Permits certain agreements by domestic mutual insurance corporations.

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S2875-2011 Actions

• Feb 7, 2012: referred to insurance
• Feb 7, 2012: DELIVERED TO ASSEMBLY
• Feb 7, 2012: PASSED SENATE
• Feb 6, 2012: ADVANCED TO THIRD READING
• Jan 31, 2012: 2ND REPORT CAL.
• Jan 30, 2012: 1ST REPORT CAL.133
• Jan 4, 2012: REFERRED TO INSURANCE
• Jan 4, 2012: returned to senate
• Jan 4, 2012: died in assembly
• Jun 7, 2011: referred to insurance
• Jun 7, 2011: DELIVERED TO ASSEMBLY
• Jun 7, 2011: PASSED SENATE
• Mar 23, 2011: ADVANCED TO THIRD READING
• Mar 22, 2011: 2ND REPORT CAL.
• Mar 21, 2011: 1ST REPORT CAL.240
• Feb 2, 2011: REFERRED TO INSURANCE

S2875-2011 Meetings

Insurance: Jan 30, 2012, Insurance: Mar 21, 2011

S2875-2011 Calendars

Active List: Feb 7, 2012 , Active List: Jun 7, 2011 , Floor Calendar: Jan 31, 2012 , Floor Calendar: Feb 6, 2012 , Floor Calendar: Feb 7, 2012 , Floor Calendar: Mar 22, 2011 , Floor Calendar: Mar 23, 2011 , Floor Calendar: Mar 24, 2011 , Floor Calendar: Mar 28, 2011 , Floor Calendar: Mar 29, 2011 , Floor Calendar: Mar 30, 2011 , Floor Calendar: Mar 31, 2011 , Floor Calendar: Apr 4, 2011 , Floor Calendar: Apr 5, 2011 , Floor Calendar: Apr 6, 2011 , Floor Calendar: Apr 11, 2011 , Floor Calendar: Apr 12, 2011 , Floor Calendar: Apr 13, 2011 , Floor Calendar: May 2, 2011 , Floor Calendar: May 3, 2011 , Floor Calendar: May 4, 2011 , Floor Calendar: May 9, 2011 , Floor Calendar: May 10, 2011 , Floor Calendar: May 11, 2011 , Floor Calendar: May 16, 2011 , Floor Calendar: May 17, 2011 , Floor Calendar: May 18, 2011 , Floor Calendar: May 23, 2011 , Floor Calendar: May 24, 2011 , Floor Calendar: May 25, 2011 , Floor Calendar: Jun 1, 2011 , Floor Calendar: Jun 2, 2011 , Floor Calendar: Jun 6, 2011 , Floor Calendar: Jun 7, 2011

S2875-2011 Votes

S2875-2011 Memo

BILL NUMBER:S2875

TITLE OF BILL:
An act
to amend the insurance law, in relation to permitting certain agreements
by domestic mutual insurance corporations

PURPOSE:
To permit domestic mutual insurance
corporations to enter
into certain compensation agreements with firms and corporations in
which an officer or director has only an "indirect" pecuniary interest.

SUMMARY OF PROVISIONS:
Section 1: Amends Insurance Law Section
1209(f) that upon application be a domestic mutual insurance
corporation, the superintendent may permit the insurance corporation
to enter into such agreement with a firm or corporation that is a
licensed producer if the superintendent determines that (1) the
insurance corporation's policyholders will not be adversely affected,
(2) the officer or director has no pecuniary interest directly in the
insurance producer, and (3) any benefit to the officer or director
that accrues as a result of the agreement would not be material in
relation to the insurance corporation's overall premium volume.

Section 2: Effective date.

EXISTING LAW:
Existing law prohibits domestic mutual insurance
companies (except those organized before January 1, 1940 to do only
marine protection and indemnity insurance) from entering into an
agreement with any of the company's officers or directors, or with
any firm or corporation in which any such officer or director is
pecuniarily interested directly or indirectly, whereby the insurance
corporation agrees to pay, for the acquisition of business, any
commission or other compensation which under the agreement is
increased or diminished by the amount of such business or by the
insurance corporation's earnings on such business.

The Insurance Department has interpreted this law as prohibiting a
mutual insurance company from entering into a profit sharing
commission agreement with an insurance agency simply because one of
the insurance company's officers also served as a director of a
corporation that owned the insurance agency. The Insurance Department
found that the insurance company officer had an "indirect" pecuniary
interest in the insurance agency.

JUSTIFICATION:
The existing prohibition is an outdated and overly
restrictive limitation put in place nearly a century ago. It serves
no legitimate purpose today and is no longer practical in today's
business environment. In today's business community, many directors
and officers of insurance companies also serve on the board of
directors of various other, non-insurance business corporations.
Today, many corporations are part of a larger holding company
structure, and it is quite possible that a corporation where an


insurance company officer selves as director would have affiliates or
subsidiaries that engage in insurance activities. This provision
unnecessarily prohibits a mutual insurance company from entering into
certain compensation agreements with these insurance agency
affiliates and discourages mutual insurance company officers and
directors from sharing their talents and serving as directors and
officers of various other corporations.

LEGISLATIVE HISTORY:
S.7794 of 2010

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately.

S2875-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    2875

                         2011-2012 Regular Sessions

                              I N  SENATE

                              February 2, 2011
                                 ___________

  Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
    printed to be committed to the Committee on Insurance

  AN ACT to amend the insurance law, in  relation  to  permitting  certain
    agreements by domestic mutual insurance corporations

    THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section 1. Subsection (f) of section 1209  of  the  insurance  law  is
  amended to read as follows:

    (f) No domestic mutual insurance corporation, except a domestic mutual
  insurance company organized before January first, nineteen hundred forty
  to  do  only marine protection and indemnity insurance, shall enter into
  any agreement with any of the officers or directors, or with any firm or
  corporation in which any such officer or director is pecuniarily  inter-
  ested  directly  or indirectly, whereby the insurance corporation agrees
  to pay, for the acquisition of business, any commission or other compen-
  sation which under the agreement  is  increased  or  diminished  by  the
  amount  of  such  business or by the insurance corporation's earnings on
  such business. NOTWITHSTANDING THE FOREGOING, AND UPON APPLICATION BY  A
  DOMESTIC MUTUAL INSURANCE CORPORATION, THE SUPERINTENDENT MAY PERMIT THE
  INSURANCE  CORPORATION  TO  ENTER  INTO SUCH AN AGREEMENT WITH A FIRM OR
  CORPORATION THAT IS A LICENSED INSURANCE PRODUCER IF THE  SUPERINTENDENT
  DETERMINES  THAT: (1) THE INSURANCE CORPORATION'S POLICYHOLDERS WILL NOT
  BE ADVERSELY AFFECTED; (2) THE OFFICER  OR  DIRECTOR  HAS  NO  PECUNIARY
  INTEREST  DIRECTLY IN THE INSURANCE PRODUCER; AND (3) ANY BENEFIT TO THE
  OFFICER OR DIRECTOR THAT ACCRUES AS A RESULT OF THE AGREEMENT WOULD  NOT
  BE  MATERIAL  IN RELATION TO THE INSURANCE CORPORATION'S OVERALL PREMIUM
  VOLUME.
    S 2. This act shall take effect immediately.


   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD08907-01-1