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

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following opinion on October 20, 2005, representing the position of the New York State Insurance Department.

Re: Comparative Statutory Analysis of N.Y. Ins. Law § 4224(a)(3) & (b)(3).

Question Presented:

Apart from N.Y. Ins. Law § 4224(a)(3) pertaining to life insurance policies and annuity contracts, and N.Y. Ins. Law § 4224(b)(3) pertaining to accident and health policies, what other, if any, substantive difference exists between the two sections regarding the activities they prohibit?

Conclusion:

Notwithstanding the clause "or agreement as to such policy or contract," which is included within § 4224(a)(3) but not § 4224(b)(3), no other substantive difference exists between § 4224(a)(3) and § 4224(b)(3) regarding the activities they prohibit. Please see the analysis below.

Facts:

There are no presented facts.

Analysis:

N.Y. Ins. Law § 4224(a)(3) (McKinney Supp. 2005) prohibits life insurance companies, savings and insurance banks, agents and brokers from permitting, offering to make or making any life insurance policy or annuity contract that is different than what is plainly expressed in such policy or contract:

(a) No life insurance company doing business in this state and no savings and insurance bank shall:

. . . .

(3) knowingly permit, and no agent thereof and no licensed insurance broker shall offer to make or make, any policy of life insurance or annuity contract or agreement as to such policy or contract other than as plainly expressed in the policy or contract.

(emphasis provided).

N.Y. Ins. Law § 4224(b)(3) (McKinney Sup. 2005) prohibits accident and health insurers, insurance agents, insurance brokers, and their representatives from permitting, offering to make or making any accident and health insurance policy that is different than what is plainly expressed in such policy:

(b) No insurer doing in this state the business of accident and health insurance, as specified in paragraph three of subsection (a) of section one thousand one hundred thirteen of this chapter, and no officer or agent of such insurer and no licensed insurance broker, and no employee or other representative of such insurer, agent or broker shall:

. . . .

(3) knowingly permit or offer to make or make, any policy of accident and health insurance, other than as plainly expressed in the policy.

N.Y. Ins. Law § 4224(a)(3) and § 4224(b)(3) (as recodified without substantive change by L. 1984, c. 367 and c. 805) are based on former N.Y. Ins. Law § 209(1) and § 209(2) (L. 1939, c. 882). N.Y. Ins. Law § 209(1) and § 209(2) (McKinney Supp. 1984) provide the following in pertinent part:

(1) No life insurance company doing business in this state and no savings and insurance bank shall make or permit any unfair discrimination between individuals of the same class and of equal expectation of life, in the amount or payment or return of premiums, or rates charged by it for policies of life insurance or annuity contracts, or in the dividends or other benefits payable thereon, or in any of the terms and conditions thereof; and no such company and no such savings and insurance bank shall knowingly permit, and no agent thereof shall offer to make or make, any contract of life insurance or annuity contract or agreement as to such contract, other than as plainly expressed in the policy issued thereon . . . .

(2) No insurer doing in this state the business of accident and health insurance . . . and no officer or agent of such insurer and no licensed insurance broker, and no employee or other representative of such insurer, agent or broker, shall make or permit any unfair discrimination between individuals of the same class in the amount of premiums, policy fees, or rates charged for any policy or contract of accident and health insurance, or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatsoever; and no such insurer shall knowingly permit, and no such insurer, no agent thereof, no licensed insurance broker, and no employee or other representative of any such insurer, agent or broker shall offer to make or make, any policy or contract of accident or health insurance, other than as plainly expressed in the policy or contract issued thereon . . . .

(emphasis provided).

§ 209(1) is based upon former § 89 of the Insurance Law (L. 1889, c. 228, § 1, as amended by L. 1890, c. 401; L. 1911, c. 249) and § 209(2) is based upon former § 108 of the Insurance Law (L. 1913, c. 155). § 89 provides in pertinent part:

No life insurance corporation doing business in this state shall make or permit any discrimination between individuals of the same class or of equal expectation of life, in the amount or payment or return of premiums or rates charged for policies of insurance, or in the dividends or other benefits payable thereon, or in any of the terms and conditions of the policy; nor shall any such company permit or agent thereof offer or make any contract of insurance or agreement as to such contract other than as plainly expressed in the policy issued thereon . . . .

§ 108 provides in pertinent part:

No insurance corporation authorized to make insurance in this state. . . nor any agent of such corporation, shall make or permit any discrimination between individuals of the same class in the amount of premiums, policy fees, or rates charged for any policy of accident or health insurance, or in the benefits payable thereunder, or in any of the terms or conditions of such insurance contract, or in any other manner whatsoever.

Accordingly, § 89 and § 108, which were promulgated at different times and were not drafted in parallel, are the predecessors of § 209(1) and § 209(2), and § 4224(a)(3) and § 4224(b)(3). Thus, other than § 4224(a)(3) pertaining to life insurance policies and annuity contracts and N.Y. Ins. Law § 4224(b)(3) pertaining to accident and health policies, the textual differences between § 4224(a)(3) and § 4224(b)(3) are of no substantive significance with regard to the activities they prohibit. The textual differences are significant only to the extent that they indicate that former Insurance Law § 89 and § 108 were promulgated at different times.

Moreover, as a matter of general statutory interpretation, § 4224(a)(3)’s clause "or agreement as to such policy or contract" is essentially superfluous and provides no additional substantive effect to § 4224(a)(3)’s prohibition. In other words, the removal of the clause would in no way diminish, enlarge or alter in any manner the practical application and effect of (a)(3)’s prohibition.

For further information you may contact Associate Attorney Kristian Earl Lynch at the New York City Office.