New York is offering a little new pricing flexibility to the state’s health insurers.

The New York State Insurance Department says health insurers can increase the rates they charge for “statutory conversion coverage.”

The department will consider requests for conversion coverage rate increases of up to 30% in any one year for the next 3 years to be reasonable, as long as an insurer provides solid actuarial justification for its request, according to Circular Letter Number 22 (2006).

The authors of the letter are Satya Pabuwal, chief of the department’s Health Bureau accident and health rating section, and Charles Rapacciuolo, the Health Bureau bureau chief.

The department is setting ground rules for increase requests because it is aware that there have not been any increases in the community rate structures for conversion coverage in many years, the officials rate.

“Current rates for the coverage may no longer be appropriate,” the officials write, “[but] large increases in rates would be detrimental to insureds and disruptive.”

New York requires insures to offer conversion coverage to individuals who lose access to employer-sponsored coverage but are not eligible for continuation coverage under the federal Consolidated Omnibus Budget Reconciliation Act.

Many consumers who qualify for the statutory conversion coverage are past members of small group plans at employers with fewer than 20 employees.

A copy of the circular letter is on the Web at Document Link