S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7222
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                               April 4, 2025
                                ___________
 
 Introduced  by  Sen.  BAILEY -- 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 indexing fixed amounts
   and clarifying compliance
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  Subsection  (b)  of  section 4228 of the insurance law is
 amended by adding three new paragraphs 30, 31 and 32 to read as follows:
   (30) "CPI" MEANS THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS  FOR
 THE  UNITED  STATES AS REPORTED BY THE BUREAU OF LABOR STATISTICS OF THE
 UNITED STATES DEPARTMENT OF LABOR, OR ITS SUCCESSOR INDEX.
   (31) "CPI FOR THE PRECEDING CALENDAR YEAR" MEANS THE  AVERAGE  OF  THE
 CPI  AS OF THE CLOSE OF THE TWELVE-MONTH PERIOD ENDING ON AUGUST THIRTY-
 FIRST OF SUCH CALENDAR YEAR.
   (32) "PERCENT INCREASE IN INFLATION" MEANS THE PERCENTAGE, IF ANY,  BY
 WHICH  THE  CPI  FOR THE PRECEDING CALENDAR YEAR EXCEEDS THE CPI FOR THE
 YEAR BEGINNING SEPTEMBER FIRST,  TWO  THOUSAND  TWENTY-FOUR  AND  ENDING
 AUGUST THIRTY-FIRST, TWO THOUSAND TWENTY-FIVE.
   §  2.  Paragraph  2 of subsection (c) of section 4228 of the insurance
 law, as added by chapter 616 of the laws of 1997, subparagraphs (E)  and
 (G)  as amended by chapter 13 of the laws of 2002, is amended to read as
 follows:
   (2) Total  selling  expenses  shall  include  the  following  expenses
 incurred directly or indirectly by the company, without regard to wheth-
 er  they  are  incurred  in  the  company's home office or in a field or
 regional office:
   (A) commissions;
   (B) the increase during the year in the amount of outstanding advances
 and loans to agents, including any accrued and unpaid interest  thereon,
 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
 S. 7222                             2
              

 
 amount is negative, it shall be treated as a reduction of the amount  of
 total selling expenses;
   (C)  the  [expense  of  direct  solicitation  advertising  that either
 includes an application or solicits a response to obtain an  application
 for a policy or contract regulated under this section;
   (D)]  FOLLOWING  distribution,  marketing  and  sales support expenses
 directly related to the procurement of new business[, which includes but
 is not limited to]:
   (i) recruiting and training of agents, including  related  recordkeep-
 ing;
   (ii) sales management and supervision; AND
   (iii) clerical functions in sales offices[; and
   (iv)  sales  support  functions, including but not limited to advanced
 underwriting support, proposals,  illustrations,  competition  aids  and
 related  systems  and  equipment, including personal computers, owned by
 the company and used in the sales process];
   [(E)] (D) any expense allowance paid to the agent  or  broker  by  the
 company or any expenses of the agent, agency or broker, assumed or reim-
 bursed by the company;
   [(F) the] (E) TRAVEL expenses [of sales conferences, training meetings
 and awards], MEALS AND ENTERTAINMENT paid for by the company; and
   [(G)] (F) all other compensation paid to or expense incurred on behalf
 of  active  and  retired  agents  and brokers, including the cost of any
 security benefits, BUT EXCLUDING ANY ANNUAL  MARKETING  OR  DISTRIBUTION
 FEE  ON  A  MUTUAL  FUND  OR ANY PORTION THEREOF RECEIVED BY THE COMPANY
 PURSUANT TO RULE 12B-1 UNDER THE INVESTMENT  COMPANY  ACT  OF  1940,  17
 C.F.R.  270.12B-1,  WHICH  IS  THEN  PAID BY THE COMPANY TO THE AGENT OR
 BROKER.
   § 3. Subparagraph (F) of paragraph 2 of subsection (e) of section 4228
 of the insurance law, as amended by chapter 13 of the laws of  2002,  is
 amended to read as follows:
   (F)  If a company employs one or more salaried employees whose princi-
 pal function is [other than] NOT the sale of new policies  or  contracts
 and  [other  than]  NOT the supervision of agents or agencies, and if no
 more than twenty-five percent of the TOTAL compensation of such  employ-
 ees  is  related to [sales results] BUSINESS PERSONALLY PRODUCED BY SUCH
 EMPLOYEES, [the compensation of such employees is not  subject  to]  the
 provisions  of  this  subsection or subsection (d) of this section SHALL
 NOT APPLY TO SUCH EMPLOYEES' TOTAL  COMPENSATION,  notwithstanding  that
 they may be licensed as life insurance agents.
   §  4.  Paragraph  3 of subsection (e) of section 4228 of the insurance
 law, as added by chapter 616 of the laws of 1997, is amended to read  as
 follows:
   (3)(A)  A  company  may pay reasonable training allowance subsidies to
 agents pursuant to a plan of  agent  compensation,  provided  that  such
 agents  are  full-time  agents of the company and the principal business
 activity of such agents is the solicitation of  policies  and  contracts
 primarily  but  not  necessarily  exclusively  for  the company, and its
 affiliates, and such agents are not  simultaneously  receiving  training
 allowance from any other life insurance company.
   (B)  Agents  receiving  training  allowance subsidies may also receive
 expense allowance payments.
   (C) An agent is eligible to receive such a training allowance subsidy,
 provided (i) such agent has earned less  than  twenty  thousand  dollars
 from  the  sale  of policies and contracts cumulatively during the three
 years prior to such agent's appointment, [or] (ii) less than twenty-five
 S. 7222                             3
 
 percent of such agent's earned income has been received from the sale of
 policies and contracts during each of the three years prior to  appoint-
 ment,  OR  (III)  LESS THAN TWENTY-FIVE PERCENT OF SUCH AGENT'S WORKTIME
 DURING  EACH  OF  THE  THREE YEARS PRIOR TO APPOINTMENT WAS ALLOCATED TO
 INDIVIDUAL LIFE AND ANNUITY SALES. THE COMPANY  MAY  ESTABLISH  THAT  AN
 AGENT  IS  ELIGIBLE TO RECEIVE A TRAINING ALLOWANCE SUBSIDY BY REQUIRING
 THE AGENT TO ATTEST THAT SUCH AGENT MEETS ONE OF THE CRITERIA SET  FORTH
 IN  THIS  SUBPARAGRAPH  PRIOR  TO APPOINTMENT. SUCH ATTESTATION SHALL BE
 SUFFICIENT TO ESTABLISH ELIGIBILITY, PROVIDED THE COMPANY DOES NOT  HAVE
 ACTUAL  KNOWLEDGE TO REJECT THE ATTESTATION BASED ON THE AGENT'S CREDEN-
 TIALS AND BACKGROUND.
   (D) An agent receiving  such  training  allowance  subsidies  may  not
 receive,  on  a cumulative basis, for an agent in the first year of such
 subsidies, the greater of [twenty-eight] FIFTY-FOUR thousand dollars and
 sixty percent of the first year commission limit, and for  an  agent  in
 the  second  year of such subsidies, the greater of [forty-four] EIGHTY-
 FIVE thousand dollars and sixty percent of  the  first  year  commission
 limit  in  the first year and forty percent of the first year commission
 limit in the second year, and for an agent in the  third  year  of  such
 subsidies, the greater of [fifty-four] ONE HUNDRED FIVE thousand dollars
 and  sixty  percent of the first year commission limit in the first year
 and forty percent of the first year commission limit in the second year,
 and twenty percent of the first year  commission  limit  for  the  third
 year, and for an agent in the fourth year of such subsidies, the greater
 of [sixty] ONE HUNDRED SIXTEEN thousand dollars and sixty percent of the
 first  year  commission limit in the first year and forty percent of the
 first year commission limit in the second year, twenty  percent  of  the
 first  year  commission  limit in the third year, and ten percent of the
 first year commission limit in the fourth year.
   (E) With respect to any agent eligible to receive  training  allowance
 subsidy  who  has  earned  at least [sixty-six] ONE HUNDRED TWENTY-SEVEN
 thousand dollars of income during either of the two calendar years imme-
 diately preceding commencement of receipt of training  allowance  subsi-
 dies, a company may pay additional training allowance subsidies of [one]
 TWO thousand dollars to such agent during each of the first two years of
 his  receipt  of training allowance subsidies for every [two] FOUR thou-
 sand dollars of such earned income in excess of [sixty-six] ONE  HUNDRED
 TWENTY-SEVEN  thousand  dollars,  provided  that the cumulative training
 allowance subsidy does not  exceed  [forty-five]  EIGHTY-SEVEN  thousand
 dollars  in  such  agent's  first  year of receipt of training allowance
 subsidy and provided further that the agent receives  not  greater  than
 [sixty] ONE HUNDRED SIXTEEN thousand dollars in total training allowance
 subsidies.
   (F)  For  purposes of this paragraph, the period of time that a person
 worked for a company under a company-sponsored training program and  was
 not  acting  as  an  agent for that company shall not be counted as time
 spent receiving training allowance subsidies, and any salary paid by the
 company to that person during that time shall not count toward the cumu-
 lative maximum training allowance subsidy.
   (G) The superintendent  shall  [periodically]  adjust  the  cumulative
 maximum  training  allowance  subsidy limits set forth in this paragraph
 ANNUALLY BY THE PERCENT INCREASE IN INFLATION.  The  superintendent  may
 also,  at any time, approve training allowance subsidies with cumulative
 maximum amounts that exceed the limits set forth in this paragraph.
   (H) A company may, upon approval of the  superintendent,  establish  a
 plan for training allowance subsidies for which the conditions of eligi-
 S. 7222                             4
 
 bility  or  the  amounts  or periods of subsidy, of any of these, differ
 from those set  forth  in  this  subsection.  The  superintendent  shall
 approve  such a plan, subject to such conditions as he may prescribe, if
 he  finds  that  it  is  likely  to meet the objective of developing new
 agents for the sale of policies or contracts or both in a cost-effective
 manner.
   § 5. Paragraph 6 of subsection (e) of section 4228  of  the  insurance
 law, as amended by chapter 13 of the laws of 2002, is amended to read as
 follows:
   (6) A company, including any person, firm or corporation on its behalf
 or  under  any agreement with it, may pay or award, or permit to be paid
 or awarded, prizes and awards to agents and brokers pursuant to  a  plan
 of  agent or broker compensation, provided that no single prize or award
 may exceed a value of [two] FIVE hundred [fifty] dollars, and  that  the
 total  value  of  such prizes and awards paid or awarded to any agent or
 broker within a calendar year may not exceed [one] TWO thousand dollars.
 Notwithstanding the foregoing, a company may also pay or award not  more
 frequently  than monthly a prize or award valued at not more than [twen-
 ty-five] FIFTY dollars. The costs of all such prizes  and  awards  shall
 not  be included in applying the limits established in subsection (d) of
 this section. The superintendent may  authorize  higher  limits  on  the
 value of prizes and awards than those set forth herein. ON THE FIRST DAY
 OF  EACH  YEAR  BEGINNING  JANUARY  FIRST,  TWO THOUSAND TWENTY-SIX, THE
 LIMITS IN THIS SUBPARAGRAPH SHALL BE ADJUSTED ANNUALLY  BY  THE  PERCENT
 INCREASE IN INFLATION.
   § 6. Subparagraph (E) of paragraph 1 and paragraph 2 of subsection (f)
 of  section  4228  of  the insurance law, as added by chapter 616 of the
 laws of 1997, are amended to read as follows:
   (E) All filings and related correspondence shall  be  proprietary  and
 confidential, and not disclosed by the superintendent. NOTHING CONTAINED
 IN  THIS  SECTION OR ANY OTHER PROVISION OF LAW SHALL PROHIBIT A COMPANY
 FROM MAKING CHANGES TO ANY COMPENSATION PAYABLE ON POLICIES OR CONTRACTS
 THAT ARE IN FORCE AND SUBJECT TO AN EXISTING  PLAN,  PROVIDED  THAT  THE
 CHANGED  COMPENSATION  MEETS  THE APPLICABLE REQUIREMENTS OF SUBSECTIONS
 (D) AND (E) OF THIS SECTION. A COMPANY SHALL BE PERMITTED TO  MAKE  SUCH
 CHANGES,  AND  CHANGES  WHOSE EFFECT IS TO INCREASE OR OTHERWISE CHANGE,
 BUT NOT REDUCE, THE COMPENSATION  SHALL  BE  SET  FORTH  PURSUANT  TO  A
 COMPENSATION PLAN THAT IS FILED IN ACCORDANCE WITH THE SAME REQUIREMENTS
 OF  THIS  PARAGRAPH  THAT  WOULD APPLY IF SUCH COMPENSATION APPLIED ONLY
 PROSPECTIVELY TO NEW BUSINESS. Changes whose effect is to reduce or  not
 increase  the  compensation  payable  to every individual covered by the
 arrangement in each and every year, need not be filed  with  the  super-
 intendent,  but must be maintained in the company's records for at least
 six years.
   (2) The annual statement  schedule  for  reporting  compliance  ON  AN
 AGGREGATE BASIS with subsection (c) of this section shall be signed by a
 knowledgeable  officer of the company. The signing of the schedule shall
 be deemed confirmation by the officer that the officer has  performed  a
 personal  review  of  the information included and responses provided to
 the interrogatories. The signature is to be preceded  by  the  following
 statement:  "I  have reviewed the sources of total selling expenses and,
 to the best of my knowledge and belief, on the basis  of  the  projected
 experience  over  the  next three years based on reasonable assumptions,
 including changes currently being contemplated, the  company's  expenses
 will  not  exceed  the  limit  imposed thereon by New York Insurance Law
 Section 4228." If the officer cannot attest to the final clause of  this
 S. 7222                             5
 
 statement, the officer must disclose the year or years in which expenses
 are  expected  to  exceed the limit and the amount by which the limit is
 expected to be exceeded.
   § 7. The opening paragraph of paragraph 5 of subsection (f) of section
 4228 of the insurance law, as amended by chapter 13 of the laws of 2002,
 is amended to read as follows:
   Any  company  making  one  or  more  payments that exceed any limit in
 subsection (d) of this section that is unable  to  recover  such  excess
 payments  shall notify the superintendent within [thirty] NINETY days of
 the date that it learns or realizes that it exceeded the limit; however,
 if the company recovers such  excess  payments  prior  to  the  required
 notification date, OR, FOR AGENTS OR BROKERS WHO ARE NO LONGER APPOINTED
 WITH  THE  COMPANY,  THE  COMPANY HAS MADE REASONABLE EFFORTS TO RECOVER
 SUCH EXCESS PAYMENTS, it need not make such notification. At that  time,
 the  company shall report the reason the company exceeded the limit, the
 number of agents and brokers to whom payments in  excess  of  the  limit
 were  made,  and  the  amount  of money paid in excess of the limit, and
 shall describe the actions the company will take promptly to prevent any
 further instances of it exceeding this limit.
   § 8. This act shall take effect immediately.