Provides that an insurer may offer valuable consideration, including merchandise or periodical subscriptions of a value of $25 or less to an insured.
TITLE OF BILL: An act to amend the insurance law, in relation to anti-rebating provisions for insurers
PURPOSE: The purpose of this bill is to permit property and casualty companies, agents, and brokers to provide merchandise or other considerations with a value not to exceed twenty five dollars during the insurance sales process to an applicant for insurance. This bill also removes a restriction that the merchandise be promotional in nature.
SUMMARY OF PROVISIONS: This bill amends subsection (a) of section 2324 of the insurance law as amended by chapter 482 of the laws of 2000, and amends section 2324 of the insurance law by adding a new subsection (g). This bill also amends subsection (c) of section 4224 of the insurance law as amended by chapter 592 of the laws of 2008.
JUSTIFICATION: Sections 2324 and 4424 of the insurance law restrict insurers and agents from providing anything of value to applicants for insurance, beyond that which is provided for in the insurance contract. These sections, referred to as the anti-rebating statutes, were established to keep insurers and agents from offering valuable items not related to the insurance contract as incentives for an applicant to purchase a policy. Many years ago, the legislature recognized the need for an exception to this section for items of minimal value that insurers or agents might choose to offer to potential customers during the sales process and amended the law to provide for an exception for items with a value of fifteen dollars or less. This bill would update that amount once again to reflect the cost of inflation since 2000 and extend the exception to include the life insurance sales process.
LEGISLATIVE HISTORY: This is a new bill.
FISCAL IMPLICATIONS: None to State.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 6812--A IN SENATE March 23, 2012 ___________Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed 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 anti-rebating provisions for insurers THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subsection (a) of section 2324 of the insurance law, as amended by chapter 482 of the laws of 2000, is amended to read as follows: (a) No authorized insurer, no licensed insurance agent, no licensed insurance broker, and no employee or other representative of any such insurer, agent or broker shall make, procure or negotiate any contract of insurance other than as plainly expressed in the policy or other written contract issued or to be issued as evidence thereof, or shall directly or indirectly, by giving or sharing a commission or in any manner whatsoever, pay or allow or offer to pay or allow to the insured or to any employee of the insured, either as an inducement to the making of insurance or after insurance has been effected, any rebate from the premium which is specified in the policy, or any special favor or advan- tage in the dividends or other benefit to accrue thereon, or shall give or offer to give any valuable consideration or inducement of any kind, directly or indirectly, which is not specified in such policy or contract, other than any
[article of]VALUABLE CONSIDERATION, INCLUDING BUT NOT LIMITED TO merchandise OR PERIODICAL SUBSCRIPTIONS, not exceed- ing [fifteen]TWENTY-FIVE dollars in value [which shall have conspicu- ously stamped or printed thereon the advertisement of the insurer, agent or broker], or shall give, sell or purchase, or offer to give, sell or purchase, as an inducement to the making of such insurance or in connection therewith, any stock, bond or other securities or any divi- dends or profits accrued thereon, nor shall the insured, his agent or representative knowingly receive directly or indirectly, any such rebate or special favor or advantage, provided, however, a licensed insuranceEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD15149-03-2 S. 6812--A 2
agent or a licensed insurance broker may retain the usual commission or underwriting fee on insurance placed on his own property or risks, if the aggregate of such commissions or underwriting fees will not exceed five percent of the total net commissions or underwriting fees received by such licensed insurance agent or insurance broker during the calendar year. S 2. Subsection (c) of section 4224 of the insurance law, as amended by chapter 592 of the laws of 2008, is amended to read as follows: (c) Except as permitted by section three thousand two hundred thirty- nine of this chapter, no such life insurance company and no such savings and insurance bank and no officer, agent, solicitor or representative thereof and no such insurer doing in this state the business of accident and health insurance and no officer, agent, solicitor or representative thereof, and no licensed insurance broker and no employee or other representative of any such insurer, agent or broker, shall pay, allow or give, or offer to pay, allow or give, directly or indirectly, as an inducement to any person to insure, or shall give, sell or purchase, or offer to give, sell or purchase, as such inducement, or interdependent with any policy of life insurance or annuity contract or policy of acci- dent and health insurance, any stocks, bonds, or other securities, or any dividends or profits accruing or to accrue thereon, or any valuable consideration or inducement whatever not specified in such policy or contract OTHER THAN ANY VALUABLE CONSIDERATION, INCLUDING BUT NOT LIMIT- ED TO MERCHANDISE OR PERIODICAL SUBSCRIPTIONS, NOT EXCEEDING TWENTY-FIVE DOLLARS IN VALUE; nor shall any person in this state knowingly receive as such inducement, any rebate of premium or policy fee or any special favor or advantage in the dividends or other benefits to accrue on any such policy or contract, or knowingly receive any paid employment or contract for services of any kind, or any valuable consideration or inducement whatever which is not specified in such policy or contract. S 3. This act shall take effect immediately.