NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6975A Revised 06/09/25
SPONSOR: Weprin TITLE OF BILL:
An act to amend the insurance law, in relation to indexing fixed amounts
and clarifying compliance
PURPOSE OR GENERAL IDEA OF BILL:
This bill would modernize the Insurance Law by updating fixed amounts in
the statute to account for inflation since the statute's enactment,
adjusting eligibility for certain subsidies to account for the subse-
quent enactment of various states' salary history ban laws, and clarify-
ing a number of compliance-related provisions.
SUMMARY OF SPECIFIC PROVISIONS:
Section one amends Section 4228 of the insurance law to clarify the
definition of selling expenses.
Section two amends Section 4228 of the insurance law to clarify the
twenty-five percent limit on compensation for life insurance sales.
Section three amends Section 4228 of the insurance law to modernize the
way in which eligibility for agent training allowance subsidies is
determined and to increase the statutory limits on training allowance
subsidies.
Section four amends section 4228 of the insurance law to increase the
statutory limit on prizes or awards that can be provided to an agent to
account for inflation since the statute's enactment.
Section five amends Section 4228 of the insurance law to clarify annual
testing requirements.
Section six amends Section 4228 of the insurance law to provide insurers
with additional time to recover overpayments.
Section seven establishes the effective date.
JUSTIFICATION:
This bill is an important first step toward updating Insurance Law
Section 4228. Section 4228 is significant to NY licensed life insurers
because it is extraterritorial, i.e., applies outside of New York, and
limits the amount of agent compensation that can be paid on sales of
individual life insurance and annuity business regardless of where that
business is sold. Specifically, New York's Insurance Law puts limits on
commissions to agents, non-cash compensation, and selling expenses that
insurance companies can incur when selling life insurance and annuities.
The statute also includes fixed limits on prior income a candidate may
have earned to be eligible for new agent training subsidies. Over time,
those monetary limits have become outdated and no longer serve their
intended purpose, as they have lost approximately half their value due
to inflation. This bill would update the limits based on inflation.
The bill also adjusts the eligibility requirements for new agents to
receive training allowance subsidies. Since the statute's enactment, a
growing number of states have enacted salary history ban laws, which
prohibit companies from inquiring into an applicant's former salary. In
these states, insurance companies cannot comply with both the eligibil-
ity requirement of Section 4228 and the state's salary history ban law.
This adjustment to eligibility requirements will benefit the public by
making it easier for new candidates to apply for and become insurance
agents, increasing employment opportunities as well as expanding the
ranks of insurance agents who can serve a public need.
The bill also clarifies the definition of selling expenses to ensure
that insurers have clear compliance guidelines, making it easier for
them to support their agents. The current definition of "total selling
expenses"' includes non-exhaustive examples and vague terms, making it
difficult to administer with certainty. In addition, the bill removes
from "total selling expenses" issuers' own ordinary expenses incurred in
advertising and promoting their own products. To the extent that Section
4228 puts limits on "total selling expenses," these should be limited to
commission, other forms of agent compensation, or proxies for these
items, i.e., items that would normally be part of the agent's overhead
but for the issuer defraying the expense. In contrast, items such as
illustrations and advanced underwriting support are items that an issuer
should supply on its own account with respect to its own products. These
are not items that would otherwise be part of an agent's overhead
expenses. Likewise, certain sales conferences and training meetings
advertising the issuer's products would normally be understood to be
part of the issuer's overhead and would not be expenses the agent would
otherwise incur on their own account.
Lastly, Section 4228 requires insurers to file annual reports with the
Department of Financial Services (DFS) and to demonstrate that their
agent compensation plans comply with the statute's payment limits.
These annual reports include statements of self-support for each life
insurance policy; self-support meaning that the premium charged for a
life insurance policy or annuity is able to cover its expenses, with the
assumptions used to demonstrate self-support being based on reasonable
actuarial assumptions about interest, mortality, taxes, and other
factors. This bill clarifies what insurers are required to test and file
with DFS.
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
FISCAL IMPLICATIONS:
None to the State.
EFFECTIVE DATE:
This act shall take effect on January 1, 2026.
STATE OF NEW YORK
________________________________________________________________________
6975--A
2025-2026 Regular Sessions
IN ASSEMBLY
March 18, 2025
___________
Introduced by M. of A. WEPRIN, CLARK -- read once and referred to the
Committee on Insurance -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee
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
23 more than twenty-five percent of the total compensation of such employ-
24 ees is related to [sales results] business personally produced by such
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10595-05-5
A. 6975--A 2
1 employees, [the compensation of such employees is not subject to] the
2 provisions of this subsection or subsection (d) of this section shall
3 not apply to such employees' total compensation, notwithstanding that
4 they may be licensed as life insurance agents.
5 § 3. Paragraph 3 of subsection (e) of section 4228 of the insurance
6 law, as added by chapter 616 of the laws of 1997, is amended to read as
7 follows:
8 (3)(A) A company may pay reasonable training allowance subsidies to
9 agents pursuant to a plan of agent compensation, provided that such
10 agents are full-time agents of the company and the principal business
11 activity of such agents is the solicitation of policies and contracts
12 primarily but not necessarily exclusively for the company, and its
13 affiliates, and such agents are not simultaneously receiving training
14 allowance from any other life insurance company.
15 (B) Agents receiving training allowance subsidies may also receive
16 expense allowance payments.
17 (C) An agent is eligible to receive such a training allowance subsidy,
18 provided (i) such agent has earned less than [twenty] forty thousand
19 dollars from the sale of policies and contracts cumulatively during the
20 three years prior to such agent's appointment, [or] (ii) less than twen-
21 ty-five percent of such agent's earned income has been received from the
22 sale of policies and contracts during each of the three years prior to
23 appointment, or (iii) less than twenty-five percent of such agent's
24 worktime during each of the three years prior to appointment was allo-
25 cated to individual life and annuity sales. The company may establish
26 that an agent is eligible to receive a training allowance subsidy by
27 requiring the agent to attest that such agent meets one of the criteria
28 set forth in this subparagraph prior to appointment. Such attestation
29 shall be sufficient to establish eligibility, provided the company does
30 not have actual knowledge to reject the attestation based on the agent's
31 credentials and background.
32 (D) An agent receiving such training allowance subsidies may not
33 receive, on a cumulative basis, for an agent in the first year of such
34 subsidies, the greater of [twenty-eight] fifty-four thousand dollars and
35 sixty percent of the first year commission limit, and for an agent in
36 the second year of such subsidies, the greater of [forty-four] eighty-
37 five thousand dollars and sixty percent of the first year commission
38 limit in the first year and forty percent of the first year commission
39 limit in the second year, and for an agent in the third year of such
40 subsidies, the greater of [fifty-four] one hundred five thousand dollars
41 and sixty percent of the first year commission limit in the first year
42 and forty percent of the first year commission limit in the second year,
43 and twenty percent of the first year commission limit for the third
44 year, and for an agent in the fourth year of such subsidies, the greater
45 of [sixty] one hundred sixteen thousand dollars and sixty percent of the
46 first year commission limit in the first year and forty percent of the
47 first year commission limit in the second year, twenty percent of the
48 first year commission limit in the third year, and ten percent of the
49 first year commission limit in the fourth year.
50 (E) With respect to any agent eligible to receive training allowance
51 subsidy who has earned at least [sixty-six] one hundred twenty-seven
52 thousand dollars of income during either of the two calendar years imme-
53 diately preceding commencement of receipt of training allowance subsi-
54 dies, a company may pay additional training allowance subsidies of [one]
55 two thousand dollars to such agent during each of the first two years of
56 his receipt of training allowance subsidies for every [two] four thou-
A. 6975--A 3
1 sand dollars of such earned income in excess of [sixty-six] one hundred
2 twenty-seven thousand dollars, provided that the cumulative training
3 allowance subsidy does not exceed [forty-five] eighty-seven thousand
4 dollars in such agent's first year of receipt of training allowance
5 subsidy and provided further that the agent receives not greater than
6 [sixty] one hundred sixteen thousand dollars in total training allowance
7 subsidies.
8 (F) For purposes of this paragraph, the period of time that a person
9 worked for a company under a company-sponsored training program and was
10 not acting as an agent for that company shall not be counted as time
11 spent receiving training allowance subsidies, and any salary paid by the
12 company to that person during that time shall not count toward the cumu-
13 lative maximum training allowance subsidy.
14 (G) The superintendent shall periodically adjust the cumulative maxi-
15 mum training allowance subsidy limits set forth in this paragraph. The
16 superintendent may also, at any time, approve training allowance subsi-
17 dies with cumulative maximum amounts that exceed the limits set forth in
18 this paragraph.
19 (H) A company may, upon approval of the superintendent, establish a
20 plan for training allowance subsidies for which the conditions of eligi-
21 bility or the amounts or periods of subsidy, of any of these, differ
22 from those set forth in this subsection. The superintendent shall
23 approve such a plan, subject to such conditions as he may prescribe, if
24 he finds that it is likely to meet the objective of developing new
25 agents for the sale of policies or contracts or both in a cost-effective
26 manner.
27 § 4. Paragraph 6 of subsection (e) of section 4228 of the insurance
28 law, as amended by chapter 13 of the laws of 2002, is amended to read as
29 follows:
30 (6) A company, including any person, firm or corporation on its behalf
31 or under any agreement with it, may pay or award, or permit to be paid
32 or awarded, prizes and awards to agents and brokers pursuant to a plan
33 of agent or broker compensation, provided that no single prize or award
34 may exceed a value of [two] five hundred [fifty] dollars, and that the
35 total value of such prizes and awards paid or awarded to any agent or
36 broker within a calendar year may not exceed [one] two thousand dollars.
37 Notwithstanding the foregoing, a company may also pay or award not more
38 frequently than monthly a prize or award valued at not more than [twen-
39 ty-five] fifty dollars. The costs of all such prizes and awards shall
40 not be included in applying the limits established in subsection (d) of
41 this section. The superintendent may authorize higher limits on the
42 value of prizes and awards than those set forth herein.
43 § 5. Paragraph 2 of subsection (f) of section 4228 of the insurance
44 law, as added by chapter 616 of the laws of 1997, is amended to read as
45 follows:
46 (2) The annual statement schedule for reporting compliance on an
47 aggregate basis with subsection (c) of this section shall be signed by a
48 knowledgeable officer of the company. The signing of the schedule shall
49 be deemed confirmation by the officer that the officer has performed a
50 personal review of the information included and responses provided to
51 the interrogatories. The signature is to be preceded by the following
52 statement: "I have reviewed the sources of total selling expenses and,
53 to the best of my knowledge and belief, on the basis of the projected
54 experience over the next three years based on reasonable assumptions,
55 including changes currently being contemplated, the company's expenses
56 will not exceed the limit imposed thereon by New York Insurance Law
A. 6975--A 4
1 Section 4228." If the officer cannot attest to the final clause of this
2 statement, the officer must disclose the year or years in which expenses
3 are expected to exceed the limit and the amount by which the limit is
4 expected to be exceeded.
5 § 6. The opening paragraph of paragraph 5 of subsection (f) of section
6 4228 of the insurance law, as amended by chapter 13 of the laws of 2002,
7 is amended to read as follows:
8 Any company making one or more payments that exceed any limit in
9 subsection (d) of this section that is unable to recover such excess
10 payments shall notify the superintendent within [thirty] ninety days of
11 the date that it learns or realizes that it exceeded the limit; however,
12 if the company recovers such excess payments prior to the required
13 notification date, or, for agents or brokers who are no longer appointed
14 with the company, the company has made reasonable efforts to recover
15 such excess payments, it need not make such notification. At that time,
16 the company shall report the reason the company exceeded the limit, the
17 number of agents and brokers to whom payments in excess of the limit
18 were made, and the amount of money paid in excess of the limit, and
19 shall describe the actions the company will take promptly to prevent any
20 further instances of it exceeding this limit.
21 § 7. This act shall take effect immediately.
