New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on January 18, 2000, representing the position of the New York State Insurance Department.

Re: New York State Insurance Department ("Department") Circular Letter No. 7 (1996).

Question Presented:

Whether the 1997 amendments to N.Y. Ins. Law § 4228 (McKinney 1985) that repealed § 4228 and replaced it with a "new" § 4228 that became effective on January 1, 1998 "superseded" Department Circular Letter No. 7 (1996)?

Conclusion:

The term "superseded" means to replace. Department Circular Letter No. 7 (1996) is advisory (i.e., not mandatory) and its purpose was to notify interested persons about the Department's proposed Regulation concerning insurance agents' fund based compensation connected with the sale of various annuities. That proposed Regulation

was not promulgated. Accordingly, the "new" N.Y. Ins. Law § 4228 (McKinney 1985) rendered Department Circular Letter No. 7 (1996) moot because § 4228(e)(1) now provides the statutory codification of the subject matter in that proposed Regulation.

Facts:

N.Y. Ins. Law § 4228(e)(1) (McKinney 1985) provides the statutory codification of the 1997 amendments to § 4228 concerning fund based compensation to insurance agents connected with the sale of life insurance and annuities. Fund based compensation relates to a percentage of the investment component of a life insurance and annuity product. Fund based compensation may be distinguished from commission based compensation that is related to a percentage of the premium of a life insurance and annuity product.

Analysis:

Department Circular Letter No. 7 (1996) was rendered moot by 1997 amendments to N.Y. Ins. Law § 4228 (McKinney 1985) that repealed § 4228 and replaced it with a "new" § 4228 that became effective on January 1, 1998.

For further information you may contact Senior Attorney Robert Freedman at the New York City Office.