senate Bill S504

2011-2012 Legislative Session

Relates to prohibiting retained asset accounts

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Archive: Last Bill Status - In Committee


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to insurance
Apr 04, 2011 defeated in insurance
Feb 22, 2011 notice of committee consideration - requested
Jan 05, 2011 referred to insurance

Votes

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Apr 4, 2011 - Insurance committee Vote

S504
4
9
committee
4
Aye
9
Nay
5
Aye with Reservations
0
Absent
0
Excused
0
Abstained
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Insurance Committee Vote: Apr 4, 2011

Co-Sponsors

S504 - Bill Details

See Assembly Version of this Bill:
A683
Current Committee:
Law Section:
Insurance Law
Laws Affected:
Amd ยง3213, Ins L
Versions Introduced in 2009-2010 Legislative Session:
S8469

S504 - Bill Texts

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

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BILL NUMBER:S504

TITLE OF BILL: REVISED 12/30/11
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 321? 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 recent 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:
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.

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

                                   504

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

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.
                                                           LBD03338-01-1

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