N.Y. Comp. Codes R. & Regs. tit. 11, § 185.10 – Dividends, retrospective rate credits and retrospective premiums.

(a) For the purposes of this section, the following definitions apply:
1. (1) A 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 board of directors. It is analogous to a dividend payable to a participating group policyholder.
2. (2) A deposit premium is the scheduled premium paid by the creditor during the policy year before the determination of the retrospective premium.
3. (3) Standard premium is the maximum premium calculated in accordance with the provisions of section 185.7 of this Part.
4. (4) A 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:
1. (1) be based upon an equitable, objective formula applicable to all credit insurance policies;
2. (2) be set forth explicitly in writing;
3. (3) be uniformly applied; and
4. (4) have been approved by the insurer's board of directors.
(c) No insurer issuing group credit 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 shall clearly state that it is not a guarantee and that the dividend or retrospective rate credit is fully subject to change by the insurance company.
(d) When the deposit premium exceeds the identifiable charge to the debtor, an insurer may incorporate into the policy, by rider or amendment thereto, a retrospective premium plan provided the formula and range or description thereof, or applicable factors are approved by the superintendent and such formula and applicable factors are set forth in the policy. Such formula and factors shall be subject to the following:
1. (1) the deposit premium may not exceed the standard premium, but any differences shall be justified and the deposit premium must be self-supporting based on reasonable assumptions;
2. (2) any retrospective premium determination must be based on loss ratios at least equal to those used in determining the standard premium under section 185.7 of this Part;
3. (3) at the end of any policy year, if the deposit premium exceeds the retrospective premium, any excess not exceeding the creditor's cash contribution may, in accordance with the terms of the policy, either be returned to the creditor or retained in the form of a claim fluctuation fund to offset losses in later years;
4. (4) contributions to any claim fluctuation fund shall be accumulated solely from creditor funds and limited to the excess of 125 percent of the standard premium over the deposit premium, if payable in advance, and to any excess of deposit premiums over retrospective premiums. The amount of any claim fluctuation fund shall not exceed 100 percent of the standard premiums for the latest policy year;
5. (5) at the end of any policy year, or at termination of the policy, if the retrospective premium exceeds the deposit premium and if the policy so provides, the insurer may charge the policyholder for such excess up to the amount of the claim fluctuation fund, if any, plus up to 25 percent of the year's deposit premium. Upon termination of the policy, any balance remaining in the claim fluctuation fund shall be refunded to the policyholder within two years from the date of termination; and
6. (6) any additional premium shall be paid out of the creditor's funds and not charged to insured debtors.