STATE OF NEW YORK ________________________________________________________________________ 6975 2025-2026 Regular Sessions IN ASSEMBLY March 18, 2025 ___________ Introduced by M. of A. WEPRIN -- read once and referred to the Committee on Insurance 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: 1 Section 1. Subsection (b) of section 4228 of the insurance law is 2 amended by adding three new paragraphs 30, 31 and 32 to read as follows: 3 (30) "CPI" means the Consumer Price Index for All Urban Consumers for 4 the United States as reported by the Bureau of Labor Statistics of the 5 United States Department of Labor, or its successor index. 6 (31) "CPI for the preceding calendar year" means the average of the 7 CPI as of the close of the twelve-month period ending on August thirty- 8 first of such calendar year. 9 (32) "Percent increase in inflation" means the percentage, if any, by 10 which the CPI for the preceding calendar year exceeds the CPI for the 11 year beginning September first, two thousand twenty-four and ending 12 August thirty-first, two thousand twenty-five. 13 § 2. Paragraph 2 of subsection (c) of section 4228 of the insurance 14 law, as added by chapter 616 of the laws of 1997, subparagraphs (E) and 15 (G) as amended by chapter 13 of the laws of 2002, is amended to read as 16 follows: 17 (2) Total selling expenses shall include the following expenses 18 incurred directly or indirectly by the company, without regard to wheth- 19 er they are incurred in the company's home office or in a field or 20 regional office: 21 (A) commissions; 22 (B) the increase during the year in the amount of outstanding advances 23 and loans to agents, including any accrued and unpaid interest thereon, 24 and including amounts charged off by the company, however, if such EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10595-02-5
A. 6975 2 1 amount is negative, it shall be treated as a reduction of the amount of 2 total selling expenses; 3 (C) the [expense of direct solicitation advertising that either 4 includes an application or solicits a response to obtain an application 5 for a policy or contract regulated under this section; 6 (D)] following distribution, marketing and sales support expenses 7 directly related to the procurement of new business[, which includes but 8 is not limited to]: 9 (i) recruiting and training of agents, including related recordkeep- 10 ing; 11 (ii) sales management and supervision; and 12 (iii) clerical functions in sales offices[; and 13 (iv) sales support functions, including but not limited to advanced 14 underwriting support, proposals, illustrations, competition aids and 15 related systems and equipment, including personal computers, owned by 16 the company and used in the sales process]; 17 [(E)] (D) any expense allowance paid to the agent or broker by the 18 company or any expenses of the agent, agency or broker, assumed or reim- 19 bursed by the company; 20 [(F) the] (E) travel expenses [of sales conferences, training meetings 21 and awards], meals and entertainment paid for by the company; and 22 [(G)] (F) all other compensation paid to or expense incurred on behalf 23 of active and retired agents and brokers, including the cost of any 24 security benefits, but excluding any annual marketing or distribution 25 fee on a mutual fund or any portion thereof received by the company 26 pursuant to Rule 12b-1 under the Investment Company Act of 1940, 17 27 C.F.R. 270.12b-1, which is then paid by the company to the agent or 28 broker. 29 § 3. Subparagraph (F) of paragraph 2 of subsection (e) of section 4228 30 of the insurance law, as amended by chapter 13 of the laws of 2002, is 31 amended to read as follows: 32 (F) If a company employs one or more salaried employees whose princi- 33 pal function is [other than] not the sale of new policies or contracts 34 and [other than] not the supervision of agents or agencies, and if no 35 more than twenty-five percent of the total compensation of such employ- 36 ees is related to [sales results] business personally produced by such 37 employees, [the compensation of such employees is not subject to] the 38 provisions of this subsection or subsection (d) of this section shall 39 not apply to such employees' total compensation, notwithstanding that 40 they may be licensed as life insurance agents. 41 § 4. Paragraph 3 of subsection (e) of section 4228 of the insurance 42 law, as added by chapter 616 of the laws of 1997, is amended to read as 43 follows: 44 (3)(A) A company may pay reasonable training allowance subsidies to 45 agents pursuant to a plan of agent compensation, provided that such 46 agents are full-time agents of the company and the principal business 47 activity of such agents is the solicitation of policies and contracts 48 primarily but not necessarily exclusively for the company, and its 49 affiliates, and such agents are not simultaneously receiving training 50 allowance from any other life insurance company. 51 (B) Agents receiving training allowance subsidies may also receive 52 expense allowance payments. 53 (C) An agent is eligible to receive such a training allowance subsidy, 54 provided (i) such agent has earned less than twenty thousand dollars 55 from the sale of policies and contracts cumulatively during the three 56 years prior to such agent's appointment, [or] (ii) less than twenty-five
A. 6975 3 1 percent of such agent's earned income has been received from the sale of 2 policies and contracts during each of the three years prior to appoint- 3 ment, or (iii) less than twenty-five percent of such agent's worktime 4 during each of the three years prior to appointment was allocated to 5 individual life and annuity sales. The company may establish that an 6 agent is eligible to receive a training allowance subsidy by requiring 7 the agent to attest that such agent meets one of the criteria set forth 8 in this subparagraph prior to appointment. Such attestation shall be 9 sufficient to establish eligibility, provided the company does not have 10 actual knowledge to reject the attestation based on the agent's creden- 11 tials and background. 12 (D) An agent receiving such training allowance subsidies may not 13 receive, on a cumulative basis, for an agent in the first year of such 14 subsidies, the greater of [twenty-eight] fifty-four thousand dollars and 15 sixty percent of the first year commission limit, and for an agent in 16 the second year of such subsidies, the greater of [forty-four] eighty- 17 five thousand dollars and sixty percent of the first year commission 18 limit in the first year and forty percent of the first year commission 19 limit in the second year, and for an agent in the third year of such 20 subsidies, the greater of [fifty-four] one hundred five thousand dollars 21 and sixty percent of the first year commission limit in the first year 22 and forty percent of the first year commission limit in the second year, 23 and twenty percent of the first year commission limit for the third 24 year, and for an agent in the fourth year of such subsidies, the greater 25 of [sixty] one hundred sixteen thousand dollars and sixty percent of the 26 first year commission limit in the first year and forty percent of the 27 first year commission limit in the second year, twenty percent of the 28 first year commission limit in the third year, and ten percent of the 29 first year commission limit in the fourth year. 30 (E) With respect to any agent eligible to receive training allowance 31 subsidy who has earned at least [sixty-six] one hundred twenty-seven 32 thousand dollars of income during either of the two calendar years imme- 33 diately preceding commencement of receipt of training allowance subsi- 34 dies, a company may pay additional training allowance subsidies of [one] 35 two thousand dollars to such agent during each of the first two years of 36 his receipt of training allowance subsidies for every [two] four thou- 37 sand dollars of such earned income in excess of [sixty-six] one hundred 38 twenty-seven thousand dollars, provided that the cumulative training 39 allowance subsidy does not exceed [forty-five] eighty-seven thousand 40 dollars in such agent's first year of receipt of training allowance 41 subsidy and provided further that the agent receives not greater than 42 [sixty] one hundred sixteen thousand dollars in total training allowance 43 subsidies. 44 (F) For purposes of this paragraph, the period of time that a person 45 worked for a company under a company-sponsored training program and was 46 not acting as an agent for that company shall not be counted as time 47 spent receiving training allowance subsidies, and any salary paid by the 48 company to that person during that time shall not count toward the cumu- 49 lative maximum training allowance subsidy. 50 (G) The superintendent shall [periodically] adjust the cumulative 51 maximum training allowance subsidy limits set forth in this paragraph 52 annually by the percent increase in inflation. The superintendent may 53 also, at any time, approve training allowance subsidies with cumulative 54 maximum amounts that exceed the limits set forth in this paragraph. 55 (H) A company may, upon approval of the superintendent, establish a 56 plan for training allowance subsidies for which the conditions of eligi-
A. 6975 4 1 bility or the amounts or periods of subsidy, of any of these, differ 2 from those set forth in this subsection. The superintendent shall 3 approve such a plan, subject to such conditions as he may prescribe, if 4 he finds that it is likely to meet the objective of developing new 5 agents for the sale of policies or contracts or both in a cost-effective 6 manner. 7 § 5. Paragraph 6 of subsection (e) of section 4228 of the insurance 8 law, as amended by chapter 13 of the laws of 2002, is amended to read as 9 follows: 10 (6) A company, including any person, firm or corporation on its behalf 11 or under any agreement with it, may pay or award, or permit to be paid 12 or awarded, prizes and awards to agents and brokers pursuant to a plan 13 of agent or broker compensation, provided that no single prize or award 14 may exceed a value of [two] five hundred [fifty] dollars, and that the 15 total value of such prizes and awards paid or awarded to any agent or 16 broker within a calendar year may not exceed [one] two thousand dollars. 17 Notwithstanding the foregoing, a company may also pay or award not more 18 frequently than monthly a prize or award valued at not more than [twen- 19 ty-five] fifty dollars. The costs of all such prizes and awards shall 20 not be included in applying the limits established in subsection (d) of 21 this section. The superintendent may authorize higher limits on the 22 value of prizes and awards than those set forth herein. On the first day 23 of each year beginning January first, two thousand twenty-six, the 24 limits in this subparagraph shall be adjusted annually by the percent 25 increase in inflation. 26 § 6. Subparagraph (E) of paragraph 1 and paragraph 2 of subsection (f) 27 of section 4228 of the insurance law, as added by chapter 616 of the 28 laws of 1997, are amended to read as follows: 29 (E) All filings and related correspondence shall be proprietary and 30 confidential, and not disclosed by the superintendent. Nothing contained 31 in this section or any other provision of law shall prohibit a company 32 from making changes to any compensation payable on policies or contracts 33 that are in force and subject to an existing plan, provided that the 34 changed compensation meets the applicable requirements of subsections 35 (d) and (e) of this section. A company shall be permitted to make such 36 changes, and changes whose effect is to increase or otherwise change, 37 but not reduce, the compensation shall be set forth pursuant to a 38 compensation plan that is filed in accordance with the same requirements 39 of this paragraph that would apply if such compensation applied only 40 prospectively to new business. Changes whose effect is to reduce or not 41 increase the compensation payable to every individual covered by the 42 arrangement in each and every year, need not be filed with the super- 43 intendent, but must be maintained in the company's records for at least 44 six years. 45 (2) The annual statement schedule for reporting compliance on an 46 aggregate basis with subsection (c) of this section shall be signed by a 47 knowledgeable officer of the company. The signing of the schedule shall 48 be deemed confirmation by the officer that the officer has performed a 49 personal review of the information included and responses provided to 50 the interrogatories. The signature is to be preceded by the following 51 statement: "I have reviewed the sources of total selling expenses and, 52 to the best of my knowledge and belief, on the basis of the projected 53 experience over the next three years based on reasonable assumptions, 54 including changes currently being contemplated, the company's expenses 55 will not exceed the limit imposed thereon by New York Insurance Law 56 Section 4228." If the officer cannot attest to the final clause of this
A. 6975 5 1 statement, the officer must disclose the year or years in which expenses 2 are expected to exceed the limit and the amount by which the limit is 3 expected to be exceeded. 4 § 7. The opening paragraph of paragraph 5 of subsection (f) of section 5 4228 of the insurance law, as amended by chapter 13 of the laws of 2002, 6 is amended to read as follows: 7 Any company making one or more payments that exceed any limit in 8 subsection (d) of this section that is unable to recover such excess 9 payments shall notify the superintendent within [thirty] ninety days of 10 the date that it learns or realizes that it exceeded the limit; however, 11 if the company recovers such excess payments prior to the required 12 notification date, or, for agents or brokers who are no longer appointed 13 with the company, the company has made reasonable efforts to recover 14 such excess payments, it need not make such notification. At that time, 15 the company shall report the reason the company exceeded the limit, the 16 number of agents and brokers to whom payments in excess of the limit 17 were made, and the amount of money paid in excess of the limit, and 18 shall describe the actions the company will take promptly to prevent any 19 further instances of it exceeding this limit. 20 § 8. This act shall take effect immediately.