Permits certain agreements by domestic mutual insurance corporations.
- Mar 18, 2013: referred to insurance
- Mar 18, 2013: DELIVERED TO ASSEMBLY
- Mar 18, 2013: PASSED SENATE
- Feb 27, 2013: ADVANCED TO THIRD READING
- Feb 12, 2013: 2ND REPORT CAL.
- Feb 11, 2013: 1ST REPORT CAL.56
- Feb 5, 2013: REFERRED TO INSURANCE
S3539-2013 MeetingsInsurance: Feb 11, 2013
S3539-2013 CalendarsActive List: Mar 18, 2013 , Floor Calendar: Feb 12, 2013 , Floor Calendar: Feb 27, 2013 , Floor Calendar: Feb 28, 2013 , Floor Calendar: Mar 4, 2013 , Floor Calendar: Mar 5, 2013 , Floor Calendar: Mar 6, 2013 , Floor Calendar: Mar 7, 2013 , Floor Calendar: Mar 11, 2013 , Floor Calendar: Mar 12, 2013 , Floor Calendar: Mar 13, 2013 , Floor Calendar: Mar 14, 2013 , Floor Calendar: Mar 18, 2013
VOTE: COMMITTEE VOTE: - Insurance - Feb 11, 2013
VOTE: FLOOR VOTE: - Mar 18, 2013
Ayes (62): Adams, Addabbo, Avella, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Espaillat, Farley, Felder, Flanagan, Fuschillo, Gallivan, Gianaris, Gipson, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Hoylman, Kennedy, Klein, Krueger, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Martins, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Sampson, Sanders, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Tkaczyk, Valesky, Young, Zeldin
Excused (1): Parker
BILL NUMBER:S3539 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 policy- holders 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 corpo- ration'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 corpo- ration in which any such officer or director is pecuniary 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 busi- ness. The Insurance Department has interpreted this law as prohibiting a mutu- al 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 serves as director would have affiliates or subsidiaries that engage in insurance activ- ities. 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 offi- cers of various other corporations. LEGISLATIVE HISTORY: S.2875 of 2011-12; S.7794 of 2010 FISCAL IMPLICATIONS: None. EFFECTIVE DATE: Immediately.
S T A T E O F N E W Y O R K ________________________________________________________________________ 3539 2013-2014 Regular Sessions I N SENATE February 5, 2013 ___________ 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. LBD08131-01-3