N.Y. Insurance Law § 2324: Rebating and discrimination

§ 2324. Rebating and discrimination. (a) No authorized insurer, no

licensed insurance agent, no licensed insurance broker, and no employee

or other representative of any such insurer, agent or broker shall make,

procure or negotiate any contract of insurance other than as plainly

expressed in the policy or other written contract issued or to be issued

as evidence thereof, or shall directly or indirectly, by giving or

sharing a commission or in any manner whatsoever, pay or allow or offer

to pay or allow to the insured or to any employee of the insured, either

as an inducement to the making of insurance or after insurance has been

effected, any rebate from the premium which is specified in the policy,

or any special favor or advantage in the dividends or other benefit to

accrue thereon, or shall give or offer to give any valuable

consideration or inducement of any kind, directly or indirectly, which

is not specified in such policy or contract, other than any valuable

consideration, including but not limited to merchandise or periodical

subscriptions, not exceeding twenty-five dollars in value, or shall

give, sell or purchase, or offer to give, sell or purchase, as an

inducement to the making of such insurance or in connection therewith,

any stock, bond or other securities or any dividends or profits accrued

thereon, nor shall the insured, his agent or representative knowingly

receive directly or indirectly, any such rebate or special favor or

advantage, provided, however, a licensed insurance agent or a licensed

insurance broker may retain the usual commission or underwriting fee on

insurance placed on his own property or risks, if the aggregate of such

commissions or underwriting fees will not exceed five percent of the

total net commissions or underwriting fees received by such licensed

insurance agent or insurance broker during the calendar year.

(b) Within the meaning of subsection (a) hereof, the sharing of a

commission with the insured shall be deemed to include any case in which

a licensed insurance agent or a licensed insurance broker which is a

subsidiary corporation of, or a corporation affiliated with, any

corporation insured, received commissions for the negotiation or

procurement of any policy or contract of insurance for the insured.

(c) This section shall not prohibit any insurer from equitably

distributing to its policyholders dividends payable from surplus on

earned premiums, nor prohibit the return at any time during the term or

at the termination of the contract of insurance of dividends, savings or

the unused or unabsorbed portion of premiums and premium deposits to

policyholders of a mutual insurer or to subscribers of a reciprocal

insurer, nor prohibit any insurer or insurance agent from paying

commissions to a licensed insurance broker for negotiating a policy or

contract of insurance, nor prohibit any licensed insurance broker from

sharing or dividing a commission earned or received by him with any

other licensed insurance broker or brokers who shall have aided him in

respect to the insurance for the negotiation of which the commission has

been earned or paid.

(d) This section shall not prohibit the making of temporary contracts

of insurance, either by temporary binders or other memoranda, if the

premium applicable to the insurance shall be due and shall be paid for

the time during which the insurance is in force by virtue of the

temporary contract.

(e) This section shall not apply to any policy or contract of

reinsurance nor to any contract or policy of life insurance, accident

insurance or health insurance which is subject to the provisions of

section four thousand two hundred twenty-four of this chapter, nor to

any contract or policy of marine insurance, other than contracts or

policies of automobile insurance, or of marine protection and indemnity

insurance, nor to any insurance contract, or rate of insurance in

connection with any insurance contract either against loss or damage to,

or legal liability in connection with, any property located wholly

outside of this state or any activity carried on outside of this state

or any motor vehicle or aircraft principally garaged and used outside of

this state.

(f) Any person or corporation violating the provisions of this section

shall, in addition to all other penalties provided by law, pay to the

people of this state as a penalty the sum of five hundred dollars for

each such violation.