N.Y. Comp. Codes R. & Regs. tit. 11 § 185.9

Current through Register Vol. 46, No. 50, December 11, 2024

Section 185.9 - Commissions and fees or other allowances

(a) An insurer issuing group credit life and group credit accident and health insurance policies may pay commissions on said business only to the insurance agent or broker who solicits the master group policy and/or is designated the agent or broker of record. The general agent or agent or broker of record may not be:

(1) the policyholder or any of its employees, officers or directors;

(2) a trustee, trustees or agent or any of their employees, officers or directors, in the event that a group credit insurance policy is issued to a trustee, trustees or agent designated by two or more creditors or vendors; or

(3) the creditor or vendor member of a trust or agency or any of its employees, officers or directors.

The aforesaid general agent or agent or broker of record may share commissions only with another agent or broker who aids in the solicitation of the master policy but in no event, either directly or indirectly, with any of the above enumerated parties.

(b) The agent or broker of record and/or any agent or broker sharing commissions for solicitation of the master policy of credit insurance, as authorized by subdivision (a) of this section, shall be licensed in accordance with Insurance Law, section 2103 or section 2104.

(c) Fees or other allowances shall include administration fees, service fees or any other payment of a similar nature payable by an insurer to an insurance agent or broker or to any other person, firm, association or corporation. Fees may be paid only for such services as are performed on behalf of the insurer and only in such amounts as would reflect the reasonable cost of performing such services. Fees may only be paid to such party or parties, including the policyholder or creditor, who perform the services. The amount of service fees must be justified by the insurer and, at least initially, stated as a dollar amount per transaction that may then be related as a percentage of premium to approximate the aggregate service fee. Other approximations may be used subject to the approval of the superintendent. Services for which fees may be payable include but are not limited to, the following: computation of premium, collection of premiums, issuance of certificates, making refunds and processing claims.

(d) In no event shall the aggregate of commissions and all service fees be such as to render the policy not self-supporting based on the loss ratio requirements underlying the calculation of the rates, along with reasonable assumptions as to expenses.

(e) Each insurer shall file with the superintendent its schedule of rates of commissions, and other fees or allowances to agents and brokers pertaining to the solicitation or sale of credit insurance and of fees or allowances, exclusive of amounts payable to persons who are in the regular employ of the insurer other than as agent or broker, to any individuals, firms or corporations pertaining to the service or administration of the credit insurance. Such schedules must separate compensation for solicitation or sale from compensation for services or administration of the credit insurance. An insurer may revise such schedules from time to time, and shall file such revised schedules with the superintendent. No insurer shall pay an amount of compensation other than as filed with the superintendent.

(f) Fees for service or administration may be payable to a policyholder or creditor to the extent the policyholder or creditor performs such service on behalf of the insurer, and must be set forth in the group policy. Fees for service or administration may not exceed the amounts set forth in the following paragraphs of this subdivision.

(1) For credit life insurance where there are identifiable charges for periods of insurance in excess of 12 months, the following amounts are the maximum per month per $1,000 of insured indebtedness:

SERVICE	Single premium not packaged	Single premium packaged
Enrolling debtor	.051	.035
Making refunds	.010	.007
Processing claims	.005	.005
General administration	.013	.011
Settling claims	.005	.005
Electronic records transfer	.010	.010

These amounts may be expressed as a percentage of the actual written premium. Any fee paid on a portion of premium that is refunded or credited to the debtor shall be returned to the insurer.

(2) For credit life insurance not subject to section 185.14 of this Part, where all identifiable charges are for periods of insurance of 12 months or less, the following amounts are the maximum per month per $1,000 of insured indebtedness:

SERVICE	Not packaged	Packaged
Enrolling debtor	.060	.045
General administration	.035	.025
Processing claims	.007	.007
Settling claims	.007	.007
Electronic records transfer	.010	.010

These amounts may be expressed as a percentage of the actual written premium.

(3) For credit life insurance subject to section 185.14 of this Part, the following are the maximum percentages of prima facie written premium:

SERVICE	FEE
Enrolling debtor	5.00%
General administration	3.00%
Processing claims	.25%
Settling claims	.25%
Electronic records transfer	1.00%
Annual distribution of premium charge adjustments	1.5%

(4) For credit accident and health insurance on closed-end loans where there is an identifiable charge for a period of insurance in excess of 12 months and the coverage is not packaged, the following are the maximum percentages of prima facie written premium:

SERVICE	After 14th day of disability, retroactive to first day of disability	After 14th day of disability	After 30th day of disability, retroactive to first day of disability	After 14th day of disability
Enrolling debtor	6.1%	7.8%	6.5%	9.0%
Making refunds	0.9%	1.0%	0.9%	1.2%
Processing claims	1.4%	1.8%	1.6%	2.1%
General administration	1.2%	1.5%	1.3%	1.6%
Settling claims	3.4%	3.2%	3.4%	3.1%
Electronic records transfer	1.7%	2.2%	1.8%	2.5%

For credit accident and health insurance that is packaged, fees which are 85 percent of the above table may be paid.

(5) For credit accident and health insurance, not subject to section 185.14 of this Part, where all identifiable charges are for periods of insurance of 12 months or less and the coverage is not packaged, the following are the maximum percentages of prima facie written premium:

SERVICE	After 14th day of disability, retroactive to first day of disability	After 14th day of disability	After 30th day of disability, retroactive to first day of disability	After 14th day of disability
Enrolling debtor	5.8%	6.1%	5.9%	7.4%
Processing claims	1.2%	1.2%	1.3%	1.5%
General administration	3.2%	3.0%	3.2%	3.4%
Settling claims	2.8%	2.2%	2.7%	2.3%
Electronic records transfer	1.4%	1.5%	1.4%	1.8%

For credit accident and health insurance that is packaged, fees which are 85 percent of the above table may be paid.

(6) For credit accident and health insurance subject to section 185.14 of this Part, the following are the maximum percentages of written premium:

SERVICE	FEE
Enrolling debtor	3.50%
General administration	2.50%
Processing claims	.25%
Settling claims	.25%
Electronic records transfer	1.00%

(7) For credit accident and health insurance as described in section 185.4(a)(3)(ii) of this Part, the following are the maximum percentages of prima facie written premium:

SERVICE	FEE
Enrolling debtor	5.40%
General administration	2.50%
Processing claims	1.10%
Settling claims	1.60%
Electronic records transfer	1.30%

(g) Compensation for other premium arrangements or plans of insurance may be submitted for approval on a case-by-case basis.

(h) Each insurer shall file or refile its schedules of compensation no later than the dates on which new premium rates are to be filed in accordance with section 185.7(k) and (l) of this Part, for classes of policies to which such compensation schedules apply and shall be implemented on the same dates as such new filed premium rates are implemented.

(i) Any fee paid on a portion of premium that is refunded or credited to the debtor shall be returned to the insurer.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 185.9