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NYS Comptroller


New York State Insurance Fund
Risk Management Planning Group
(Issued: 01/24/2017)


The objectives of our examination were to determine if the New York State Insurance Fund (NYSIF): (i) effectively addressed the risk of Risk Management Planning Group (RMPG) serving in conflicting roles of insurance broker and Third Party Administrator (TPA) for North Shore Hospital (North Shore) and King Kullen Supermarket (King Kullen) policies; and (ii) followed its policies and standard industry practices when calculating premiums and providing discounts to North Shore and King Kullen.


NYSIF provides a guaranteed source of workers’ compensation insurance for employers within New York State.  In 2001, NYSIF accepted RMPG’s proposal to bring its clients to NYSIF for workers’ compensation insurance coverage and to administer the policies for NYSIF at no charge to NYSIF.  Under the TPA agreement, NYSIF determines the amount to charge policyholders for insurance premiums, including whether to provide any discounts.  In evaluating whether to provide a discount, NYSIF should use variety of data, including the New York Compensation Insurance Rating Board (NYCIRB) rates, NYSIF policies and standard industry practices.  NYSIF also should ensure it receives accurate reserves information from the TPA (RMPG) for policies.

During the period 2001 through 2012, NYSIF charged North Shore and King Kullen more than $215.6 million and $30.3 million in premiums, respectively.  During the same period, NYSIF also provided discounts of more than $118.7 million and more than $6.6 million to North Shore and King Kullen, respectively.

Key Findings

  • NYSIF did not effectively address the risk of RMPG serving in conflicting roles or follow its policies and industry practices when calculating $245.9 million in combined premiums and providing $125.3 million in combined discounts for North Shore and King Kullen.
  • NYSIF allowed RMPG to: represent North Shore and King Kullen as its broker to negotiate favorable insurance rates with NYSIF; and represent NYSIF as the TPA to administer the insurance claims.  NYSIF provided no evidence that it established procedures to effectively guard against the increased risk that RMPG may not fairly represent information pertinent to NYSIF’s premium pricing decisions (i.e., reserves) in an effort to garner lower premiums and discounts for these policyholders.  Despite RMPG under reserving, NYSIF failed to conduct a comprehensive review of North Shore and King Kullen to ensure proper reserves for all claims, and failed to ensure RMPG established effective controls to prevent under reserving.
  • NYSIF failed to follow its own internal policies and standard industry practices to determine premiums and discounts related to the North Shore and King Kullen policies.
  • NYSIF priced North Shore and King Kullen premiums without critical information to ensure the premiums collected would be sufficient to cover the ultimate cost of the claims.  Discounts totaling $118.7 million for North Shore and $6.6 million for King Kullen were provided despite the missing information and without required documentation to support the decisions.
  • NYSIF undercharged North Shore and King Kullen up to a cumulative $14.1 million for workers’ compensation assessments, which amounts to an additional discount on top of the $125.3 million totaling $139.4 million in premium discounts.

Key Recommendations

  • NYSIF must ensure:

    1. premiums are appropriately priced.
    2. discounts and surcharges are warranted.
    3. all underwriting decisions are documented, including those that deviate from NYSIF’s policies.
  • NYSIF should develop strong internal controls that include oversight of NYSIF underwriting staff, including the Director of Underwriting, when setting premiums.
  • NYSIF should monitor policies administered by RMPG and consistently review RMPG’s compliance with the TPA agreement which includes adequately setting reserves.
  • NYSIF should conduct an independent review of the North Shore and King Kullen policies to ensure appropriate reserves for existing claims.

For a complete copy of Report, click here


Division of Contracts and Expenditures
Bernard J. McHugh, Director of State Expenditures

Phone: (518) 474-4868 Email:
Address: Office of the State Comptroller, Division of Contracts and Expenditures
110 State Street, 10th Floor; Albany, NY 12236