BILL NUMBER: S3632

SPONSOR: BRESLIN
 
TITLE OF BILL:  An act to amend the insurance law, in relation to
prohibiting unilateral reduction, diminishment or non-payment of health
insurance commissions or other compensation

 
PURPOSE:

To protect licensed health insurance producers, brokers, agents and
benefits consultants from unilateral reduction, diminishment or non-pay-
ment of earned commissions or other compensation.

 
SUMMARY OF PROVISIONS:

Section one of the bill adds a new Subsection (c) to Section 2114 of the
Insurance Law, to make it unlawful for insurers or health plans to
unilaterally reduce, diminish or cease payment of commissions or other
compensation to licensed health insurance producers, where such commis-
sions are included or embedded in prior-approved premium rates of indi-
vidual and small group health insurance policies and plans.
              

Section two of the bill sets forth the effective date.

 
JUSTIFICATION:

The Insurance Law requires all insurers and health plans that offer
individual and small group health insurance policies, contracts or plans
to submit premium rate filings or applications to the Department of
Financial Services for prior-approval in advance of offering such
products for sale or delivery in the state. The Superintendent of Finan-
cial Services is charged with making a written finding, within 30-60
days of such submittals, to approve, modify or disapprove of such rate
filings or applications, taking into account the financial condition of
the insurer to determine if such premium rates are unreasonable, exces-
sive, inadequate, or unfairly discriminatory, based upon sound actuarial
assumptions and methods.

If any such premium rate filings or applications contain embedded or
actuarially-loaded commissions or other compensation, and such rates are
subsequently approved or modified by the Superintendent, then it is only
fair as a matter of public policy and good business practices, that
licensed health insurance producers, brokers, agents and benefits
consultants be paid such commissions or other compensation as earned
without diminution. Moreover, insurers and health plans should be
prohibited from inserting provisions into any sales contract or agree-
ment with any such health insurance producers allowing for the unilater-
al reduction, diminishment or non-payment of such commissions or other
compensation, while such prior-approved rate filings or applications are
in full force and effect. Any such action would be unlawful as against
public policy and constitute a violation of the Insurance Law and be
enforceable by applicable provisions thereunder.

 
LEGISLATIVE HISTORY:

S6132 of 2017-18

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
Immediately, and shall apply to all applicable insurance policies,
contracts for insurance and certificates of insurance entered into or
renewed on or after the date on which it shall have become a law.