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

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on December 14, 2004, representing the position of the New York State Insurance Department.

Re: NYS Partnership for Long Term Care Training Requirements

Question Presented:

As of April 1, 2005 all agents must receive mandatory training and certification to sell New York State Partnership for Long Term Care products. Are managing general agents also required to receive New York State Partnership for Long Term Care training and certification to receive override commissions?

Conclusion:

The mandatory training and certification that will be required as of April 1, 2005 to sell New York State Partnership for Long Term Care products is not a requirement of the New York State Insurance Law or regulations. Any issues concerning this requirement should be directed to the insurer providing New York State Partnership for Long Term Care products, the New York State Department of Health, and the New York State Partnership for Long Term Care.

Facts:

As of April 1, 2005 all agents must receive mandatory training and certification to sell the New York State Partnership for Long Term Care products. The managing general agent will not be selling New York State Partnership for Long Term Care products but its sub-agents will be selling the products.

Analysis:

New York State Insurance Department requirements specifically applicable to non-Partnership long-term care insurance policies/certificates are set forth in N.Y. Comp. Codes R. & Regs. tit.11, §§ 52.12, 52.13, 52.16(b), 52.25, 52.29 and 52.65 (West, WESTLAW through August 15, 2004)(Regulation 62). Some of these requirements also pertain to Partnership long term care insurance policies/certificates where N.Y. Comp. Codes R. & Regs. tit 11, Part 39. does not address an issue. Generally, New York State Insurance Department requirements pertaining specifically to Partnership long term care insurance policies/certificates are set forth in N.Y. Comp. Codes R. & Regs. tit 11, Part 39 (Regulation 144).

The New York State Insurance Department’s general limitations on commissions that may be paid to an insurance agent or broker for sale of a non-Partnership or Partnership long term care insurance policy/certificate are set forth in N.Y. Comp. Codes R. & Regs. tit 11, § 52.25(e)(West, WESTLAW through August 15, 2004):

(e) Permitted compensation arrangements.

    1. An insurer may provide commissions or other compensation to an agent or other representative for the sale of a long term care insurance, nursing home insurance only, home care insurance only, or nursing home and home care insurance policy or certificate at a higher level or amount during the first year the policy or certificate is in effect than is paid for selling or servicing the policy or certificate during the second year. However, all proposed first year commissions or compensation as well as renewal commissions or compensation shall be subject to review and approval to ensure that they are reasonable, not excessive, and not inconsistent with expected loss ratio requirements.
    2. The commission or other compensation provided in subsequent (renewal) years must be the same as that provided in the second year or period and must be provided for a reasonable number of renewal years.
    3. In a replacement situation no insurer shall provide compensation to its agents or other producers and no agent or producer shall receive compensation greater than the renewal compensation payable by the replacing insurer on renewal policies.
    4. For purposes of this section, compensation includes pecuniary or nonpecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate including but not limited to bonuses, gifts, prizes, awards and finders fees.

The New York State Insurance Department has certified the New York State Department of Health as a continuing education credit provider and has certified the agent certification training to sell New York State Partnership for Long Term Care products to qualify for 8 continuing education credits. The continuing education credits received by taking this training may be used by licensed agents to meet New York State Insurance Department continuing education requirement.

However, the New York State Insurance Law and regulations do not require training and certification to receive commissions for selling New York State Partnership for Long Term Care products. It is our understanding that the requirement for training and certification to sell New York State Partnership for Long Term Care insurance products originates from the governance process of the New York State Partnership for Long Term Care directly involving participating Partnership insurers and the New York State Department of Health. It is also our understanding that the requirement for training and certification to sell New York State Partnership for Long Term Care insurance products involves a contractual arrangement between the New York State Department of Health and participating Partnership insurers. Therefore, any issues concerning this particular training and certification requirement should be directed to the insurer providing New York State Partnership for Long Term Care products, the New York State Department of Health, and the New York State Partnership for Long Term Care.

For further information you may contact Special Counsel Athan Shinas at the Albany Office.