Insurance Circular Letter No. 4 (2026)

July 8, 2026

TO:  All Authorized Life Insurance Companies and Licensed Fraternal Benefit Societies and Licensed Life Insurance Agents and Brokers

RE:  Amendments to Insurance Law § 4228 Regarding Limitations on Expenses for Life Insurance and Annuity Business

STATUTORY AND REGULATORY REFERENCES:  Insurance Law § 4228, 11 NYCRR 12 (Insurance Regulation 50), and 11 NYCRR 243 (Insurance Regulation 152)

I. Purpose

The purpose of this Circular Letter is to advise all authorized life insurance companies and licensed fraternal benefit societies (collectively, “companies”) and licensed life insurance agents and insurance brokers of amendments to Insurance Law § 4228 made by Chapter 427 of the Laws of 2025 (“Chapter 427”), which took effect September 26, 2025, and to provide guidance on implementing these amendments.

II. Discussion

A. Compensation Limits

Insurance Law § 4228 sets forth limitations on expenses for life insurance and annuity business.  Prior to Chapter 427, § 4228(e)(2)(F) exempted from the compensation limits set forth in § 4228(d) and (e), salaried employees whose principal function is “other than” the sale of new policies or contracts and not the supervision of agents or agencies, if no more than 25% of their compensation is related to “sales results.”  Chapter 427 changed “other than” to “not” and changed “sales results” to “business personally produced by such employees.”  For example, while a salaried employee who otherwise meets the Insurance Law § 4228(e)(2)(F) exemption requirements and who works in the office of general counsel at a company may be compensated based on the overall sales results of the company, the compensation limits in § 4228 would not generally apply to such employee. Similarly, the compensation limits in § 4228 would not apply to someone who otherwise meets the Insurance Law § 4228(e)(2)(F) exemption requirements and who is compensated based on regional sales results.

B. Selling Expenses

Chapter 427 amended Insurance Law § 4228(c)(2)(D) and (F) to remove from the calculation of total selling expenses sales support functions, including, but not limited to, advanced underwriting support, proposals, illustrations, competition aids and related systems and equipment, including personal computers, owned by the company and used in the sales process.  It also removes from total selling expenses the expenses of sales conferences, training meetings, and awards paid for by the company and replaces those expenses with travel expenses, meals, and entertainment paid for by the company.

C. Training Allowance Subsidies and Awards and Prizes

Chapter 427 amended Insurance Law § 4228(e)(3)(C)(i) to state in relevant part that an insurance agent is eligible to receive a training allowance subsidy if the insurance agent has earned less than $40,000 from the sale of policies and contracts cumulatively during the three years prior to such agent’s appointment.  It also added a new § 4228(e)(3)(C)(iii) to permit a training allowance subsidy if less than 25% of such agent’s worktime during each of the three years prior to appointment was allocated to individual life and annuity sales.  However, Chapter 427 did not amend § 4228(e)(3)(C)(ii), which allows a training allowance subsidy if less than 25% of an agent’s earned income has been received from the sale of policies and contracts during each of the three years prior to appointment.

The company may establish that an agent is eligible to receive a training allowance subsidy by requiring the agent to attest that such agent meets one of the criteria set forth in Insurance Law § 4228(e)(3)(C) prior to appointment.  Such attestation will be sufficient to establish eligibility, provided the company does not have actual knowledge to reject the attestation based on the agent’s credentials and background. 

Any attestations submitted by an insurance agent to a company pursuant to Insurance Law § 4228(e)(3)(C) should identify which of the three criteria the insurance agent meets.  Companies must maintain attestations in accordance with 11 NYCRR 243 (Insurance Regulation 152) and be prepared to provide a copy to the Department in connection with examination or upon the Department’s request.

Chapter 427 also increases the training allowance subsidies an insurance agent may receive from the company and amended Insurance Law § 4228(e)(6) to double the statutory limits on awards and prizes that a company may pay to an insurance agent or insurance broker.

D. Certification of Compliance

Chapter 427 amended Insurance Law § 4228(f)(2) to clarify that annual reporting by a company to the Department regarding compliance with Insurance Law § 4228(c) (total selling expenses) must be on an aggregate basis.  The effect of this change is that the officer of the company does not have to certify each technical component of the calculations backing up the schedule referenced in § 4228(f)(2).

E. Overpayments

Chapter 427 amended Insurance Law § 4228(f)(5) to extend the number of days, from 30 days to 90 days, that a company must notify the Department when making one or more overpayments that exceed any limit in Insurance Law § 4228(d) and where the company is unable to recover such overpayments.  Chapter 427 further amended this section to dispense with the notification requirement if the company has made reasonable efforts to recover the overpayments from insurance agents or insurance brokers who are no longer appointed by the company.

Companies must maintain a record of their reasonable efforts to recover overpayments from insurance agents or insurance brokers no longer appointed by the company in accordance with 11 NYCRR 243 and be prepared to provide the record to the Department in connection with an examination or upon the Department’s request.

III. Conclusion

The Department expects companies to review their procedures and certifications and update them, as needed, in accordance with Chapter 427 and this Circular Letter.

Please direct any questions regarding this Circular Letter to [email protected].