of this Part are being satisfied. Such demonstration shall compare as a ratio the actual experience to the expected experience as anticipated by the filing memorandum required by section 59.5 of this Part.

2. (2) Starting in calendar year 1988, by July first each year, each insurer shall submit to the Actuarial Valuation Bureau:

   1. (i) any changes to a monitoring plan approved under paragraph (1) of this subdivision, or in the case of an insurer issuing certificates subject to this Part without an appropriate plan submitted or approved under paragraph (1), a plan should be submitted for approval;

   2. (ii) notice of any monitoring unit for which the actual to expected ratio produced by the monitoring plan approved under paragraph (1) of this subdivision is less than the percentages in the following table:

      Total incurred claims	Ratio indicating insurer action is necessary
      1,000 or more	.90 or less
      100–999	.80 or less
      25–99	.65 or less
      0–24	0 or less

   3. (iii) an adjustment plan, subject to the approval of the superintendent, which can be expected to bring the certificates into compliance with the minimum benefit ratio standards or an explanation, satisfactory to the superintendent, that the minimum benefit ratio is still expected to be met.
3. (3) The superintendent may require at any time the submission of the experience on any certificates or groupings of certificates subject to this Part.

4. (4) Corrective action may be required at any time if the experience indicates that the minimum benefit ratio may not be met by the end of the period used in the filing memorandum. In addition, the superintendent may require action in any case where he finds the premiums are not reasonable in relation to the benefits provided.

   (b) Accident and health insurance.

5. (1) Insurers must maintain detailed experience data for certificates subject to this Part. Where more than one coverage may be provided at the option of the insured under a single policy form, such experience shall be maintained for each major combination of coverage. Insurers shall monitor such experience annually for the purpose of assuring compliance with minimum benefit ratio standards.

6. (2) Definitions to be observed and procedures to be followed.

   1. (i) Applying the monitoring standards.

      1. (a) A certificate providing the following coverage shall be deemed a Scale I certificate:

         1. (1) disability income certificates which are guaranteed renewable or non-cancellable where one-half or more of the current premium income is collected on coverage of disability periods of five years or more; and
         2. (2) certificates providing major medical insurance.
      2. (b) All other certificates are deemed Scale II certificates.

      3. (c) The ratio of the actual incurred benefit ratio, to the expected incurred benefit ratio, shall determine the necessity of corrective, according to the following:

         *Number of reported claims in the period
         Ratio indicating insurer action is necessary
         	Scale I	Scale II
         1,000 or more	.80 or less	.90 or less
         100–999	.65 or less	.80 or less
         25–99	.50 or less	.65 or less
         0–24	0 or less	0 or less

      4. (d) The benefit ratios for Scale I certificates shall be based on the sum of the most recent two years' experience. The benefit ratios for Scale II certificates shall be based on the most recent one year's experience. All certificates are exempt from such monitoring requirements with respect to the first group policy year.
      5. (e) It is expected that each insurer will carefully monitor those actual to expected ratios which exceed 100 percent, so that plans for increased premium rates can be submitted on a timely basis.

   2. (ii) Insurer action required by this section.

      1. (a) A preliminary plan outlining the certificates which require insurer action shall be submitted to the superintendent by July first of the year following the year being analyzed. If, in the opinion of the insurer's actuary, the deviation of actual from expected benefit ratio is due to unusual reserve fluctuations, economic conditions, or other nonrecurring conditions, the preliminary plan should include that opinion, with appropriate justification. In such a case, the superintendent may exempt the certificates from the need for a corrective plan for that year. Filing of the corrective plan itself shall be made by the later of October first or three months from the date of denial of the exemption, and must contain the detailed experience by year, since inception of the certificate. If an insurer is monitoring a certificate on the basis of a policy year rather than a calendar year, time periods equivalent to those listed above must be employed.
      2. (b) Such a corrective plan for certificates which are not noncancellable shall include a plan utilizing premium reductions, dividends, benefit increases, or any combination of these or other methods such that the minimum benefit ratio can reasonably be expected to be achieved; however, such plan is subject to approval by the superintendent. In most instances, benefit increases may not be included as part of the insurer's plan without offering the alternative option of appropriate premium reduction. Failure to submit such a plan within the required time period will be a violation of this regulation and will subject the insurer to the penalties of section 109 of the Insurance Law.
      3. (c) Such a corrective plan for certificates which are noncancellable shall include a demonstration of the continued reasonableness of the premiums charged in relation to the benefits provided, thereby justifying continued use of the certificate.

(a) Life insurance