What's happening
This bill prohibits health insurers from unilaterally reducing or stopping commissions or compensation to insurance producers during approved rate periods.
Why it matters
Protects insurance producers’ income stability. By banning insurers from unilaterally cutting commissions during fixed, approved rate periods, the bill ensures that agents, brokers, and consultants can rely on the compensation structure that was in effect when a policy was sold. This creates more predictable earnings for insurance professionals.
Prevents backdoor premium rate changes. Since commissions are often “loaded” into the rate filings reviewed and approved by the Department of Financial Services, prohibiting insurers from reducing commissions after the fact prevents them from effectively lowering their costs (and potentially increasing profit margins) without regulatory oversight.
Strengthens trust in contract agreements. The bill restricts insurers from inserting clauses into contracts that allow commission changes without the producer’s agreement, reinforcing the integrity and enforceability of insurance sales agreements in New York.
Could impact consumer access to advice. By protecting producer compensation, the bill may help ensure that consumers—especially those in the individual and small group markets—continue to have access to professional insurance advice, since stable commissions may incentivize agents to serve these markets.
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Who cares
Headline styles
Protect Health Insurance Commissions
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to insurance
- Referred to insurance
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6132
2017-2018 Regular Sessions
IN SENATE
May 11, 2017
Introduced by Sen. SEWARD -- 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 unilateral reduction, diminishment or non-payment of health insurance commissions or other compensation
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 2114 of the insurance law is amended by adding a new subsection (c) to read as follows:
(c) Notwithstanding any other provision of this chapter or any other general, special or local law to the contrary, it shall be unlawful as against public policy for any insurer or health plan to include any provisions in a sales contract or agreement entered into with a licensed life or accident and health insurance producer, broker, agent or benefits consultant, allowing such insurer or health plan to unilaterally reduce, diminish or otherwise cease payments of any commissions or other compensation offered to any such licensed life or accident and health insurance producer, broker, agent or benefits consultant, for the sale or replacement of any individual or small group health insurance policy, contract for insurance or certificate of insurance, where such commissions or other compensation were included, embedded or otherwise actuarially loaded into such insurer's or health plan's premium rate filings or applications submitted to the department pursuant to section three thousand two hundred thirty-one of this chapter, for so long as such prior approved rates are valid and remain in full force and effect.
§ 2. This act shall take effect immediately and shall apply to all applicable policies, certificates and contracts issued, renewed, modified, altered or amended on or after such date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11531-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
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-payment 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 commissions are included or embedded in prior-approved premium rates of individual 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 Financial 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, excessive, 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 agreement with any such health insurance producers allowing for the unilateral 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
New bill.
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.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.