Relates to indexing fixed amounts and clarifying compliance, the official text

S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  7222--A
     Cal. No. 1644
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                               April 4, 2025
                                ___________
 
 Introduced  by Sens. BAILEY, FERNANDEZ, MURRAY -- read twice and ordered
   printed, and when printed to be committed to the Committee  on  Insur-
   ance  -- committee discharged and said bill committed to the Committee
   on Rules -- ordered to a third reading, amended and ordered reprinted,
   retaining its place in the order of third reading
 
 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:
 
   Section  1. Subparagraphs (D) and (F) of paragraph 2 of subsection (c)
 of section 4228 of the insurance law, as added by  chapter  616  of  the
 laws of 1997, are amended to read as follows:
   (D)  distribution,  marketing  and  sales  support  expenses  directly
 related to the procurement of new business, which includes  but  is  not
 limited to:
   (i)  recruiting  and training of agents, including related recordkeep-
 ing;
   (ii) sales management and supervision; AND
   (iii) clerical functions in sales offices[; and
   (iv) sales support functions, including but not  limited  to  advanced
 underwriting  support,  proposals,  illustrations,  competition aids and
 related systems and equipment, including personal  computers,  owned  by
 the company and used in the sales process];
   (F)  the  TRAVEL expenses [of sales conferences, training meetings and
 awards], MEALS AND ENTERTAINMENT paid for by the company; and
   § 2. Subparagraph (F) of paragraph 2 of subsection (e) of section 4228
 of the insurance law, as amended by chapter 13 of the laws of  2002,  is
 amended to read as follows:
   (F)  If a company employs one or more salaried employees whose princi-
 pal function is [other than] NOT the sale of new policies  or  contracts
 and  [other  than]  NOT the supervision of agents or agencies, and if no

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10595-06-5
 S. 7222--A                          2
 
 more than twenty-five percent of the TOTAL compensation of such  employ-
 ees  is  related to [sales results] BUSINESS PERSONALLY PRODUCED BY SUCH
 EMPLOYEES, [the compensation of such employees is not  subject  to]  the
 provisions  of  this  subsection or subsection (d) of this section SHALL
 NOT APPLY TO SUCH EMPLOYEES' TOTAL  COMPENSATION,  notwithstanding  that
 they may be licensed as life insurance agents.
   §  3.  Paragraph  3 of subsection (e) of section 4228 of the insurance
 law, as added by chapter 616 of the laws of 1997, is amended to read  as
 follows:
   (3)(A)  A  company  may pay reasonable training allowance subsidies to
 agents pursuant to a plan of  agent  compensation,  provided  that  such
 agents  are  full-time  agents of the company and the principal business
 activity of such agents is the solicitation of  policies  and  contracts
 primarily  but  not  necessarily  exclusively  for  the company, and its
 affiliates, and such agents are not  simultaneously  receiving  training
 allowance from any other life insurance company.
   (B)  Agents  receiving  training  allowance subsidies may also receive
 expense allowance payments.
   (C) An agent is eligible to receive such a training allowance subsidy,
 provided (i) such agent has earned less  than  [twenty]  FORTY  thousand
 dollars  from the sale of policies and contracts cumulatively during the
 three years prior to such agent's appointment, [or] (ii) less than twen-
 ty-five percent of such agent's earned income has been received from the
 sale of policies and contracts during each of the three years  prior  to
 appointment,  OR  (III)  LESS  THAN  TWENTY-FIVE PERCENT OF SUCH AGENT'S
 WORKTIME DURING EACH OF THE THREE YEARS PRIOR TO APPOINTMENT  WAS  ALLO-
 CATED  TO  INDIVIDUAL  LIFE AND ANNUITY SALES. THE COMPANY MAY ESTABLISH
 THAT AN AGENT IS ELIGIBLE TO RECEIVE A  TRAINING  ALLOWANCE  SUBSIDY  BY
 REQUIRING  THE AGENT TO ATTEST THAT SUCH AGENT MEETS ONE OF THE CRITERIA
 SET FORTH IN THIS SUBPARAGRAPH PRIOR TO  APPOINTMENT.  SUCH  ATTESTATION
 SHALL  BE SUFFICIENT TO ESTABLISH ELIGIBILITY, PROVIDED THE COMPANY DOES
 NOT HAVE ACTUAL KNOWLEDGE TO REJECT THE ATTESTATION BASED ON THE AGENT'S
 CREDENTIALS AND BACKGROUND.
   (D) An agent receiving  such  training  allowance  subsidies  may  not
 receive,  on  a cumulative basis, for an agent in the first year of such
 subsidies, the greater of [twenty-eight] FIFTY-FOUR thousand dollars and
 sixty percent of the first year commission limit, and for  an  agent  in
 the  second  year of such subsidies, the greater of [forty-four] EIGHTY-
 FIVE thousand dollars and sixty percent of  the  first  year  commission
 limit  in  the first year and forty percent of the first year commission
 limit in the second year, and for an agent in the  third  year  of  such
 subsidies, the greater of [fifty-four] ONE HUNDRED FIVE thousand dollars
 and  sixty  percent of the first year commission limit in the first year
 and forty percent of the first year commission limit in the second year,
 and twenty percent of the first year  commission  limit  for  the  third
 year, and for an agent in the fourth year of such subsidies, the greater
 of [sixty] ONE HUNDRED SIXTEEN thousand dollars and sixty percent of the
 first  year  commission limit in the first year and forty percent of the
 first year commission limit in the second year, twenty  percent  of  the
 first  year  commission  limit in the third year, and ten percent of the
 first year commission limit in the fourth year.
   (E) With respect to any agent eligible to receive  training  allowance
 subsidy  who  has  earned  at least [sixty-six] ONE HUNDRED TWENTY-SEVEN
 thousand dollars of income during either of the two calendar years imme-
 diately preceding commencement of receipt of training  allowance  subsi-
 dies, a company may pay additional training allowance subsidies of [one]
 S. 7222--A                          3
 
 TWO thousand dollars to such agent during each of the first two years of
 his  receipt  of training allowance subsidies for every [two] FOUR thou-
 sand dollars of such earned income in excess of [sixty-six] ONE  HUNDRED
 TWENTY-SEVEN  thousand  dollars,  provided  that the cumulative training
 allowance subsidy does not  exceed  [forty-five]  EIGHTY-SEVEN  thousand
 dollars  in  such  agent's  first  year of receipt of training allowance
 subsidy and provided further that the agent receives  not  greater  than
 [sixty] ONE HUNDRED SIXTEEN thousand dollars in total training allowance
 subsidies.
   (F)  For  purposes of this paragraph, the period of time that a person
 worked for a company under a company-sponsored training program and  was
 not  acting  as  an  agent for that company shall not be counted as time
 spent receiving training allowance subsidies, and any salary paid by the
 company to that person during that time shall not count toward the cumu-
 lative maximum training allowance subsidy.
   (G) The superintendent shall periodically adjust the cumulative  maxi-
 mum  training  allowance subsidy limits set forth in this paragraph. The
 superintendent may also, at any time, approve training allowance  subsi-
 dies with cumulative maximum amounts that exceed the limits set forth in
 this paragraph.
   (H)  A  company  may, upon approval of the superintendent, establish a
 plan for training allowance subsidies for which the conditions of eligi-
 bility or the amounts or periods of subsidy, of  any  of  these,  differ
 from  those  set  forth  in  this  subsection.  The superintendent shall
 approve such a plan, subject to such conditions as he may prescribe,  if
 he  finds  that  it  is  likely  to meet the objective of developing new
 agents for the sale of policies or contracts or both in a cost-effective
 manner.
   § 4. Paragraph 6 of subsection (e) of section 4228  of  the  insurance
 law, as amended by chapter 13 of the laws of 2002, is amended to read as
 follows:
   (6) A company, including any person, firm or corporation on its behalf
 or  under  any agreement with it, may pay or award, or permit to be paid
 or awarded, prizes and awards to agents and brokers pursuant to  a  plan
 of  agent or broker compensation, provided that no single prize or award
 may exceed a value of [two] FIVE hundred [fifty] dollars, and  that  the
 total  value  of  such prizes and awards paid or awarded to any agent or
 broker within a calendar year may not exceed [one] TWO thousand dollars.
 Notwithstanding the foregoing, a company may also pay or award not  more
 frequently  than monthly a prize or award valued at not more than [twen-
 ty-five] FIFTY dollars. The costs of all such prizes  and  awards  shall
 not  be included in applying the limits established in subsection (d) of
 this section. The superintendent may  authorize  higher  limits  on  the
 value of prizes and awards than those set forth herein.
   §  5.  Paragraph  2 of subsection (f) of section 4228 of the insurance
 law, as added by chapter 616 of the laws of 1997, is amended to read  as
 follows:
   (2)  The  annual  statement  schedule  for  reporting compliance ON AN
 AGGREGATE BASIS with subsection (c) of this section shall be signed by a
 knowledgeable officer of the company. The signing of the schedule  shall
 be  deemed  confirmation by the officer that the officer has performed a
 personal review of the information included and  responses  provided  to
 the  interrogatories.  The  signature is to be preceded by the following
 statement: "I have reviewed the sources of total selling  expenses  and,
 to  the  best  of my knowledge and belief, on the basis of the projected
 experience over the next three years based  on  reasonable  assumptions,
 S. 7222--A                          4
 
 including  changes  currently being contemplated, the company's expenses
 will not exceed the limit imposed thereon  by  New  York  Insurance  Law
 Section  4228." If the officer cannot attest to the final clause of this
 statement, the officer must disclose the year or years in which expenses
 are  expected  to  exceed the limit and the amount by which the limit is
 expected to be exceeded.
   § 6. The opening paragraph of paragraph 5 of subsection (f) of section
 4228 of the insurance law, as amended by chapter 13 of the laws of 2002,
 is amended to read as follows:
   Any company making one or more  payments  that  exceed  any  limit  in
 subsection  (d)  of  this  section that is unable to recover such excess
 payments shall notify the superintendent within [thirty] NINETY days  of
 the date that it learns or realizes that it exceeded the limit; however,
 if  the  company  recovers  such  excess  payments prior to the required
 notification date, OR, FOR AGENTS OR BROKERS WHO ARE NO LONGER APPOINTED
 WITH THE COMPANY, THE COMPANY HAS MADE  REASONABLE  EFFORTS  TO  RECOVER
 SUCH  EXCESS PAYMENTS, it need not make such notification. At that time,
 the company shall report the reason the company exceeded the limit,  the
 number  of  agents  and  brokers to whom payments in excess of the limit
 were made, and the amount of money paid in  excess  of  the  limit,  and
 shall describe the actions the company will take promptly to prevent any
 further instances of it exceeding this limit.
   § 7. This act shall take effect immediately.