NY State Senate Bill 2019-S2928

Senate Bill S2928

2019-2020 Legislative Session

Relates to the definition of the phrase "an inducement for, or as compensation for, any title insurance business"

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Archive: Last Bill Status - In Senate Committee Insurance 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 08, 2020	referred to insurance
Jan 30, 2019	referred to insurance

co-Sponsors

2019-S2928 (ACTIVE) - Details

See Assembly Version of this Bill:: A402
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §6409, Ins L
Versions Introduced in Other Legislative Sessions:: 2017-2018: S6704, A8467
2021-2022: A1354

2019-S2928 (ACTIVE) - Summary

Relates to the definition of the phrase "an inducement for, or as compensation for, any title insurance business" as it relates to the prohibition against certain actions.

2019-S2928 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S2928

SPONSOR: BRESLIN
 
TITLE OF BILL:

An act to amend the insurance law, in relation to the prohibition of
commissions and rebates

 
PURPOSE:

This bill clarifies that providing a benefit with the intention to
compensate or offer compensation, directly or indirectly, for any past
or present placement for a particular piece of title insurance business
by a title insurance corporation or agent or a representative thereof is
a prohibited illegal inducement under the

Section 6409(d) of the insurance Law.

 
SUMMARY OF PROVISIONS:

Section 1: This section amends subdivision 2 of section 6409(d) of the

Insurance Law, clarifying that a marketing activity or conveyed benefit
or consideration shall be considered an illegal "inducement" under this
section if it is given with the intention to directly or indirectly
compensate a present or perspective client for any past or present
placement of title insurance business.

Section 2: Provides the effective date.

 
JUSTIFICATION:

In 2017, as part of proposed rulemaking to clarify and enforce Insurance
Law Section 6409(d), the Department of Financial Services drafted regu-
lations that deemed any marketing practices that conveyed a benefit onto
a perspective client an illegal inducement "regardless of whether
provided as a quid pro quo for perspective business." This interpreta-
tion goes beyond the intended scope of the law and seems to be an about
face from previous guidance by the Office of General Counsel (OGC),
which were requested by and relied upon by the title insurance industry,
and which expressly required the presence of a "quid pro quo" in order
to constitute an illegal inducement. See i.e. OGC Opinion No. 11-06-05
(June 21, 2011).

Because the title insurance industry does not engage in direct to
consumer advertising, insurers and agents need to be able to market
themselves and their services to their clients, including attorneys and
other real estate professionals, and they should be able to do this in a
way similar to others in the insurance industry and general economy, as
long as there is no direct or indirect "quid pro quo" for the placement
of a particular piece title insurance business. This bill clarifies that
the mere presence of common marketing activities absent a quid pro quo
does not constitute an illegal inducement under 6409(d).

 
LEGISLATIVE HISTORY:

2017-2018: A.8467 / S6704

 
FISCAL IMPLICATIONS:

None to the state.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2019-S2928 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2928
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 30, 2019
                                ___________
 
 Introduced  by  Sens. BRESLIN, ADDABBO, SERINO -- read twice and ordered
   printed, and when printed to be committed to the Committee  on  Insur-
   ance
 
 AN  ACT  to  amend  the insurance law, in relation to the prohibition of
   commissions and rebates
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subsection  (d)  of section 6409 of the insurance law, as
 amended by section 17 of part V of chapter 57 of the laws  of  2014,  is
 amended to read as follows:
   (d)  (1) No title insurance corporation, title insurance agent, or any
 other person acting for or on behalf of the title insurance  corporation
 or  title  insurance agent, shall offer or make, directly or indirectly,
 any rebate of any portion of the fee, premium or charge made, or pay  or
 give  to any applicant, or to any person, firm, or corporation acting as
 agent, representative, attorney, or employee of the owner, lessee, mort-
 gagee or the prospective owner, lessee, or mortgagee of the real proper-
 ty or any interest therein, either directly or indirectly,  any  commis-
 sion,  any  part  of  its fees or charges, or any other consideration or
 valuable thing, as an inducement for, or as compensation for, any  title
 insurance  business,  nor  shall  any applicant, or any person, firm, or
 corporation acting as agent, representative, attorney,  or  employee  of
 the  owner,  lessee,  mortgagee  or of the prospective owner, lessee, or
 mortgagee of the real property or anyone having  any  interest  in  real
 property  knowingly  receive, directly or indirectly, any such rebate or
 other consideration or valuable thing. Any person or entity who violates
 this section shall be subject to a penalty of [(1)]  (I)  five  thousand
 dollars; or [(2)] (II) up to ten times the amount of any compensation or
 rebate  received or paid in the case of a title insurance corporation or
 title insurance agent; or [(3)] (III) up to five times the amount of any
 compensation or rebate received or paid; or [(4)] (IV) in the case of an
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD03106-01-9

 S. 2928                             2
 
 applicant for title insurance that covers real  property  used  predomi-
 nantly  for  residential  purposes,  and which consists of not more than
 four dwelling units, other than hotels and  motels,  an  amount  not  to
 exceed  the compensation or rebate received or paid, when such applicant
 knew that it was a violation to receive such rebate, or other  consider-
 ation  or  valuable  thing; provided, however, if such applicant did not
 know that it was a violation to receive such rebate, or other  consider-
 ation or valuable thing, he or she shall not be assessed a penalty under
 this [subdivision] SUBSECTION.
   (2)  FOR  THE  PURPOSES  OF THIS SUBSECTION, "AN INDUCEMENT FOR, OR AS
 COMPENSATION FOR, ANY TITLE INSURANCE BUSINESS"  SHALL  MEAN  A  BENEFIT
 GIVEN  WITH  THE INTENTION TO COMPENSATE OR OFFER COMPENSATION, DIRECTLY
 OR INDIRECTLY, FOR ANY PAST OR PRESENT PLACEMENT FOR A PARTICULAR  PIECE
 OF TITLE INSURANCE BUSINESS TO ANY APPLICANT, OR PERSON, FIRM, OR CORPO-
 RATION  ACTING  AS  AGENT,  REPRESENTATIVE, ATTORNEY, OR EMPLOYEE OF THE
 OWNER, LESSEE, MORTGAGEE OR THE PROSPECTIVE OWNER, LESSEE, OR  MORTGAGEE
 OF THE REAL PROPERTY OR ANY INTEREST THEREIN. NOTHING CONTAINED IN PARA-
 GRAPH  ONE  OF  THIS SUBSECTION TO THE CONTRARY SHALL PROHIBIT ANY TITLE
 INSURANCE CORPORATION OR TITLE INSURANCE  AGENT,  OR  ANY  OTHER  PERSON
 ACTING  FOR  OR  ON  BEHALF  OF THE TITLE INSURANCE CORPORATION OR TITLE
 INSURANCE AGENT, FROM UNDERTAKING  ANY  USUAL  AND  CUSTOMARY  MARKETING
 ACTIVITY AIMED AT ACQUAINTING PRESENT AND PROSPECTIVE CUSTOMERS WITH THE
 ADVANTAGES  OF USING A PARTICULAR TITLE INSURER OR TITLE INSURANCE AGENT
 THAT ARE NOT INTENDED FOR THE PURPOSE OF A REWARD FOR THE FUTURE  PLACE-
 MENT OF, OR THE PAST PLACEMENT, OF A PARTICULAR PIECE OF TITLE INSURANCE
 BUSINESS.
   § 2. This act shall take effect immediately.

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Senate Bill S2928

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Sponsored By

Neil D. Breslin