What's happening
This bill requires prompt, fair, and equitable payment of insurance commissions to health insurance producers, including interest penalties for late payments.
Why it matters
Strengthens protections for health insurance producers. by mandating clear timelines (45 days) for commission payments, reducing financial uncertainty for agents and brokers who help consumers access health coverage.
Creates meaningful financial consequences for delayed payments. by imposing interest penalties at a significant rate (whichever is greater: the corporate tax rate or 12% per year), discouraging health plans from withholding or slowing payments.
Covers a broad range of health insurance arrangements. including those inside and outside New York’s health exchange and those subject to both state and federal health reform laws—which ensures producers are protected regardless of how or where coverage is sold.
Nullifies any contractual attempts to bypass these requirements. , making it illegal for health plans to use side agreements to weaken or evade these prompt payment standards, thus safeguarding the intent of the law.
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Who cares
Headline styles
Pay Insurance Commissions On Time
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to insurance
- Referred to insurance
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3623
2019-2020 Regular Sessions
IN SENATE
February 11, 2019
Introduced by Sens. BRESLIN, 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 standards for prompt, fair and equitable payments of insurance commissions or other compensation arrangements
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subsection (d) of section 2119 of the insurance law, as amended by chapter 687 of the laws of 2003, is amended to read as follows:
(d) (1) No insurance broker shall, in connection with the sale, solicitation or negotiation, issuance, delivery or transfer in this state of any contract of insurance made or negotiated in this state, directly or indirectly charge, or receive from, the insured or prospective insured therein any greater sum than the rate of premium fixed therefor by the insurer obligated as such therein, unless such broker has a right to compensation for services created in the manner specified in subsection (c) of this section.
(2) The provisions of this section shall apply to any placement of major medical or any other comprehensive type of health insurance coverage by an insurance broker under contracts or agreements issued or entered into by a health plan pursuant to this article and articles forty-two, forty-three and forty-seven of this chapter and article forty-four of the public health law, inside or outside the New York health benefit exchange established under Governor's Executive Order No. 42 (2012) to implement applicable provisions of the federal Patient Protection and Affordable Care Act, Public Law 111-148 (42 USC § 18001 et seq. (2010)).
§ 2. The insurance law is amended by adding a new section 3224-d to read as follows:
§ 3224-d. Standards for prompt, fair and equitable payments of insurance commissions or other compensation arrangements. Notwithstanding any other provisions of this chapter or any other general or special law to the contrary, this section is intended to provide for prompt, fair and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09804-01-9
S. 3623 2
equitable payments of insurance commissions or other compensation arrangements to health insurance producers for placement of major medical or any other comprehensive type of health insurance coverage under contracts or agreements issued or entered into by a health plan pursuant to this article and articles forty-two, forty-three and fortyseven of this chapter and article forty-four of the public health law, which shall adhere to the following standards:
(a) Except in a case where the obligation of a health plan to pay an insurance commission or other compensation arrangement to an insurance producer upon receipt of payment of premium or other charge for placement of major medical or any other comprehensive type of health insurance coverage is not reasonably clear, or when there is a reasonable basis supported by specific information available for review by the superintendent that such payment of premium or other charge was submitted fraudulently, such health plan shall pay such insurance commission or other compensation arrangement to any such insurance producer within forty-five days of receipt of such payment of premium or other charge.
(b) Each failure to timely pay an insurance commission or other compensation arrangement to an insurance producer for placement of major medical or any other comprehensive type of health insurance coverage in violation of this section shall constitute a separate violation. In addition to the penalties provided in this chapter, any health plan that fails to adhere to the standards contained in this section shall be obligated to pay to an insurance producer interest on the amount of such insurance commission or other compensation arrangement due and owing the greater of the rate equal to the rate set by the commissioner of taxation and finance for corporate taxes pursuant to paragraph one of subsection (e) of section one thousand ninety-six of the tax law or twelve percent per annum, to be computed from the date payment was required to be made. When the amount of interest due on any such payment is less than two dollars, a health plan shall not be required to pay interest on such payment.
(c) The provisions of this section shall apply to any placement of major medical or any other comprehensive type of health insurance coverage under contracts or agreements issued or entered into by a health plan pursuant to this article and articles forty-two, forty-three and forty-seven of this chapter and article forty-four of the public health law, inside or outside the New York health benefit exchange established under Governor's Executive Order No. 42 (2012) to implement applicable provisions of the federal Patient Protection and Affordable Care Act, Public Law 111-148 (42 USC § 18001 et seq. (2010)).
(d) Any contract or agreement entered into on or after the effective date of this section between a health plan and an insurance producer that attempts to abrogate, alter or amend any of the provisions of this section, shall be void as against public policy.
(e) For purposes of this section:
(1) "health plan" shall mean an insurer or organization or corporation licensed or certified pursuant to article forty-three or forty-seven of this chapter or article forty-four of the public health law; and
(2) "insurance producer" shall mean an insurance agent, insurance broker or insurance consultant licensed pursuant to article twenty-one of this chapter.
§ 3. This act shall take effect immediately.
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 standards for prompt, fair and equitable payments of insurance commis- sions or other compensation arrangements
Purpose
To modernize the insurance law to ensure that licensed health insurance producers, including brokers, agents and benefit consultants, are promptly paid compensation earned for placement of health insurance coverage.
Summary of provisions
Section 1 of the bill would amend subsection (d) of § 2219 of the insur- ance law by adding a new paragraph (2) thereto, to ensure that the provisions of such section are applied to major medical or any other comprehensive type of health insurance plans and policies placed by licensed insurance brokers inside or outside the New York State of Health Benefit Exchange established pursuant to Governor's Executive Order No. 42 (2012).
Section 2 of the bill would add a new § 3224-d to the Insurance Law, to establish standards for prompt, fair and equitable payments of insurance commissions or other compensation arrangements earned, to licensed health insurance producers, including brokers, agents and benefit consultants, for placement of major medical or any other comprehensive type of health insurance coverage. Such prompt payments would be made by health plans within 45 days of receipt of payment of premium or other charge.
Section 3 of the bill would provide for an immediate effective date.
Justification
With the establishment of the New York State of Health Benefit Exchange and the attendant implementation of the federal Patient Protection and Affordable Care Act (PPACA) in the state, licensed insurance producers have experienced extremely slow payments from health plans & carriers for placement of health insurance coverage, inside and outside the Exchange. In order to remain competitive and economically viable in the fast-paced and competitive insurance marketplace as it continues to evolve, insurance producers must have positive cash flow to operate their insurance agencies and consulting businesses.
This bill is wholly modeled upon existing law requiring prompt payment of healthcare providers by health plans after provision of medical or other healthcare services to covered patients/insureds/subscribers (see Insurance Law § 3224-a). It is only fair that licensed insurance produc- ers be promptly paid upon the placement of health insurance coverage, in a manner similar to healthcare providers upon the rendering of medical or other healthcare services.
Legislative history
S.4545 of 2017-18; S.1671 of 2015-16; Similar to S.7300 of 2014
Fiscal implications
None.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.