Clarifies who may sue an insurer for violations related to misrepresentations, misleading statements and incomplete comparisons

Showing the cosponsors who are on Agora, A to Z. The official record may list more.

• Democratic4

Shown in neutral colors by design; Agora is non-partisan.

◆ The sponsor's argument

Why Jamaal Bailey says this is needed

States have been primary prudential regulators of the business of insur- ance since the 1800's. Each state has its own department, insurance laws and regulations, and each has an interest in regulating transactions that take place within its borders. As the financial capital of the world, New York is home to many of the world's largest insurance compa- nies, and its regulatory system has firmly established the New York State Department of Financial Services as the pre-eminent regulator of insurance in the country. In 1945, Congress endorsed this state-specific approach by enacting the McCarran-Ferguson Act, which leaves insurance regulation up to each state. Since the passage of McCarron-Ferguson, New York courts have generally articulated a presumption against extraterritorial application of New York's laws. While this has been generally understood and recog- nized by the DFS and the New York courts, a recent contrary federal court ruling introduced unwanted ambiguity that this legislation is designed to correct. This bill reinforces the well understood reading of Section 4226 by adding language to make it clear that the section is only applicable to policies or contracts purchased and delivered or issued for delivery in New York. The consequences of any other reading of this statute are far reaching as any insurer that is authorized to do business in New York would find itself subject to litigation under Section 4226 for all of the policies and illustrations it issues outside New York in connection with sales that occur wholly outside of New York. Layering New York law on top of the law of the state where the policy was issued would intro- duce redundant jurisdiction and potential oversight, and would inject substantial and unnecessary uncertainty into the state-based system of insurance regulation. This type of conflict jeopardizes the state-based system, and potentially undermines New York's authority, by encouraging Congress to act to displace the state-based system through federal intervention. By way of example, if this section of New York law is not clarified, so long as a life insurer is authorized to do business in New York, it is subject to liability under Section 4226 for all of its life insurance policies and illustrations issued across the country-even those issued outside of New York. A California insurer would be subject to liability under New York Insurance Law Section 4226 for illustrations issued in California or Texas, in connection with policies sold in those states. New York has little interest in regulating stich transactions, and significantly less of an interest than the states where those trans- actions occurred. New York does have a strong interest in maintaining the current state based regulatory regime for the insurance market. Enacting this bill will strengthen that system and help to ensure the federal government does not act.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.