New York Senate Bill S05238

New York 2025-2026 Regular Session

• Introduced: 2/20/25
• Refer: 2/20/25
• Refer: 1/7/26

Caption

Relates to replacement of individual life insurance policies or annuity contracts; amends provisions relating to misrepresentations and misleading statements; requires replacements regulation be consistent with policies of the national association of insurance commissioners.

Summary

S05238 amends New York’s Insurance Law provisions governing misrepresentations and misleading statements in the sale and replacement of life insurance and annuity products. The bill updates sections 2123 and 4226 to expressly address the replacement of individual life insurance policies and individual annuity contracts, and it requires those replacements to follow standards set by regulation of the Superintendent of Financial Services. Those regulations must, to the greatest extent practicable and in the public interest, align with the National Association of Insurance Commissioners’ replacement model rules. The bill also specifies that replacement regulations must define what counts as a replacement, set disclosure and notification procedures, require notice to the insurer whose policy is being replaced, and provide a 60-day period after issuance during which the policyholder may return the new policy or contract and reinstate the old one. It removes language that specifically required the exchange of illustrative and cost information and the prior “incomplete comparison” framework, while retaining prohibitions on misleading representations intended to induce a lapse, forfeiture, or surrender of coverage. The bill takes effect 180 days after becoming law.

Impact

If enacted, the bill would revise the Insurance Law’s consumer-protection rules for life insurance and annuity replacements, affecting insurers, insurance agents, brokers, and other representatives involved in replacement transactions. It would give the Superintendent of Financial Services clearer authority to regulate replacement practices and would require those rules to track NAIC replacement standards as closely as practicable. Policyholders would gain an explicit 60-day rescission/reinstatement window for replacement contracts, while insurers would receive mandatory notice when their policies are targeted for replacement.

Sentiment

Based on the bill text and available context, the measure appears to be framed as a consumer-protection and regulatory-clarification bill rather than a controversial policy overhaul. The caption and amendments suggest an intent to modernize replacement rules and reduce misleading sales practices in life insurance and annuity transactions. No committee transcript or vote record is available here, so there is no documented recorded debate or opposition in the provided materials.

Contention

The main substantive issue is how replacement transactions should be regulated and how much detail should be mandated by statute versus left to the Superintendent’s regulations. The bill removes explicit statutory language about exchanging illustrative and cost information and about deeming certain comparisons “incomplete,” which could be viewed as simplifying the law but also as reducing specificity. Potential points of contention would likely involve insurers and brokers concerned about compliance burdens versus consumer advocates favoring stronger disclosure, notice, and reinstatement protections for policyholders.