A10537 Summary:

BILL NOA10537
 
SAME ASSAME AS S05024
 
SPONSORRules (Morelle)
 
COSPNSR
 
MLTSPNSR
 
Amd SS2123 & 4226, Ins L
 
Relates to replacement of individual life insurance policies or annuity contracts; amends provisions relating to misrepresentations and misleading statements; requires replacements regulations be consistent with policies of the national association of insurance commissioners.
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A10537 Actions:

BILL NOA10537
 
06/04/2012referred to insurance
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A10537 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          10537
 
                   IN ASSEMBLY
 
                                      June 4, 2012
                                       ___________
 
        Introduced  by COMMITTEE ON RULES -- (at request of M. of A. Morelle) --
          read once and referred to the Committee on Insurance
 
        AN ACT to amend the insurance law, in relation  to  the  replacement  of
          individual  life insurance policies or individual annuity contracts of
          any insurer
 
          The People of the State of New York, represented in Senate and  Assem-

        bly, do enact as follows:
 
     1    Section  1.  The  section  heading and subsections (a), (b) and (c) of
     2  section 2123 of the insurance law,  subsections  (a),  (b)  and  (c)  as
     3  amended  by  chapter  540 of the laws of 1996, paragraph 3 of subsection
     4  (a) as added by chapter 616 of the laws of 1997, the  opening  paragraph
     5  of paragraph 3 of subsection (a) as amended by chapter 13 of the laws of
     6  2002, are amended to read as follows:
     7    Misrepresentations[,]   and   misleading  statements  [and  incomplete
     8  comparisons].
     9    (a) (1) No agent or representative of any insurer  or  health  mainte-
    10  nance  organization  authorized  to  transact  life,  accident or health
    11  insurance or health maintenance organization business in this state  and
    12  no  insurance  broker,  and no other person, firm, association or corpo-

    13  ration, shall issue or circulate or cause or  permit  to  be  issued  or
    14  circulated,  any illustration, circular, statement or memorandum misrep-
    15  resenting the terms, benefits or advantages of any policy or contract of
    16  life, accident or health insurance, any annuity contract or  any  health
    17  maintenance  organization  contract, delivered or issued for delivery or
    18  to be delivered or issued for delivery, in this state, or shall make any
    19  misleading estimate as to the dividends or share  of  surplus  or  addi-
    20  tional  amounts to be received in the future on such policy or contract,
    21  or shall make any false or misleading statement as to the  dividends  or
    22  share  of  surplus  or  additional  amounts  previously paid by any such
    23  insurer or  health  maintenance  organization  on  similar  policies  or
    24  contracts, or shall make any misleading representation, or any misrepre-

    25  sentation,  as  to the financial condition of any such insurer or health
    26  maintenance organization, or as to the legal reserve system  upon  which
    27  such insurer or health maintenance organization operates.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11187-01-1

        A. 10537                            2
 
     1    (2) No such person, firm, association or corporation shall make to any
     2  person  or  persons  any incomplete [comparison] or misleading represen-
     3  tation of any such policies or contracts of any  insurer,  insurers,  or
     4  health maintenance organization, for the purpose of inducing, or tending

     5  to  induce,  such  person  or persons to lapse, forfeit or surrender any
     6  insurance policy or health maintenance organization contract.
     7    (3) Any replacement of individual life insurance policies or  individ-
     8  ual  annuity  contracts of an insurer by an agent, representative of the
     9  same or different insurer or broker shall conform to  standards  promul-
    10  gated  by  regulation  by  the  superintendent. Such regulation shall be
    11  consistent, to the greatest extent practicable and in the public  inter-
    12  est,  with  the  replacements regulation adopted by the national associ-
    13  ation of insurance commissioners, as amended  from  time  to  time,  and
    14  shall also:
    15    (A) specify what constitutes the replacement of a life insurance poli-
    16  cy or annuity contract and the proper disclosure and notification proce-

    17  dures to replace a policy or contract;
    18    (B)  require  notification  of the proposed replacement to the insurer
    19  whose policies or contracts are intended to be replaced; and
    20    (C) [require the timely exchange of illustrative and cost  information
    21  required  by section three thousand two hundred nine of this chapter and
    22  necessary for completion of a comparison of the  proposed  and  replaced
    23  coverage; and
    24    (D)] provide for a sixty-day period following issuance of the replace-
    25  ment policies or contracts during which the policy or contract owner may
    26  return  the policies or contracts and reinstate the replaced policies or
    27  contracts.
    28    (b) [Any comparison of the policies or contracts of any such  insurer,
    29  insurers  or  health  maintenance  organization shall be deemed to be an

    30  incomplete comparison if it does not conform to all the requirements for
    31  comparisons established by regulation.
    32    (c)] In the determination, judicial or otherwise, of  the  incomplete-
    33  ness or misleading character of any such [comparison] representation, it
    34  shall  not  be  presumed  that  the  insured knew or knows of any of the
    35  provisions, terms or benefits  contained  in  any  insurance  policy  or
    36  health maintenance organization contract.
    37    §  2.  The section heading and subsections (a), (b) and (c) of section
    38  4226 of the insurance law, paragraph 6 of subsection  (a)  as  added  by
    39  chapter 616 of the laws of 1997, are amended to read as follows:
    40    Misrepresentations[,]   and   misleading  statements  [and  incomplete

    41  comparisons] by insurers. (a) No insurer authorized to do in this  state
    42  the business of life, or accident and health insurance, or to make annu-
    43  ity contracts shall:
    44    (1)  issue or circulate, or cause or permit to be issued or circulated
    45  on its behalf,  any  illustration,  circular,  statement  or  memorandum
    46  misrepresenting the terms, benefits or advantages of any of its policies
    47  or contracts;
    48    (2)  make  any  estimate of the dividends or share of surplus or addi-
    49  tional amounts to be received on such policies or contracts;
    50    (3) make any false or misleading statement of the dividends  or  share
    51  of  surplus  or  additional  amounts paid by any such insurer on similar
    52  policies or contracts;
    53    (4) make any misleading representation, or  any  misrepresentation  of
    54  the  financial  condition  of  any  such insurer or of the legal reserve

    55  system upon which it operates; [or]

        A. 10537                            3
 
     1    (5) make or deliver to any person or persons any  incomplete  [compar-
     2  ison  of]  or  misleading  representation regarding any such policies or
     3  contracts for the purpose of inducing, or tending to induce, such person
     4  or persons to lapse,  forfeit  or  surrender  any  insurance  policy  or
     5  contract[.]; or
     6    (6) replace the individual life insurance policies or individual annu-
     7  ity  contracts  of  an  insurer by the same or different insurer without
     8  conforming to the standards promulgated by regulation by the superinten-
     9  dent. Such regulation shall be consistent, to the greatest extent  prac-
    10  ticable  and  in  the  public interest, with the replacements regulation

    11  adopted by the  national  association  of  insurance  commissioners,  as
    12  amended from time to time, and shall also:
    13    (A) specify what constitutes the replacement of a life insurance poli-
    14  cy or annuity contract and the proper disclosure and notification proce-
    15  dures to replace a policy or contract;
    16    (B)  require  notification  of the proposed replacement to the insurer
    17  whose policies or contracts are intended to be replaced; and
    18    (C) [require the timely exchange of illustrative and cost  information
    19  required  by section three thousand two hundred nine of this chapter and
    20  necessary for completion of a comparison of the  proposed  and  replaced
    21  coverage; and
    22    (D)] provide for a sixty-day period following issuance of the replace-

    23  ment policies or contracts during which the policy or contract owner may
    24  return  the policies or contracts and reinstate the replaced policies or
    25  contracts.
    26    (b) [Any comparison of the policies or contracts of any  such  insurer
    27  or  insurers  shall  be deemed to be an incomplete comparison if it does
    28  not conform to all the requirements for comparisons established  by  the
    29  superintendent by regulation.
    30    (c)]  In  any determination, judicial or otherwise, of the incomplete-
    31  ness or misleading character of any such [comparison  or  of]  represen-
    32  tation,  it  shall not be presumed that the insured knew or knows of any
    33  of the provisions or benefits  contained  in  any  insurance  policy  or
    34  contract.
    35    § 3. This act shall take effect on the one hundred eightieth day after

    36  it shall have become a law.
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