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S07222 Summary:

BILL NOS07222A
 
SAME ASSAME AS A06975-A
 
SPONSORBAILEY
 
COSPNSRFERNANDEZ, MURRAY
 
MLTSPNSR
 
Amd §4228, Ins L
 
Relates to indexing fixed amounts and clarifying compliance with respect to life insurance agents.
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S07222 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         7222--A
            Cal. No. 1644
 
                               2025-2026 Regular Sessions
 
                    IN SENATE
 
                                      April 4, 2025
                                       ___________
 
        Introduced  by Sens. BAILEY, FERNANDEZ, MURRAY -- read twice and ordered
          printed, and when printed to be committed to the Committee  on  Insur-
          ance  -- committee discharged and said bill committed to the Committee
          on Rules -- ordered to a third reading, amended and ordered reprinted,
          retaining its place in the order of third reading
 
        AN ACT to amend the insurance law, in relation to indexing fixed amounts
          and clarifying compliance
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1. Subparagraphs (D) and (F) of paragraph 2 of subsection (c)
     2  of section 4228 of the insurance law, as added by  chapter  616  of  the
     3  laws of 1997, are amended to read as follows:
     4    (D)  distribution,  marketing  and  sales  support  expenses  directly
     5  related to the procurement of new business, which includes  but  is  not
     6  limited to:
     7    (i)  recruiting  and training of agents, including related recordkeep-
     8  ing;
     9    (ii) sales management and supervision; and
    10    (iii) clerical functions in sales offices[; and
    11    (iv) sales support functions, including but not  limited  to  advanced
    12  underwriting  support,  proposals,  illustrations,  competition aids and
    13  related systems and equipment, including personal  computers,  owned  by
    14  the company and used in the sales process];
    15    (F)  the  travel expenses [of sales conferences, training meetings and
    16  awards], meals and entertainment paid for by the company; and
    17    § 2. Subparagraph (F) of paragraph 2 of subsection (e) of section 4228
    18  of the insurance law, as amended by chapter 13 of the laws of  2002,  is
    19  amended to read as follows:
    20    (F)  If a company employs one or more salaried employees whose princi-
    21  pal function is [other than] not the sale of new policies  or  contracts
    22  and  [other  than]  not the supervision of agents or agencies, and if no

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10595-06-5

        S. 7222--A                          2
 
     1  more than twenty-five percent of the total compensation of such  employ-
     2  ees  is  related to [sales results] business personally produced by such
     3  employees, [the compensation of such employees is not  subject  to]  the
     4  provisions  of  this  subsection or subsection (d) of this section shall
     5  not apply to such employees' total  compensation,  notwithstanding  that
     6  they may be licensed as life insurance agents.
     7    §  3.  Paragraph  3 of subsection (e) of section 4228 of the insurance
     8  law, as added by chapter 616 of the laws of 1997, is amended to read  as
     9  follows:
    10    (3)(A)  A  company  may pay reasonable training allowance subsidies to
    11  agents pursuant to a plan of  agent  compensation,  provided  that  such
    12  agents  are  full-time  agents of the company and the principal business
    13  activity of such agents is the solicitation of  policies  and  contracts
    14  primarily  but  not  necessarily  exclusively  for  the company, and its
    15  affiliates, and such agents are not  simultaneously  receiving  training
    16  allowance from any other life insurance company.
    17    (B)  Agents  receiving  training  allowance subsidies may also receive
    18  expense allowance payments.
    19    (C) An agent is eligible to receive such a training allowance subsidy,
    20  provided (i) such agent has earned less  than  [twenty]  forty  thousand
    21  dollars  from the sale of policies and contracts cumulatively during the
    22  three years prior to such agent's appointment, [or] (ii) less than twen-
    23  ty-five percent of such agent's earned income has been received from the
    24  sale of policies and contracts during each of the three years  prior  to
    25  appointment,  or  (iii)  less  than  twenty-five percent of such agent's
    26  worktime during each of the three years prior to appointment  was  allo-
    27  cated  to  individual  life and annuity sales. The company may establish
    28  that an agent is eligible to receive a  training  allowance  subsidy  by
    29  requiring  the agent to attest that such agent meets one of the criteria
    30  set forth in this subparagraph prior to  appointment.  Such  attestation
    31  shall  be sufficient to establish eligibility, provided the company does
    32  not have actual knowledge to reject the attestation based on the agent's
    33  credentials and background.
    34    (D) An agent receiving  such  training  allowance  subsidies  may  not
    35  receive,  on  a cumulative basis, for an agent in the first year of such
    36  subsidies, the greater of [twenty-eight] fifty-four thousand dollars and
    37  sixty percent of the first year commission limit, and for  an  agent  in
    38  the  second  year of such subsidies, the greater of [forty-four] eighty-
    39  five thousand dollars and sixty percent of  the  first  year  commission
    40  limit  in  the first year and forty percent of the first year commission
    41  limit in the second year, and for an agent in the  third  year  of  such
    42  subsidies, the greater of [fifty-four] one hundred five thousand dollars
    43  and  sixty  percent of the first year commission limit in the first year
    44  and forty percent of the first year commission limit in the second year,
    45  and twenty percent of the first year  commission  limit  for  the  third
    46  year, and for an agent in the fourth year of such subsidies, the greater
    47  of [sixty] one hundred sixteen thousand dollars and sixty percent of the
    48  first  year  commission limit in the first year and forty percent of the
    49  first year commission limit in the second year, twenty  percent  of  the
    50  first  year  commission  limit in the third year, and ten percent of the
    51  first year commission limit in the fourth year.
    52    (E) With respect to any agent eligible to receive  training  allowance
    53  subsidy  who  has  earned  at least [sixty-six] one hundred twenty-seven
    54  thousand dollars of income during either of the two calendar years imme-
    55  diately preceding commencement of receipt of training  allowance  subsi-
    56  dies, a company may pay additional training allowance subsidies of [one]

        S. 7222--A                          3
 
     1  two thousand dollars to such agent during each of the first two years of
     2  his  receipt  of training allowance subsidies for every [two] four thou-
     3  sand dollars of such earned income in excess of [sixty-six] one  hundred
     4  twenty-seven  thousand  dollars,  provided  that the cumulative training
     5  allowance subsidy does not  exceed  [forty-five]  eighty-seven  thousand
     6  dollars  in  such  agent's  first  year of receipt of training allowance
     7  subsidy and provided further that the agent receives  not  greater  than
     8  [sixty] one hundred sixteen thousand dollars in total training allowance
     9  subsidies.
    10    (F)  For  purposes of this paragraph, the period of time that a person
    11  worked for a company under a company-sponsored training program and  was
    12  not  acting  as  an  agent for that company shall not be counted as time
    13  spent receiving training allowance subsidies, and any salary paid by the
    14  company to that person during that time shall not count toward the cumu-
    15  lative maximum training allowance subsidy.
    16    (G) The superintendent shall periodically adjust the cumulative  maxi-
    17  mum  training  allowance subsidy limits set forth in this paragraph. The
    18  superintendent may also, at any time, approve training allowance  subsi-
    19  dies with cumulative maximum amounts that exceed the limits set forth in
    20  this paragraph.
    21    (H)  A  company  may, upon approval of the superintendent, establish a
    22  plan for training allowance subsidies for which the conditions of eligi-
    23  bility or the amounts or periods of subsidy, of  any  of  these,  differ
    24  from  those  set  forth  in  this  subsection.  The superintendent shall
    25  approve such a plan, subject to such conditions as he may prescribe,  if
    26  he  finds  that  it  is  likely  to meet the objective of developing new
    27  agents for the sale of policies or contracts or both in a cost-effective
    28  manner.
    29    § 4. Paragraph 6 of subsection (e) of section 4228  of  the  insurance
    30  law, as amended by chapter 13 of the laws of 2002, is amended to read as
    31  follows:
    32    (6) A company, including any person, firm or corporation on its behalf
    33  or  under  any agreement with it, may pay or award, or permit to be paid
    34  or awarded, prizes and awards to agents and brokers pursuant to  a  plan
    35  of  agent or broker compensation, provided that no single prize or award
    36  may exceed a value of [two] five hundred [fifty] dollars, and  that  the
    37  total  value  of  such prizes and awards paid or awarded to any agent or
    38  broker within a calendar year may not exceed [one] two thousand dollars.
    39  Notwithstanding the foregoing, a company may also pay or award not  more
    40  frequently  than monthly a prize or award valued at not more than [twen-
    41  ty-five] fifty dollars. The costs of all such prizes  and  awards  shall
    42  not  be included in applying the limits established in subsection (d) of
    43  this section. The superintendent may  authorize  higher  limits  on  the
    44  value of prizes and awards than those set forth herein.
    45    §  5.  Paragraph  2 of subsection (f) of section 4228 of the insurance
    46  law, as added by chapter 616 of the laws of 1997, is amended to read  as
    47  follows:
    48    (2)  The  annual  statement  schedule  for  reporting compliance on an
    49  aggregate basis with subsection (c) of this section shall be signed by a
    50  knowledgeable officer of the company. The signing of the schedule  shall
    51  be  deemed  confirmation by the officer that the officer has performed a
    52  personal review of the information included and  responses  provided  to
    53  the  interrogatories.  The  signature is to be preceded by the following
    54  statement: "I have reviewed the sources of total selling  expenses  and,
    55  to  the  best  of my knowledge and belief, on the basis of the projected
    56  experience over the next three years based  on  reasonable  assumptions,

        S. 7222--A                          4
 
     1  including  changes  currently being contemplated, the company's expenses
     2  will not exceed the limit imposed thereon  by  New  York  Insurance  Law
     3  Section  4228." If the officer cannot attest to the final clause of this
     4  statement, the officer must disclose the year or years in which expenses
     5  are  expected  to  exceed the limit and the amount by which the limit is
     6  expected to be exceeded.
     7    § 6. The opening paragraph of paragraph 5 of subsection (f) of section
     8  4228 of the insurance law, as amended by chapter 13 of the laws of 2002,
     9  is amended to read as follows:
    10    Any company making one or more  payments  that  exceed  any  limit  in
    11  subsection  (d)  of  this  section that is unable to recover such excess
    12  payments shall notify the superintendent within [thirty] ninety days  of
    13  the date that it learns or realizes that it exceeded the limit; however,
    14  if  the  company  recovers  such  excess  payments prior to the required
    15  notification date, or, for agents or brokers who are no longer appointed
    16  with the company, the company has made  reasonable  efforts  to  recover
    17  such  excess payments, it need not make such notification. At that time,
    18  the company shall report the reason the company exceeded the limit,  the
    19  number  of  agents  and  brokers to whom payments in excess of the limit
    20  were made, and the amount of money paid in  excess  of  the  limit,  and
    21  shall describe the actions the company will take promptly to prevent any
    22  further instances of it exceeding this limit.
    23    § 7. This act shall take effect immediately.
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