NY State Senate Bill 2023-S4605

Senate Bill S4605

2023-2024 Legislative Session

Amends the general business law, insurance law, and public health law regarding preneed insurance premiums

download bill text pdf

Current Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to consumer protection
Feb 13, 2023	referred to consumer protection

2023-S4605 (ACTIVE) - Details

Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Amd §453, Gen Bus L; amd §§107 & 3208, Ins L; amd §3450, Pub Health L
Versions Introduced in Other Legislative Sessions:: 2017-2018: S6143
2019-2020: S820
2021-2022: S5610

2023-S4605 (ACTIVE) - Summary

Relates to preneed insurance premiums.

2023-S4605 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S4605

SPONSOR: LANZA
 
TITLE OF BILL:

An act to amend the general business law, the insurance law and the
public health law, in relation to preneed insurance; and providing for
the repeal of such provisions upon expiration thereof

 
PURPOSE OR GENERAL IDEA OF BILL:

To permit the sale of preneed insurance in New York State.

 
SUMMARY OF PROVISIONS:

Section 1 of the bill would amend Subdivision 1 of section 453 of the
general business law to clarify that any and all money paid to a life
insurance company as premium for preneed life insurance as defined in
section 107 of the insurance law shall be considered as premium paid to
an insurer.

Section 2 of the bill would amend Subdivision (a) of section 107 of the

insurance law to add a new paragraph (55) to include a definition of
preened life insurance.

Section 3 of the bill would amend Subdivision (d) of section 3208 of the
insurance law to permit the assignment of a contract or, policy to a
designated funeral home so long as the assignment is contingent upon the
provision of funeral goods and services by the assignee at the time of
death of the insured; to prohibit the seller or provider of the preneed
life insurance policy to be named as the owner or beneficiary of the
policy of preneed life insurance; and to prohibit the sale of a policy
of preneed life insurance with a face value greater than $20,000.

Section 4 of the bill would amend Section 3208 of the insurance law by
creating a new subdivision (e) to set forth the required consumer
disclosures to be provided at the time an application for preneed life
insurance is made.

Section 5 of the bill would amend Paragraph (I) of subdivision 1 of
section 3450 of the public health law to exclude from the prohibition on
the payment of consideration a commission authorized pursuant to article
twenty-one of the insurance law.

Section 6 is the effective date, which also provides that the amendments
set forth in this act shall expire, be deemed released and shall cease
to be of any force or effect after June 1, 2023.

 
JUSTIFICATION:

New York currently prohibits funeral directors who are licensed insur-
ance agents from receiving a commission for the sale of pre-need funeral
insurance. This is the only insurance product on the market for which a
commission cannot be paid. Forty-eight states across the country allow
commission-based sales of insurance by funeral directors who are also
licensed insurance agents. Life insurance companies domiciled in New
York are not able to offer their product within the state's borders; all
while offering similar products across the country.

The New York State Department of Financial Services (DFS) has a compre-
hensive system for approval and oversight of any insurance product sold
to consumers. Independent insurance agents are licensed by DFS only
after completing significant hours of course work and passing the state
licensing examination. Additionally, on-going continuing education is
required for agents to maintain their license.

This legislation promotes consumer choice in the marketplace, by allow-
ing consumers an alternative funding vehicle to fund their final
expenses. Similarly, this legislation allows funeral directors the
option to offer a variety of funding vehicles to their customers.
Currently, the only funding mechanism available to consumers is to put
their money into a trust. Experience across the country proves that
insurance is a viable funding alternative for which there are many
advantages. Unlike trust-funded accounts, which only provide as much
money as is in the account for funeral expenses, pre-need funeral insur-
ance provides the entire face value of the policy for funeral expenses
the moment the policy is issued. This legislation sets forth consumer
protection measures related to the sale of preneed funeral insurance,
including specific disclosures required at the time of policy applica-
tion, a prohibition on the seller of the preneed life insurance policy
being named as the owner or beneficiary of the policy of preneed life
insurance, and a cap on the face value of the policy of preneed life
insurance at $20,000.

 
PRIOR LEGISLATIVE HISTORY:

2022: S.5610 - Referred to Consumer Protection/ A.6995 - Referred to
Consumer Affairs & Protection

2021: S.5610 - Referred to Consumer Protection/ A.6995 - Referred to
Consumer Affairs & Protection

2020: S.820 - Referred to Consumer Protection/ A.7301 - Referred to
Consumer Affairs & Protection

2019: S.820 - Referred to Consumer Protection/ A.7301 - Referred to
Consumer Affairs & Protection

2018: S.6143 - Referred to Consumer Protection / A.7838-A - Referred to
Consumer Affairs & Protection

2017: S.6143 - Referred to Consumer Protection / A.7838 - Referred to
Consumer Affairs & Protection

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
Immediately.

2023-S4605 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4605
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             February 13, 2023
                                ___________
 
 Introduced  by  Sen.  LANZA  -- read twice and ordered printed, and when
   printed to be committed to the Committee on Consumer Protection
 
 AN ACT to amend the general business law,  the  insurance  law  and  the
   public health law, in relation to preneed insurance; and providing for
   the repeal of such provisions upon expiration thereof

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph (a) of subdivision 1 of section 453 of the gener-
 al business law, as amended by chapter 642  of  the  laws  of  2019,  is
 amended to read as follows:
   (a)  Any  and  all  moneys  paid  to a funeral firm, funeral director,
 undertaker, cemetery, or any other person, firm or corporation, under or
 in connection with an agreement, or any option to enter into  an  agree-
 ment, for the sale of merchandise to be used in connection with a funer-
 al  or  burial,  or for the furnishing of personal services of a funeral
 director or undertaker, wherein the merchandise is not  to  be  actually
 physically  delivered  or  the  personal services are not to be rendered
 until the occurrence of the death of the person  for  whose  funeral  or
 burial  such  merchandise or services are to be furnished shall continue
 to be the money of the person making such payment and shall be  held  in
 trust for such person by the funeral firm, funeral director, undertaker,
 cemetery  or  any other person, firm or corporation to whom such payment
 is made and shall, within ten business days of receipt, be deposited  in
 an  interest  bearing  account in a bank, national bank, federal savings
 bank, federal savings and loan association, savings  bank,  savings  and
 loan association, credit union, or federal credit union within the state
 and  duly  authorized  to  receive deposits in the state of New York and
 which shall earn interest at a rate which shall be at not less than  the
 prevailing rate of interest earned by other such deposits in such banks,
 savings  banks,  savings  and  loan associations, or credit unions under
 this section, or shall be placed in a trust  company  in  an  investment
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08654-01-3

 S. 4605                             2
 
 backed  by  the government of the United States and shall not be commin-
 gled with other moneys of the funeral firm, funeral director,  undertak-
 er,  cemetery,  or other person, firm or corporation or become the funds
 of  the  funeral  firm, funeral director, undertaker, cemetery, or other
 person, firm or corporation, and shall be so held on  deposit,  together
 with  any  interest thereon with interest earned being accrued daily and
 credited monthly, until said merchandise has  been  actually  physically
 delivered  and  said personal services have been rendered, unless sooner
 repaid, in whole or in part; PROVIDED, HOWEVER, THAT ANY AND  ALL  MONEY
 PAID  TO  A LIFE INSURANCE COMPANY AS PREMIUM FOR PRENEED LIFE INSURANCE
 AS DEFINED IN SECTION ONE HUNDRED SEVEN OF THE INSURANCE  LAW  SHALL  BE
 CONSIDERED  AS  PREMIUM  PAID  TO  AN  INSURER. No funeral firm, funeral
 director, undertaker, cemetery or any other person, firm or corporation,
 shall discharge the obligation established under this section to deposit
 or place money with a bank, national bank, federal savings bank, federal
 savings and loan association, savings bank,  savings  and  loan  associ-
 ation,  credit  union,  federal credit union or trust company within the
 state through  a  surety  bond  or  other  financial  instrument  unless
 expressly provided under this section.
   §  2. Subsection (a) of section 107 of the insurance law is amended by
 adding a new paragraph 55 to read as follows:
   (55) "PRENEED LIFE INSURANCE"  MEANS  ANY  LIFE  INSURANCE  POLICY  OR
 CERTIFICATE  THAT  IS ISSUED IN COMBINATION WITH, IN SUPPORT OF, WITH AN
 ASSIGNMENT TO, OR AS A GUARANTEE FOR,  A  PREARRANGEMENT  AGREEMENT  FOR
 GOODS AND SERVICES, OR OTHER BENEFITS, TO BE PROVIDED AT THE TIME OF AND
 IMMEDIATELY  FOLLOWING  THE DEATH OF THE INSURED. GOODS AND SERVICES MAY
 INCLUDE EMBALMING, CREMATION, BODY PREPARATION, VIEWING  OR  VISITATION,
 COFFIN  OR  URN, MEMORIAL STONE, AND TRANSPORTATION OF THE DECEASED. THE
 STATUS OF THE POLICY OR CERTIFICATE AS PRENEED LIFE INSURANCE IS  DETER-
 MINED AT THE TIME OF ISSUE IN ACCORDANCE WITH THE POLICY FORM FILING.
   § 3. Subsection (d) of section 3208 of the insurance law, paragraphs 2
 and  3 as amended by chapter 557 of the laws of 2001, is amended to read
 as follows:
   (d) No person, firm, association, society, or corporation  engaged  in
 this  state  in  the  business  of providing for the payment of funeral,
 burial or other expenses of deceased  members,  whether  or  not  it  be
 subject to the other provisions of this chapter, and no insurer shall:
   (1) deliver or issue for delivery in this state any contract or policy
 whereby  the benefit or any part thereof accruing under such contract or
 policy, upon the death of such member or of the person insured, shall be
 payable to a  designated  or  restricted  funeral  director  or  funeral
 directing  concern or other person engaged in such trade or business, or
 to any official or designated group of them, PROVIDED, HOWEVER, THAT THE
 INSURED MAY, PURSUANT TO PARAGRAPH ONE  OF  SUBSECTION  (B)  OF  SECTION
 THREE  THOUSAND  TWO  HUNDRED FIVE OF THIS ARTICLE, IMMEDIATELY ASSIGN A
 CONTRACT OR POLICY SO PROCURED OR EFFECTUATED TO  A  DESIGNATED  FUNERAL
 HOME  SO  LONG  AS  THE  ASSIGNMENT  IS CONTINGENT UPON THE PROVISION OF
 FUNERAL GOODS AND SERVICES BY THE ASSIGNEE AT THE TIME OF DEATH  OF  THE
 INSURED; or
   (2)  pay  any such benefit or any part thereof to any funeral director
 or funeral directing concern or other person engaged in  such  trade  or
 business  or  to  any  official or designated group of them, without the
 consent of the person or persons  entitled  to  such  benefits,  SUBJECT
 HOWEVER, TO ANY CONTINGENT ASSIGNMENT, THE CONTINGENCY OF WHICH HAS BEEN
 SATISFIED  THROUGH  THE  PROVISION  OF FUNERAL GOODS AND SERVICES BY THE
 ASSIGNEE, or to pay any commission or other consideration to any funeral
 S. 4605                             3
 
 director or funeral directing concern or employee thereof to induce such
 person to sell or offer to sell any  contract  or  policy  of  insurance
 designated  or  marketed  as payable for funeral or burial expenses upon
 the death of the insured; or
   (3)  in  any  way deprive the personal representative or family of the
 deceased of the advantages of competition in  procuring  and  purchasing
 supplies and services in connection with the funeral and burial arrange-
 ments of such deceased; OR
   (4) PERMIT THE SELLER OR PROVIDER OF THE PRENEED LIFE INSURANCE POLICY
 TO  BE  NAMED  AS THE OWNER OR BENEFICIARY OF THE POLICY OF PRENEED LIFE
 INSURANCE; OR
   (5) SELL OR OFFER TO SELL ANY  CONTRACT  OR  POLICY  OF  PRENEED  LIFE
 INSURANCE  WITH  A FACE VALUE GREATER THAN TWENTY THOUSAND DOLLARS, PLUS
 AN ANNUAL PERCENTAGE INCREASE BASED ON THE ANNUAL CONSUMER  PRICE  INDEX
 COMPILED  BY  THE  UNITED STATES DEPARTMENT OF LABOR, BEGINNING WITH THE
 ANNUAL CONSUMER PRICE INDEX ANNOUNCED BY THE UNITED STATES DEPARTMENT OF
 LABOR FOR THE YEAR TWO THOUSAND TWENTY-THREE.
   § 4. Section 3208 of the insurance law is  amended  by  adding  a  new
 subsection (e) to read as follows:
   (E)  THE  FOLLOWING  INFORMATION  SHALL BE ADEQUATELY DISCLOSED AT THE
 TIME AN APPLICATION IS MADE, PRIOR TO ACCEPTING THE APPLICANT'S  INITIAL
 PREMIUM  OR  DEPOSIT,  FOR ANY CONTRACT OR POLICY OF PRENEED LIFE INSUR-
 ANCE:
   (1) THE FACT THAT A LIFE INSURANCE POLICY IS INVOLVED OR IS TO BE USED
 TO FUND A PREARRANGEMENT;
   (2) THE NATURE OF THE  RELATIONSHIP  AMONG  THE  SOLICITING  AGENT  OR
 AGENTS,  THE  PROVIDER  OF THE FUNERAL OR CEMETERY MERCHANDISE SERVICES,
 THE ADMINISTRATOR AND ANY OTHER PERSON;
   (3) THE RELATIONSHIP OF THE LIFE INSURANCE POLICY TO  THE  FUNDING  OF
 THE PREARRANGEMENT AND THE NATURE AND EXISTENCE OF ANY GUARANTEES RELAT-
 ING TO THE PREARRANGEMENT;
   (4) THE IMPACT ON THE PREARRANGEMENT OF ANY:
   (A) CHANGES IN THE LIFE INSURANCE POLICY INCLUDING BUT NOT LIMITED TO,
 CHANGES  IN  THE  ASSIGNMENT,  BENEFICIARY  DESIGNATION  OR  USE  OF THE
 PROCEEDS;
   (B) PENALTIES TO BE INCURRED BY THE POLICY HOLDER AS A RESULT OF FAIL-
 URE TO MAKE PREMIUM PAYMENTS;
   (C) PENALTIES TO BE INCURRED OR MONIES TO BE RECEIVED AS A  RESULT  OF
 CANCELLATION OR SURRENDER OF THE LIFE INSURANCE POLICY;
   (5)  A  LIST  OF  THE  MERCHANDISE  AND  SERVICES WHICH ARE APPLIED OR
 CONTRACTED FOR  IN  THE  PREARRANGEMENT  AND  ALL  RELEVANT  INFORMATION
 CONCERNING  THE  PRICE  OF THE FUNERAL SERVICES, INCLUDING AN INDICATION
 THAT THE PURCHASE PRICE IS EITHER GUARANTEED AT THE TIME OF PURCHASE  OR
 TO BE DETERMINED AT THE TIME OF NEED;
   (6)  THE  FACT  THAT THE APPLICANT HAS THE RIGHT TO SURRENDER THE LIFE
 INSURANCE POLICY, TOGETHER WITH A WRITTEN REQUEST FOR  CANCELLATION,  TO
 THE  INSURER  DURING  A  PERIOD  OF NOT LESS THAN TEN DAYS NOR MORE THAN
 THIRTY DAYS FROM THE DATE THE POLICY WAS DELIVERED TO THE  POLICY  OWNER
 FOR  A REFUND OF PREMIUM PAID PURSUANT TO PARAGRAPH ELEVEN OF SUBSECTION
 (A) OF SECTION THREE THOUSAND TWO HUNDRED THREE OF THIS ARTICLE;
   (7) ALL RELEVANT INFORMATION CONCERNING WHAT OCCURS  AND  WHETHER  ANY
 ENTITLEMENTS  OR  OBLIGATIONS ARISE IF THERE IS A DIFFERENCE BETWEEN THE
 PROCEEDS OF THE LIFE INSURANCE POLICY AND THE AMOUNT ACTUALLY NEEDED  TO
 FUND THE PREARRANGEMENT;
 S. 4605                             4

   (8)  ANY  PENALTIES  OR  RESTRICTIONS,  INCLUDING  BUT  NOT LIMITED TO
 GEOGRAPHIC RESTRICTIONS OR THE INABILITY OF THE PROVIDER TO PERFORM,  ON
 THE DELIVERY OF MERCHANDISE, SERVICES OR THE PREARRANGEMENT GUARANTEE;
   (9)  IF  SO, THE FACT THAT A SALES COMMISSION OR OTHER FORM OF COMPEN-
 SATION IS BEING PAID AND THE IDENTITY OF THE INDIVIDUALS OR ENTITIES  TO
 WHOM IS IT PAID.
   §  5.  Paragraph  (l)  of  subdivision 1 of section 3450 of the public
 health law, as amended by chapter 642 of the laws of 2019, is amended to
 read as follows:
   (l) has paid, given, has caused to be paid or given or offered to  pay
 or to give to any person a commission, EXCLUDING A COMMISSION AUTHORIZED
 PURSUANT  TO  ARTICLE TWENTY-ONE OF THE INSURANCE LAW, or other valuable
 consideration for the solicitation or procurement,  either  directly  or
 indirectly,  of  funeral  patronage,  or  has accepted any consideration
 (including without  limitation  a  commission,  EXCLUDING  A  COMMISSION
 AUTHORIZED  PURSUANT TO ARTICLE TWENTY-ONE OF THE INSURANCE LAW, rebate,
 or discount or direct or indirect price reduction  on  merchandise  from
 the  current  value  thereof)  from  any  financial institution or trust
 company, or agent thereof, with whom the funeral director deposits funds
 paid for funeral services in advance of need pursuant to subdivision one
 of section four hundred fifty-three of the general business  law  except
 that  the  funeral  director may accept, from the financial institution,
 trust company or agent thereof, up  to  twenty-five  hundredths  of  one
 percent  of  the fee authorized under paragraph (b) of subdivision three
 of section four hundred fifty-three of  the  general  business  law  for
 administrative  services  provided  by  the  funeral  director,  or  has
 accepted any consideration (including without limitation a commission or
 gift) from any insurer or agent thereof, to sell, offer or  promote  the
 sale  of  any  policy of insurance payable, expressly or as marketed, at
 the death of the insured for funeral or burial expenses;
   § 6. This act shall take effect immediately and shall expire  June  1,
 2028  when  upon  such  date  the provisions of this act shall be deemed
 repealed.

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