NY State Senate Bill 2019-S820

Senate Bill S820

2019-2020 Legislative Session

Relates to amending the general business law, insurance law, and public health law regarding preneed insurance premiums

download bill text pdf

Archive: Last Bill Status - In Senate Committee Consumer Protection 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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to consumer protection
Jan 09, 2019	referred to consumer protection

2019-S820 (ACTIVE) - Details

See Assembly Version of this Bill:: A7301
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Amd §453, Gen Bus L; amd §§107 & 3208, Ins L; amd §3450, Pub Health L
Versions Introduced in Other Legislative Sessions:: 2017-2018: S6143, A7838
2021-2022: S5610, A6995
2023-2024: S4605

2019-S820 (ACTIVE) - Summary

Relates to preneed insurance premiums.

2019-S820 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S820

SPONSOR: LANZA
 
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:

2018: S.6143-13 - Referred to Consumer Protection / A.7838-A - Referred
to Consumer Affairs & Protection
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.

2019-S820 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    820
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                              January 9, 2019
                                ___________
 
 Introduced  by  Sen.  LANZA  -- read twice and ordered printed, and when
   printed to be committed to the Committee on Consumer Protection
 
 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:
 
   Section 1. Paragraph (a) of subdivision 1 of section 453 of the gener-
 al business law, as amended by chapter 557  of  the  laws  of  2001,  is
 amended to read as follows:
   (a)  Any  and  all  moneys  paid  to a funeral firm, funeral director,
 undertaker, cemetery, or any other person, firm or corporation, under or
 in connection with an agreement, or any option to enter into  an  agree-
 ment, for the sale of merchandise to be used in connection with a funer-
 al  or  burial,  or for the furnishing of personal services of a funeral
 director or undertaker, wherein the merchandise is not  to  be  actually
 physically  delivered  or  the  personal services are not to be rendered
 until the occurrence of the death of the person  for  whose  funeral  or
 burial  such  merchandise or services are to be furnished shall continue
 to be the money of the person making such payment and shall be  held  in
 trust for such person by the funeral firm, funeral director, undertaker,
 cemetery  or  any other person, firm or corporation to whom such payment
 is made and shall, within ten business days of receipt, be deposited  in
 an  interest  bearing  account in a bank, national bank, federal savings
 bank, federal savings and loan association, savings  bank,  savings  and
 loan association, credit union, or federal credit union within the state
 and  duly  authorized  to  receive deposits in the state of New York and
 which shall earn interest at a rate which shall be at not less than  the
 prevailing rate of interest earned by other such deposits in such banks,
 savings  banks,  savings  and  loan associations, or credit unions under
 this section, or shall be placed in a trust  company  in  an  investment
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD00295-01-9

 S. 820                              2
 
 backed  by  the government of the United States and shall not be commin-
 gled with other moneys of the funeral firm, funeral director,  undertak-
 er,  cemetery,  or other person, firm or corporation or become the funds
 of  the  funeral  firm, funeral director, undertaker, cemetery, or other
 person, firm or corporation, and shall be so held on  deposit,  together
 with  any  interest  thereon,  until  said merchandise has been actually
 physically delivered and said  personal  services  have  been  rendered,
 unless  sooner  repaid, in whole or in part; PROVIDED, HOWEVER, THAT ANY
 AND ALL MONEY PAID TO A LIFE INSURANCE COMPANY AS  PREMIUM  FOR  PRENEED
 LIFE  INSURANCE AS DEFINED IN SECTION ONE HUNDRED SEVEN OF THE INSURANCE
 LAW SHALL BE CONSIDERED AS PREMIUM PAID TO AN INSURER. No funeral  firm,
 funeral  director,  undertaker,  cemetery  or  any other person, firm or
 corporation, shall  discharge  the  obligation  established  under  this
 section  to  deposit  or place money with a bank, national bank, federal
 savings bank,  federal  savings  and  loan  association,  savings  bank,
 savings  and  loan  association,  credit  union, federal credit union or
 trust company within the state through a surety bond or other  financial
 instrument unless expressly provided under this section.
   §  2. Subsection (a) of section 107 of the insurance law is amended by
 adding a new paragraph 55 to read as follows:
   (55) "PRENEED LIFE INSURANCE"  MEANS  ANY  LIFE  INSURANCE  POLICY  OR
 CERTIFICATE  THAT  IS ISSUED IN COMBINATION WITH, IN SUPPORT OF, WITH AN
 ASSIGNMENT TO, OR AS A GUARANTEE FOR,  A  PREARRANGEMENT  AGREEMENT  FOR
 GOODS AND SERVICES, OR OTHER BENEFITS, TO BE PROVIDED AT THE TIME OF AND
 IMMEDIATELY  FOLLOWING  THE DEATH OF THE INSURED. GOODS AND SERVICES MAY
 INCLUDE EMBALMING, CREMATION, BODY PREPARATION, VIEWING  OR  VISITATION,
 COFFIN  OR  URN, MEMORIAL STONE, AND TRANSPORTATION OF THE DECEASED. THE
 STATUS OF THE POLICY OR CERTIFICATE AS PRENEED LIFE INSURANCE IS  DETER-
 MINED AT THE TIME OF ISSUE IN ACCORDANCE WITH THE POLICY FORM FILING.
   § 3. Subsection (d) of section 3208 of the insurance law is amended to
 read as follows:
   (d)  No  person, firm, association, society, or corporation engaged in
 this state in the business of providing  for  the  payment  of  funeral,
 burial  or  other  expenses  of  deceased  members, whether or not it be
 subject to the other provisions of this chapter, and no insurer shall:
   (1) deliver or issue for delivery in this state any contract or policy
 whereby the benefit or any part thereof accruing under such contract  or
 policy, upon the death of such member or of the person insured, shall be
 payable  to  a  designated  or  restricted  funeral  director or funeral
 directing concern or other person engaged in such trade or business,  or
 to any official or designated group of them, PROVIDED, HOWEVER, THAT THE
 INSURED  MAY,  PURSUANT  TO  PARAGRAPH  ONE OF SUBSECTION (B) OF SECTION
 THREE THOUSAND TWO HUNDRED FIVE OF THIS ARTICLE,  IMMEDIATELY  ASSIGN  A
 CONTRACT  OR  POLICY  SO PROCURED OR EFFECTUATED 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; or
   (2) pay any such benefit or any part thereof to any  funeral  director
 or  funeral  directing  concern or other person engaged in such trade or
 business or to any official or designated group  of  them,  without  the
 consent  of  the  person  or  persons entitled to such benefits, SUBJECT
 HOWEVER, TO ANY CONTINGENT ASSIGNMENT, THE CONTINGENCY OF WHICH HAS BEEN
 SATISFIED THROUGH THE PROVISION OF FUNERAL GOODS  AND  SERVICES  BY  THE
 ASSIGNEE; or

 S. 820                              3
 
   (3)  in  any  way deprive the personal representative or family of the
 deceased of the advantages of competition in  procuring  and  purchasing
 supplies and services in connection with the burial of such deceased; OR
   (4) PERMIT 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; OR
   (5) SELL OR OFFER TO SELL ANY  CONTRACT  OR  POLICY  OF  PRENEED  LIFE
 INSURANCE WITH A FACE VALUE GREATER THAN TWENTY THOUSAND DOLLAR, PLUS AN
 ANNUAL  PERCENTAGE  INCREASE  BASED  ON  THE ANNUAL CONSUMER PRICE INDEX
 COMPILED BY THE UNITED STATES DEPARTMENT OF LABOR,  BEGINNING  WITH  THE
 ANNUAL CONSUMER PRICE INDEX ANNOUNCED BY THE UNITED STATES DEPARTMENT OF
 LABOR FOR TWO THOUSAND TWENTY.
   §  4.  Section  3208  of  the insurance law is amended by adding a new
 subsection (e) to read as follows:
   (E) THE FOLLOWING INFORMATION SHALL BE  ADEQUATELY  DISCLOSED  AT  THE
 TIME  AN APPLICATION IS MADE, PRIOR TO ACCEPTING THE APPLICANT'S INITIAL
 PREMIUM OR DEPOSIT, FOR ANY CONTRACT OR POLICY OF  PRENEED  LIFE  INSUR-
 ANCE:
   (1)  THE  FACT  THAT A LIFE INSURANCE POLICY IS INVOLVED OR BE USED TO
 FUND A PREARRANGEMENT;
   (2) THE NATURE OF THE  RELATIONSHIP  AMONG  THE  SOLICITING  AGENT  OR
 AGENTS,  THE  PROVIDER  OF THE FUNERAL OR CEMETERY MERCHANDISE SERVICES,
 THE ADMINISTRATOR AND ANY OTHER PERSON;
   (3) THE RELATIONSHIP OF THE LIFE INSURANCE POLICY TO  THE  FUNDING  OF
 THE PREARRANGEMENT AND THE NATURE AND EXISTENCE OF ANY GUARANTEES RELAT-
 ING TO THE PREARRANGEMENT;
   (4) THE IMPACT ON THE PREARRANGEMENT OF ANY:
   (A) CHANGES IN THE LIFE INSURANCE POLICY INCLUDING BUT NOT LIMITED TO,
 CHANGES  IN  THE  ASSIGNMENT,  BENEFICIARY  DESIGNATION  OR  USE  OF THE
 PROCEEDS;
   (B) PENALTIES TO BE INCURRED BY THE POLICY HOLDER AS A RESULT OF FAIL-
 URE TO MAKE PREMIUM PAYMENTS;
   (C) PENALTIES TO BE INCURRED OR MONIES TO BE RECEIVED AS A  RESULT  OF
 CANCELLATION OR SURRENDER OF THE LIFE INSURANCE POLICY;
   (5)  A  LIST  OF  THE  MERCHANDISE  AND  SERVICES WHICH ARE APPLIED OR
 CONTRACTED FOR  IN  THE  PREARRANGEMENT  AND  ALL  RELEVANT  INFORMATION
 CONCERNING  THE  PRICE OF THE FUNERAL SERVICES, INCLUDING AND INDICATION
 THAT THE PURCHASE PRICE IS EITHER GUARANTEED AT THE TIME OF PURCHASE  OR
 TO BE DETERMINED AT THE TIME OF NEED;
   (6)  THE  FACT  THAT THE APPLICANT HAS THE RIGHT TO SURRENDER THE LIFE
 INSURANCE POLICY, TOGETHER WITH A WRITTEN REQUEST FOR  CANCELLATION,  TO
 THE  INSURER  DURING  A  PERIOD  OF NOT LESS THAN TEN DAYS NOR MORE THAT
 THIRTY DAYS FROM THE DATE THE POLICY WAS DELIVERED TO THE  POLICY  OWNER
 FOR  A REFUND OF PREMIUM PAID PURSUANT TO PARAGRAPH ELEVEN OF SUBSECTION
 (A) OF SECTION THREE THOUSAND TWO HUNDRED THREE OF THIS ARTICLE;
   (7) ALL RELEVANT INFORMATION CONCERNING WHAT OCCURS  AND  WHETHER  ANY
 ENTITLEMENTS  OR  OBLIGATIONS ARISE IF THERE IS A DIFFERENCE BETWEEN THE
 PROCEEDS OF THE LIFE INSURANCE POLICY AND THE AMOUNT ACTUALLY NEEDED  TO
 FUND THE PREARRANGEMENT;
   (8)  ANY  PENALTIES  OR  RESTRICTIONS,  INCLUDING  BUT  NOT LIMITED TO
 GEOGRAPHIC RESTRICTIONS OR THE INABILITY OF THE PROVIDER TO PERFORM,  ON
 THE DELIVERY OF MERCHANDISE, SERVICES OR THE PREARRANGEMENT GUARANTEE;
   (9)  IF  SO, THE FACT THAT A SALES COMMISSION OR OTHER FORM OF COMPEN-
 SATION IS BEING PAID AND THE IDENTITY OF THE INDIVIDUALS OR ENTITIES  TO
 WHOM IS IT PAID.

 S. 820                              4
 
   §  5.  Paragraph  (l)  of  subdivision 1 of section 3450 of the public
 health law, as amended by chapter 560 of the laws of 1998, is amended to
 read as follows:
   (l)  has paid, given, has caused to be paid or given or offered to pay
 or to give to any person a commission, EXCLUDING A COMMISSION AUTHORIZED
 PURSUANT TO ARTICLE TWENTY-ONE OF THE INSURANCE LAW, or  other  valuable
 consideration  for  the  solicitation or procurement, either directly or
 indirectly, of funeral patronage,  or  has  accepted  any  consideration
 (including  without  limitation  a  commission,  EXCLUDING  A COMMISSION
 AUTHORIZED PURSUANT TO ARTICLE TWENTY-ONE OF THE INSURANCE LAW,  rebate,
 or  discount  or  direct or indirect price reduction on merchandise from
 the current value thereof)  from  any  financial  institution  or  trust
 company, or agent thereof, with whom the funeral director deposits funds
 paid for funeral services in advance of need pursuant to subdivision one
 of section four hundred fifty-three of the general business law;
   §  6.  This act shall take effect immediately and shall expire June 1,
 2024 when upon such date the provisions of  this  act  shall  be  deemed
 repealed; provided, however, that:
   a.  the  amendments to paragraphs 2 and 3 of subsection (d) of section
 3208 of the insurance law made by section three of this act  shall  take
 effect  on the same date as the reversion of such paragraphs pursuant to
 section 6 of chapter 557 of the laws of 2001, as amended;
   b. the amendments to paragraph (l) of subdivision 1 of section 3450 of
 the public health law made by section five of this act shall take effect
 on the same date as the reversion of such paragraph pursuant to  section
 6 of chapter 557 of the laws of 2001, as amended; and
   c.  if such reversion pursuant to section 6 of chapter 557 of the laws
 of 2001, as amended, shall have occurred prior to the effective date  of
 this  act,  section  three  and five of this act shall take effect imme-
 diately.

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