senate Bill S13

Relates to prohibiting retained asset accounts

download pdf

Sponsor

Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
view actions

actions

  • 09 / Jan / 2013
    • REFERRED TO INSURANCE
  • 08 / Jan / 2014
    • REFERRED TO INSURANCE

Summary

Prohibits insurers from using retained asset accounts to hold proceeds from death benefits.

do you support this bill?

Bill Details

See Assembly Version of this Bill:
A638
Versions:
S13
Legislative Cycle:
2013-2014
Current Committee:
Senate Insurance
Law Section:
Insurance Law
Laws Affected:
Amd ยง3213, Ins L
Versions Introduced in Previous Legislative Cycles:
2011-2012: S504, A683
2009-2010: S8469, S8469

Sponsor Memo

BILL NUMBER:S13

TITLE OF BILL:
An act
to amend the insurance law, in relation to prohibiting retained-asset
accounts

PURPOSE OR GENERAL IDEA OF BILL:
Bans retained-asset accounts.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1. Amends section 3213 of the Insurance Law. Prohibits
proceeds from a life insurance policy to be held in a retained-asset
account held by the insurer. Defines a retained-asset account.

Section 2. Effective Date

EXISTING LAW:
None.

JUSTIFICATION:
A news report in Bloomberg News (July 28, 2010) told the story of a
twenty-four year old Army sergeant who had been killed by a bomb in
Afghanistan and his $400,000 life insurance policy held by Prudential
Financial, Inc. Unfortunately, the money wasn't deposited in a bank
account guaranteed by the Federal Deposit Insurance Corporation. It
was held in a general corporate account - a retained-asset account
controlled by Prudential, where it continued to earn investment
income. While Prudential earned 4.8% on income held in retained-asset
accounts, it usually paid the survivors only 1% interest.

This legislation would prohibit retained asset accounts. Life
insurance policies should be paid in full upon the death of a
beneficiary and not retained in an account controlled by the insurer.
Corporations like Prudential must not be allowed to earn millions of
dollars on its insurance policies while at the same time only paying
out a fraction to the survivors.

PRIOR LEGISLATIVE HISTORY:
2012: S.504 - Referred to Insurance/A.683 - Referred to Insurance
2011: S.504 - Defeated in Insurance/A.683 - Referred to Insurance
2010: S.8469 - Referred to Rules

FISCAL IMPLICATIONS:
None to state.

EFFECTIVE DATE:
Sixty days after it shall have become law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   13

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sen.  DIAZ  --  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 prohibiting  retained-
  asset accounts

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 3213 of the insurance law is  amended  to  read  as
follows:
  S  3213.  Payment  of proceeds.   1. WHERE THE PROCEEDS OF A POLICY OF
LIFE INSURANCE DELIVERED OR ISSUED FOR DELIVERY IN THIS STATE ARE  PAYA-
BLE,  ACCORDING  TO  ITS  TERMS,  SUCH  PROCEEDS  SHALL NOT BE HELD IN A
RETAINED-ASSET ACCOUNT HELD BY THE INSURER. FOR PURPOSES OF THIS SECTION
A "RETAINED-ASSET ACCOUNT" SHALL MEAN AN ACCOUNT NOT GUARANTEED  BY  THE
FEDERAL  DEPOSIT  INSURANCE CORPORATION, THE FUNDS OF WHICH ARE RETAINED
BY THE INSURER, WITH ALL OR A PORTION OF THE INTEREST BEING PAID TO  THE
INSURER, BUT THE FUNDS OF SUCH ACCOUNT ARE PAYABLE TO THE BENEFICIARY OR
BENEFICIARIES BY USE OF A CHECKBOOK.
  2.  Where  the  proceeds  of  a  policy of life insurance delivered or
issued for delivery in this state are payable, according to  its  terms,
to  two  or  more  beneficiaries without designation of their respective
interests, the proceeds shall be paid to  such  beneficiaries  in  equal
portions.
  S  2.  This  act  shall take effect on the sixtieth day after it shall
have become a law.



 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00928-01-3

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.