INS-03-07-00013-E Financial Statement Filings and Accounting Practices and Procedures

1/17/07 N.Y. St. Reg. INS-03-07-00013-E

NEW YORK STATE REGISTER

VOLUME XXIX, ISSUE 3

January 17, 2007

RULE MAKING ACTIVITIES

INSURANCE DEPARTMENT

EMERGENCY RULE MAKING

 

I.D No. INS-03-07-00013-E

Filing No. 5

Filing Date. Jan. 02, 2007

Effective Date. Jan. 02, 2007

Financial Statement Filings and Accounting Practices and Procedures

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:

Action taken:

Amendment of section 83.2 (Regulation 172) of Title 11 NYCRR.

Statutory authority:

Insurance Law, sections 107(a)(2), 201, 301, 307, 308, 1109, 1301, 1302, 1308, 1404, 1405, 1411, 1414, 1501, 1505, 3233, 4117, 4233, 4239, 4301, 4310, 4321-a, 4322-a, 4327 and 6404; Public Health Law, sections 4403, 4403-a, 4403-c and 4408-a; and L. 2002, ch. 599

Finding of necessity for emergency rule:

Preservation of general welfare.

Specific reasons underlying the finding of necessity:

Certain provisions of the Insurance Law require that insurers file financial statements annually and quarterly with the Superintendent. These insurers are subject to the provisions of Sections 307 and 308 of the Insurance Law and are required to file what are known as Annual and Quarterly Statement Blanks on forms prescribed by the Superintendent. The Superintendent has prescribed forms and Annual and Quarterly Statement Instructions that are adopted from time to time by the National Association of Insurance Commissioners (“NAIC”), as supplemented by additional New York forms and instructions. To assist in the completion of the Financial Statements, the NAIC also adopts and publishes from time to time certain policy procedure and instruction manuals. The latest edition of one of the manuals, Accounting Practices and Procedures Manual As Of March 2006 (“Accounting Manual”) includes a body of accounting guidelines referred to as Statements of Statutory Accounting Principles (“SSAPs”). The Accounting Manual, which is incorporated by reference into this regulation, was adopted by the NAIC in March 2006.

The Accounting Manual represents a codification of statutory accounting principles. The purpose of the codification of statutory accounting principles is to produce a comprehensive guide for regulators, insurers and auditors. This amendment will take effect upon filing with the Secretary of State so that the accounting principles of this part will be in place for use in the preparation of Quarterly Statements and the Annual Statement for 2006. This amendment adopts the latest version of the Accounting Manual.

This regulation, as amended, will enhance the consistency of the accounting treatment of assets, liabilities, reserves, income and expenses by entities subject to the regulation, by clearly setting forth the accounting practices and procedures to be followed in completing quarterly and annual statements required by law. In the preparation of this amendment, it was necessary for the Insurance Department to take into account determinations made by the NAIC at its meetings in 2006.

Absent the amendment being effective immediately, many of New York's accounting practices and procedures would not be consistent with the practices and procedures followed in most other states.

For the reasons stated above, this rule must be promulgated on an emergency basis for the furtherance of the general welfare.

Subject:

Financial statement filings and accounting practices and procedures.

Purpose:

To update a citation in section 83.2(c) to refer to an accounting manual entitled Accounting Practices and Procedures Manual as of March 2006 (instead of 2005).

Text of emergency rule:

Subdivision (c) of Section 83.2 of Part 83 is amended to read as follows:

(c) To assist in the completion of the Financial Statements, the NAIC also adopts and publishes from time to time certain policy, procedures and instruction manuals. The latest of these manuals, the Accounting Practices and Procedures Manual as of March [2005*] 2006* (“Accounting Manual”) includes a body of accounting guidelines referred to as Statements of Statutory Accounting Principles (“SSAPs”). The Accounting Manual shall be used in the preparation of Quarterly Statements and the Annual Statement for [2005] 2006, which will be filed in [2006] 2007.

The footnote to subdivision (c) of Section 83.2 is amended to read as follows: *ACCOUNTING PRACTICES AND PROCEDURES MANUAL AS OF MARCH [2005] 2006. Copyright 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006 by National Association of Insurance Commissioners, in Kansas City, Missouri.

This notice is intended

to serve only as a notice of emergency adoption. This agency intends to adopt this emergency rule as a permanent rule and will publish a notice of proposed rule making in the State Register at some future date. The emergency rule will expire April 1, 2007.

Text of emergency rule and any required statements and analyses may be obtained from:

Andrew Mais, Insurance Department, 25 Beaver St., New York, NY 10004, [phone], e-mail: [e-mail]

Regulatory Impact Statement

Filing of a Regulatory Impact Statement for the Sixth Amendment to 11 NYCRR 83 (Regulation 172) is unnecessary because the action is a technical amendment as described in SAPA § 202-a.

Regulatory Flexibility Analysis

The Insurance Department finds that this regulation will have no adverse economic impact on local governments, and will not impose reporting, recordkeeping or other compliance requirements on local governments. The basis of this finding is that this regulation is directed to insurers as defined under this regulation, none of which are local governments.

The Insurance Department finds that this regulation will have no adverse impact on small businesses, and will not impose reporting, recordkeeping or other compliance requirements on small businesses. The basis for this finding is that this regulation is directed to insurers. The Insurance Department has reviewed filed Reports on Examination and Annual Statements of authorized insurers and determined that none of them would come within the definition of small businesses, within the meaning of the State Administrative Procedure Act, because none are both independently owned and have fewer than one hundred employees.

Rural Area Flexibility Analysis

The Insurance Department finds that this rule does not impose any additional burden on persons located in rural areas, and the Insurance Department finds that it will not have an adverse impact on rural areas. This rule applies uniformly to parties that do business in both rural and nonrural areas of New York State.

Job Impact Statement

The proposed rule changes should have no adverse impact on jobs and employment opportunities in New York State. The regulation codifies numerous accounting practices and procedures that had not previously been organized in such a unified and coherent manner. The current amendment only changes a publication date references to a publication incorporated by reference in the regulation and should have no adverse impact on jobs or employment opportunities.