N.Y. Insurance Law § 2123: Misrepresentations, misleading statements and incomplete comparisons

§ 2123. Misrepresentations, misleading statements and incomplete

comparisons. (a) (1) No agent or representative of any insurer or health

maintenance organization authorized to transact life, accident or health

insurance or health maintenance organization business in this state,

insurance broker, person who has received a grant from and has been

certified by the health benefit exchange established pursuant to section

1311 of the Affordable Care Act, 42 U.S.C. § 18031, to act as a

navigator, including any person employed by a certified navigator, or

other person, firm, association or corporation, shall issue or circulate

or cause or permit to be issued or circulated, any illustration,

circular, statement or memorandum misrepresenting the terms, benefits or

advantages of any policy or contract of life, accident or health

insurance, any annuity contract or any health maintenance organization

contract, delivered or issued for delivery or to be delivered or issued

for delivery, in this state, or shall make any misleading estimate as to

the dividends or share of surplus or additional amounts to be received

in the future on such policy or contract, or shall make any false or

misleading statement as to the dividends or share of surplus or

additional amounts previously paid by any such insurer or health

maintenance organization on similar policies or contracts, or shall make

any misleading representation, or any misrepresentation, as to the

financial condition of any such insurer or health maintenance

organization, or as to the legal reserve system upon which such insurer

or health maintenance organization operates.

(2) No such person, firm, association or corporation shall make to any

person or persons any incomplete comparison of any such policies or

contracts of any insurer, insurers, or health maintenance organization,

for the purpose of inducing, or tending to induce, such person or

persons to lapse, forfeit or surrender any insurance policy or health

maintenance organization contract.

(3) Any replacement of individual life insurance policies or

individual annuity contracts of an insurer by an agent, representative

of the same or different insurer or broker shall conform to standards

promulgated by regulation by the superintendent. Such regulation shall:

(A) specify what constitutes the replacement of a life insurance

policy or annuity contract and the proper disclosure and notification

procedures to replace a policy or contract;

(B) require notification of the proposed replacement to the insurer

whose policies or contracts are intended to be replaced;

(C) require the timely exchange of illustrative and cost information

required by section three thousand two hundred nine of this chapter and

necessary for completion of a comparison of the proposed and replaced

coverage; and

(D) provide for a sixty-day period following issuance of the

replacement policies or contracts during which the policy or contract

owner may return the policies or contracts and reinstate the replaced

policies or contracts.

(b) Any comparison of the policies or contracts of any such insurer,

insurers or health maintenance organization shall be deemed to be an

incomplete comparison if it does not conform to all the requirements for

comparisons established by regulation.

(c) In the determination, judicial or otherwise, of the incompleteness

or misleading character of any such comparison, it shall not be presumed

that the insured knew or knows of any of the provisions, terms or

benefits contained in any insurance policy or health maintenance

organization contract.

(d) Any agent or representative of an insurer or health maintenance

organization, insurance broker, person who has received a grant from and

has been certified by the health benefit exchange established pursuant

to section 1311 of the affordable care act, 42 U.S.C. § 18031, to act as

a navigator, including any person employed by a certified navigator, or

any other person, firm, association or corporation who, or which, shall

violate any of the provisions of this section and shall knowingly

receive any compensation or commission for the solicitation, sale or

negotiation of any insurance policy, health maintenance organization or

annuity contract induced by a violation of this section shall also be

liable for a civil penalty in the amount received by such violator as

compensation or commission, which penalty may be sued for and recovered

for his, her, or its own use and benefit by any person induced to

purchase an insurance policy, health maintenance organization or annuity

contract by such violation. In addition, such agent, representative,

broker, person, firm, association or corporation violating this section

shall be liable for a civil penalty in the amount of any compensation or

commission lost by any agent, representative or broker as a result of a

violation of this section or the making of such false or misleading

statement, which penalty may be sued for and recovered for his, her, or

its own use and benefit by such agent, representative or broker.

* (e) Except with respect to a credit unemployment insurance policy,

group credit life insurance policy, a group credit health, group credit

accident or group credit health and accident policy, or similar group

credit insurance covering the person of the insured, state chartered

banking institutions, federally chartered banking institutions and any

person soliciting the purchase of or selling insurance on the premises

thereof, must disclose or cause to be disclosed in writing, where

practicable, in clear and concise language, to their customers and

prospective customers who are solicited therefor, that any insurance

offered or sold:

(1) is not a deposit;

(2) is not insured by the federal deposit insurance corporation or the

national credit union share insurance fund, as applicable; and

(3) is not guaranteed by the state chartered banking institution or

the federally chartered banking institution.

* NB Repealed September 10, 2029

* (f) For the purposes of this section, the terms "state chartered

banking institutions" and "federally chartered banking institutions"

shall have the same meanings as set forth in subdivision one of section

twelve-a of the banking law.

* NB Repealed September 10, 2029