S T A T E O F N E W Y O R K
________________________________________________________________________
683
2009-2010 Regular Sessions
I N A S S E M B L Y
(PREFILED)
January 7, 2009
___________
Introduced by M. of A. CAHILL, GOTTFRIED, CLARK -- Multi-Sponsored by --
M. of A. ENGLEBRIGHT, ESPAILLAT, GREENE, HOOPER, JACOBS, JOHN, McENE-
NY, SWEENEY -- read once and referred to the Committee on Insurance
AN ACT to amend the insurance law, in relation to third party notifica-
tion by insurance carriers in certain instances in regard to long term
care policies; prohibiting the inclusion of certain goods and services
in the sale of certain insurance policies without the insured's
informed consent, and providing a specific penalty for violation of
such prohibition
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subsection (f) of section 3111 of the insurance law, as
relettered by section 30 of part B of chapter 58 of the laws of 2004, is
relettered subsection (g) and a new subsection (f) is added to read as
follows:
(F) EVERY INSURER THAT HAS IN FORCE A LONG-TERM CARE INSURANCE POLICY
AS DEFINED IN SECTION ONE THOUSAND ONE HUNDRED SEVENTEEN OF THIS CHAPTER
THE PREMIUMS FOR WHICH ARE PAID DIRECTLY TO THE INSURER BY THE SENIOR
CITIZEN INSURED SHALL PERMIT THE INSURED TO DESIGNATE A PARTY TO WHOM
THE INSURER SHALL TRANSMIT NOTICES OF NONPAYMENT OF PREMIUMS DUE OR
NOTICE OF CANCELLATION FOR NONPAYMENT OF PREMIUMS, AS DETERMINED BY THE
INSURER. THE SENIOR CITIZEN SHALL NOTIFY THE INSURER THAT A THIRD PARTY
HAS BEEN SO DESIGNATED. SUCH NOTIFICATION SHALL BE DELIVERED TO THE
INSURER BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, AND SHALL BE EFFEC-
TIVE NOT LATER THAN TEN BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE
INSURER. THE NOTIFICATION MUST CONTAIN, IN WRITING, AN ACCEPTANCE BY THE
THIRD PARTY DESIGNEE TO RECEIVE SUCH NOTICES OF CANCELLATION. SHOULD THE
THIRD PARTY DESIGNEE DESIRE TO TERMINATE HIS OR HER STATUS AS A THIRD
PARTY DESIGNEE, SUCH DESIGNEE SHALL PROVIDE WRITTEN NOTICE TO BOTH THE
INSURER AND THE SENIOR CITIZEN INSURED. SHOULD THE SENIOR CITIZEN
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00579-01-9
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INSURED DESIRE TO TERMINATE THE THIRD PARTY DESIGNATION, THE INSURED
SHALL PROVIDE WRITTEN NOTICE TO THE INSURER. THE TRANSMISSION TO THE
THIRD PARTY DESIGNEE OF ANY SUCH NOTICE OF CANCELLATION SHALL BE IN
ADDITION TO A COPY OF SUCH DOCUMENT TRANSMITTED TO THE SENIOR CITIZEN
INSURED AND WHEN A THIRD PARTY IS SO DESIGNATED ALL SUCH NOTICES SHALL
BE MAILED IN AN ENVELOPE CLEARLY MARKED ON ITS FACE WITH THE FOLLOWING:
"IMPORTANT INSURANCE POLICY INFORMATION: OPEN IMMEDIATELY". DESIGNATION
AS A THIRD PARTY SHALL NOT CONSTITUTE ACCEPTANCE OF ANY LIABILITY ON THE
THIRD PARTY FOR SERVICES PROVIDED TO SUCH SENIOR CITIZEN. THE INSURER
SHALL NOTIFY ITS INSURED SENIOR CITIZEN ANNUALLY IN WRITING OF THE
AVAILABILITY OF THE THIRD PARTY DESIGNEE NOTICE PROCEDURE AND PROVIDE
INFORMATION ON HOW THE INSURED CAN COMMENCE THIS PROCEDURE; HOWEVER,
SUCH NOTICE NEED NOT BE PROVIDED ONCE A SENIOR CITIZEN HAS MADE A DESIG-
NATION.
S 2. 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) (1) 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 advantage 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 merchandise not exceeding fifteen
dollars in value which shall have conspicuously stamped or printed ther-
eon 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 dividends or profits accrued thereon,
nor shall the insured, his OR HER agent or representative knowingly
receive directly or indirectly, any such rebate or special favor or
advantage, provided, however, a licensed insurance agent or a licensed
insurance broker may retain the usual commission or underwriting fee on
insurance placed on his OR HER 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.
(2) 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 INCLUDE WITH THE SALE OF AN INSURANCE
POLICY ANY OTHER INSURANCE POLICY OR PRODUCT OR OTHER GOODS AND SERVICES
WITHOUT FIRST OBTAINING THE INFORMED CONSENT OF THE PROPOSED INSURED.
S 3. Subsection (f) of section 2324 of the insurance law is amended to
read as follows:
(f) (1) Any person or corporation violating the provisions of this
section shall, in addition to all other penalties provided by law, pay
to the people of this state as a penalty the sum of five hundred dollars
for each such violation.
(2) ANY PERSON OR CORPORATION VIOLATING THE PROVISIONS OF PARAGRAPH
TWO OF SUBSECTION (A) OF THIS SECTION SHALL, IN ADDITION TO ALL OTHER
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PENALTIES PROVIDED BY LAW, PAY A FINE IN THE SUM OF ONE THOUSAND DOLLARS
FOR EACH SUCH VIOLATION.
S 4. 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) (1) 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 represen-
tative thereof and no such insurer doing in this state the business of
accident and health insurance and no officer, agent, solicitor or repre-
sentative 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 accident 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; 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.
(2) NO SUCH LIFE INSURANCE COMPANY AND NO SUCH SAVINGS AND INSURANCE
BANK 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 REPRE-
SENTATIVE OF ANY SUCH INSURER, AGENT OR BROKER SHALL INCLUDE WITH THE
SALE OF AN INSURANCE POLICY ANY OTHER INSURANCE POLICY OR PRODUCT OR
OTHER GOODS AND SERVICES WITHOUT FIRST OBTAINING THE INFORMED CONSENT OF
THE PROPOSED INSURED.
S 5. Section 4224 of the insurance law is amended by adding a new
subsection (f) to read as follows:
(F) ANY PERSON OR CORPORATION VIOLATING THE PROVISIONS OF PARAGRAPH
TWO OF SUBSECTION (C) OF THIS SECTION SHALL IN ADDITION TO ALL OTHER
PENALTIES PROVIDED BY LAW PAY A FINE IN THE SUM OF ONE THOUSAND DOLLARS
FOR EACH SUCH VIOLATION.
S 6. This act shall take effect immediately, except that section one
of this act shall take effect on the first of January next succeeding
the date on which it shall have become a law and shall apply to policies
issued or renewed on or after such date.