•  Summary 
  •  
  •  Actions 
  •  
  •  Committee Votes 
  •  
  •  Floor Votes 
  •  
  •  Memo 
  •  
  •  Text 
  •  
  •  LFIN 
  •  
  •  Chamber Video/Transcript 

A07838 Summary:

BILL NOA07838A
 
SAME ASSAME AS S06143-B
 
SPONSORCusick
 
COSPNSRMagnarelli, Stirpe, Lupardo
 
MLTSPNSR
 
Amd 453, Gen Bus L; amd 107 & 3208, Ins L; amd 3450, Pub Health L
 
Relates to preneed insurance premiums.
Go to top    

A07838 Actions:

BILL NOA07838A
 
05/16/2017referred to consumer affairs and protection
01/03/2018referred to consumer affairs and protection
01/29/2018amend and recommit to consumer affairs and protection
01/29/2018print number 7838a
Go to top

A07838 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7838A
 
SPONSOR: Cusick
  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: 2017: S.6143-A - Referred to Consumer Protection / A.7838 - Referred to Consumer Affairs & Protection   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.   EFFECTIVE DATE: Immediately.
Go to top

A07838 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         7838--A
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                      May 16, 2017
                                       ___________
 
        Introduced  by M. of A. CUSICK, MAGNARELLI, STIRPE, LUPARDO -- read once
          and referred to the Committee on Consumer Affairs  and  Protection  --
          recommitted  to  the  Committee  on Consumer Affairs and Protection in
          accordance with Assembly Rule 3, sec. 2 -- committee discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee
 
        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:
 
     1    Section 1. Paragraph (a) of subdivision 1 of section 453 of the gener-
     2  al business law, as amended by chapter 557  of  the  laws  of  2001,  is
     3  amended to read as follows:
     4    (a)  Any  and  all  moneys  paid  to a funeral firm, funeral director,
     5  undertaker, cemetery, or any other person, firm or corporation, under or
     6  in connection with an agreement, or any option to enter into  an  agree-
     7  ment, for the sale of merchandise to be used in connection with a funer-
     8  al  or  burial,  or for the furnishing of personal services of a funeral
     9  director or undertaker, wherein the merchandise is not  to  be  actually
    10  physically  delivered  or  the  personal services are not to be rendered
    11  until the occurrence of the death of the person  for  whose  funeral  or
    12  burial  such  merchandise or services are to be furnished shall continue
    13  to be the money of the person making such payment and shall be  held  in
    14  trust for such person by the funeral firm, funeral director, undertaker,
    15  cemetery  or  any other person, firm or corporation to whom such payment
    16  is made and shall, within ten business days of receipt, be deposited  in
    17  an  interest  bearing  account in a bank, national bank, federal savings
    18  bank, federal savings and loan association, savings  bank,  savings  and
    19  loan association, credit union, or federal credit union within the state
    20  and  duly  authorized  to  receive deposits in the state of New York and

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11595-02-8

        A. 7838--A                          2
 
     1  which shall earn interest at a rate which shall be at not less than  the
     2  prevailing rate of interest earned by other such deposits in such banks,
     3  savings  banks,  savings  and  loan associations, or credit unions under
     4  this  section,  or  shall  be placed in a trust company in an investment
     5  backed by the government of the United States and shall not  be  commin-
     6  gled  with other moneys of the funeral firm, funeral director, undertak-
     7  er, cemetery, or other person, firm or corporation or become  the  funds
     8  of  the  funeral  firm, funeral director, undertaker, cemetery, or other
     9  person, firm or corporation, and shall be so held on  deposit,  together
    10  with  any  interest  thereon,  until  said merchandise has been actually
    11  physically delivered and said  personal  services  have  been  rendered,
    12  unless  sooner  repaid, in whole or in part; provided, however, that any
    13  and all money paid to a life insurance company as  premium  for  preneed
    14  life  insurance as defined in section one hundred seven of the insurance
    15  law shall be considered as premium paid to an insurer. No funeral  firm,
    16  funeral  director,  undertaker,  cemetery  or  any other person, firm or
    17  corporation, shall  discharge  the  obligation  established  under  this
    18  section  to  deposit  or place money with a bank, national bank, federal
    19  savings bank,  federal  savings  and  loan  association,  savings  bank,
    20  savings  and  loan  association,  credit  union, federal credit union or
    21  trust company within the state through a surety bond or other  financial
    22  instrument unless expressly provided under this section.
    23    §  2. Subsection (a) of section 107 of the insurance law is amended by
    24  adding a new paragraph 55 to read as follows:
    25    (55) "Preneed life insurance"  means  any  life  insurance  policy  or
    26  certificate  that  is issued in combination with, in support of, with an
    27  assignment to, or as a guarantee for,  a  prearrangement  agreement  for
    28  goods and services, or other benefits, to be provided at the time of and
    29  immediately  following  the death of the insured. Goods and services may
    30  include embalming, cremation, body preparation, viewing  or  visitation,
    31  coffin  or  urn, memorial stone, and transportation of the deceased. The
    32  status of the policy or certificate as preneed life insurance is  deter-
    33  mined at the time of issue in accordance with the policy form filing.
    34    § 3. Subsection (d) of section 3208 of the insurance law is amended to
    35  read as follows:
    36    (d)  No  person, firm, association, society, or corporation engaged in
    37  this state in the business of providing  for  the  payment  of  funeral,
    38  burial  or  other  expenses  of  deceased  members, whether or not it be
    39  subject to the other provisions of this chapter, and no insurer shall:
    40    (1) deliver or issue for delivery in this state any contract or policy
    41  whereby the benefit or any part thereof accruing under such contract  or
    42  policy, upon the death of such member or of the person insured, shall be
    43  payable  to  a  designated  or  restricted  funeral  director or funeral
    44  directing concern or other person engaged in such trade or business,  or
    45  to any official or designated group of them, provided, however, that the
    46  insured  may,  pursuant  to  paragraph  one of subsection (b) of section
    47  three thousand two hundred five of this article,  immediately  assign  a
    48  contract  or  policy  so procured or effectuated to a designated funeral
    49  home so long as the assignment  is  contingent  upon  the  provision  of
    50  funeral  goods  and services by the assignee at the time of death of the
    51  insured; or
    52    (2) pay any such benefit or any part thereof to any  funeral  director
    53  or  funeral  directing  concern or other person engaged in such trade or
    54  business or to any official or designated group  of  them,  without  the
    55  consent  of  the  person  or  persons entitled to such benefits, subject
    56  however, to any contingent assignment, the contingency of which has been

        A. 7838--A                          3
 
     1  satisfied through the provision of funeral goods  and  services  by  the
     2  assignee; or
     3    (3)  in  any  way deprive the personal representative or family of the
     4  deceased of the advantages of competition in  procuring  and  purchasing
     5  supplies and services in connection with the burial of such deceased; or
     6    (4) permit the seller or provider of the preneed life insurance policy
     7  to  be  named  as the owner or beneficiary of the policy of preneed life
     8  insurance; or
     9    (5) sell or offer to sell any  contract  or  policy  of  preneed  life
    10  insurance with a face value greater than twenty thousand dollar, plus an
    11  annual  percentage  increase  based  on  the Annual Consumer Price Index
    12  compiled by the United States Department of Labor,  beginning  with  the
    13  Annual Consumer Price Index announced by the United States Department of
    14  Labor for two thousand nineteen.
    15    §  4.  Section  3208  of  the insurance law is amended by adding a new
    16  subsection (e) to read as follows:
    17    (e) The following information shall be  adequately  disclosed  at  the
    18  time  an application is made, prior to accepting the applicant's initial
    19  premium or deposit, for any contract or policy of  preneed  life  insur-
    20  ance:
    21    (1)  The  fact  that a life insurance policy is involved or be used to
    22  fund a prearrangement;
    23    (2) The nature of the  relationship  among  the  soliciting  agent  or
    24  agents,  the  provider  of the funeral or cemetery merchandise services,
    25  the administrator and any other person;
    26    (3) The relationship of the life insurance policy to  the  funding  of
    27  the prearrangement and the nature and existence of any guarantees relat-
    28  ing to the prearrangement;
    29    (4) The impact on the prearrangement of any:
    30    (A) Changes in the life insurance policy including but not limited to,
    31  changes  in  the  assignment,  beneficiary  designation  or  use  of the
    32  proceeds;
    33    (B) Penalties to be incurred by the policy holder as a result of fail-
    34  ure to make premium payments;
    35    (C) Penalties to be incurred or monies to be received as a  result  of
    36  cancellation or surrender of the life insurance policy;
    37    (5)  A  list  of  the  merchandise  and  services which are applied or
    38  contracted for  in  the  prearrangement  and  all  relevant  information
    39  concerning  the  price of the funeral services, including and indication
    40  that the purchase price is either guaranteed at the time of purchase  or
    41  to be determined at the time of need;
    42    (6)  The  fact  that the applicant has the right to surrender the life
    43  insurance policy, together with a written request for  cancellation,  to
    44  the  insurer  during  a  period  of not less than ten days nor more that
    45  thirty days from the date the policy was delivered to the  policy  owner
    46  for  a refund of premium paid pursuant to paragraph eleven of subsection
    47  (a) of section three thousand two hundred three of this article;
    48    (7) All relevant information concerning what occurs  and  whether  any
    49  entitlements  or  obligations arise if there is a difference between the
    50  proceeds of the life insurance policy and the amount actually needed  to
    51  fund the prearrangement;
    52    (8)  Any  penalties  or  restrictions,  including  but  not limited to
    53  geographic restrictions or the inability of the provider to perform,  on
    54  the delivery of merchandise, services or the prearrangement guarantee;

        A. 7838--A                          4
 
     1    (9)  If  so, the fact that a sales commission or other form of compen-
     2  sation is being paid and the identity of the individuals or entities  to
     3  whom is it paid.
     4    §  5.  Paragraph  (l)  of  subdivision 1 of section 3450 of the public
     5  health law, as amended by chapter 560 of the laws of 1998, is amended to
     6  read as follows:
     7    (l) has paid, given, has caused to be paid or given or offered to  pay
     8  or to give to any person a commission, excluding a commission authorized
     9  pursuant  to  article twenty-one of the insurance law, or other valuable
    10  consideration for the solicitation or procurement,  either  directly  or
    11  indirectly,  of  funeral  patronage,  or  has accepted any consideration
    12  (including without  limitation  a  commission,  excluding  a  commission
    13  authorized  pursuant to article twenty-one of the insurance law, rebate,
    14  or discount or direct or indirect price reduction  on  merchandise  from
    15  the  current  value  thereof)  from  any  financial institution or trust
    16  company, or agent thereof, with whom the funeral director deposits funds
    17  paid for funeral services in advance of need pursuant to subdivision one
    18  of section four hundred fifty-three of the general business law;
    19    § 6. This act shall take effect immediately and shall expire  June  1,
    20  2023  when  upon  such  date  the provisions of this act shall be deemed
    21  repealed; provided, however, that:
    22    a. the amendments to paragraphs 2 and 3 of subsection (d)  of  section
    23  3208  of  the insurance law made by section three of this act shall take
    24  effect on the same date as the reversion of such paragraphs pursuant  to
    25  section 6 of chapter 557 of the laws of 2001, as amended;
    26    b. the amendments to paragraph (l) of subdivision 1 of section 3450 of
    27  the public health law made by section five of this act shall take effect
    28  on  the same date as the reversion of such paragraph pursuant to section
    29  6 of chapter 557 of the laws of 2001, as amended; and
    30    c. if such reversion pursuant to section 6 of chapter 557 of the  laws
    31  of  2001, as amended, shall have occurred prior to the effective date of
    32  this act, section three and five of this act  shall  take  effect  imme-
    33  diately.
Go to top