STATEMENT TO

ASSEMBLY COMMITTEE SUBSTITUTE FOR

ASSEMBLY, No. 2261

with Assembly Floor Amendments

(Proposed By Assemblymen BATEMAN and GARRETT)

ADOPTED: JUNE 5, 1997

      These amendments pertain to the calculation of the loss ratio by health insurance carriers on individual and small group health benefits plans. Specifically, the amendments clarify that managed care claim-related expenses for health maintenance organizations, which are subject to the approval of the Commissioner of Banking and Insurance, shall also be approved by the commissioner for other carriers.

      The amendments also delete any reference to calculation of the loss ratio on the basis of a life duration and instead provide that once every three years each carrier is required to calculate the value of the funds held in the premium stabilization account for each block of business during the preceding three-year period and, if the value of the reserve fund is determined to be more than 5% of the annualized premium for that respective block of business, the carrier is required to either offset premiums to new policyholders or refund premiums to policyholders during the calculation period.