2023 New York Laws › ISC - Insurance › Article 25 - Prohibitions Against Controlled Business › 2502 - Designation of Particular Insurer, Agent or Broker in Property Financing Transactions and Other Unfair Practices.

* §  2502.  Designation  of  particular  insurer,  agent  or broker in
property financing transactions and other unfair  practices.  (a)(1)  No
person,  firm,  or  corporation engaged in the business of financing the
purchase of real or personal property, lending  money  on  the  security
thereof,  or  servicing  a  mortgage  thereon, and none of its trustees,
directors, officers, agents or other  employees,  shall  require,  as  a
condition  precedent  to  financing any such purchase or making any such
loan or renewing or extending any such loan or  mortgage  or  performing
any  other  act  in  connection  therewith,  that  the  person,  firm or
corporation for whom the transaction is undertaken negotiate any  policy
of  insurance  or  renewal  thereof  covering  such  property  through a
particular insurance company, agent or broker.
(2) State  chartered  banking  institutions  and  federally  chartered
banking  institutions shall not extend credit, lease or sell property of
any kind, or furnish any services, or fix or vary the consideration  for
any  of the foregoing, on the condition or requirement that the customer
obtain insurance from such institution, its affiliate or subsidiary,  or
a  particular  insurer,  agent  or  broker, provided, however, that this
prohibition shall not prevent such  institution  from  engaging  in  any
activity  described  in  this subdivision that would not violate section
106 of the Bank Holding Company Act Amendments of 1970,  as  interpreted
by   the  Board  of  Governors  of  the  Federal  Reserve  System.  This
prohibition shall not prevent a state chartered banking  institution  or
federally  chartered  banking institution from informing a customer that
insurance is required in order to obtain a loan or credit, that loan  or
credit  approval  is  contingent  upon  the  customer's  procurement  of
acceptable  insurance,  or  that  insurance  is  available   from   such
institution;   provided,  however,  that  the  state  chartered  banking
institution or the federally chartered banking  institution  shall  also
inform  the  customer  in  writing  that  his or her choice of insurance
provider shall not affect the institution's credit  decision  or  credit
terms in any way. Such disclosure shall be given prior to or at the time
that  any  such  institution or person selling insurance on the premises
thereof solicits the purchase of any insurance from a customer  who  has
applied for a loan or extension of credit.
(b)  This  section  shall  not  prevent  the  exercise of any right to
approve or disapprove of the insurance company  selected  to  underwrite
the insurance, except that in exercising such right, whether pursuant to
this section or any other law, such person, firm, or corporation and its
trustees, directors, officers, agents and employees shall not:
(1) discriminate against an insurance company which issues a policy of
insurance  that  is non-assessable as to any designated mortgagee or any
secured creditor designated as a loss payee  because  of  the  insurer's
type of organization, or
(2) refuse to accept an insurance policy because it was not negotiated
through a particular insurance company, agent or broker.
(c)  No  such  person,  firm  or corporation shall, in connection with
compliance with a covenant to insure, require that the person,  firm  or
corporation for whom the purchase of the property is financed or to whom
a  mortgage  loan  is  made  or who owns the property shall pay a fee or
other charge as a condition to accepting, during the unexpired term of a
policy then held, another policy of insurance in substitution  therefor.
No  state  chartered  banking institution or federally chartered banking
institution shall require a  debtor,  insurer,  or  insurance  agent  or
broker  to  pay  a  separate  charge  in connection with the handling of
insurance that is required in connection with a loan or other  extension
of credit or the provision of another traditional banking product solely
because  the insurance is being provided by an insurance agent or broker

which is not  the  state  chartered  banking  institution  or  federally
chartered banking institution or any subsidiary or affiliate thereof.
(d)  Except  with  respect  to  a  flood  insurance policy or 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,  when  a  customer obtains insurance and credit from a
state chartered  banking  institution  or  federally  chartered  banking
institution,  then  the  credit  and  insurance  transactions  shall  be
completed through separate documents. The expense of insurance  premiums
may  not  be  included  in  the  primary  credit transaction without the
express written consent of the customer.
(e) Any state chartered banking  institution  or  federally  chartered
banking  institution  and  any  subsidiary or affiliate thereof which is
licensed to sell insurance in this state  shall  maintain  separate  and
distinct  books  and  records  relating  to  its insurance transactions,
including all files relating to and reflecting consumer complaints,  and
such  insurance  books  and  records  shall  be  made  available  to the
superintendent for inspection upon reasonable notice.
(f) For the purposes of  this  section,  the  terms  "state  chartered
banking institution" and "federally chartered banking institution" shall
have  the  same  meanings  as  set  forth  in subdivision one of section
twelve-a of the banking law.
* NB Effective until September 10, 2024
* § 2502. Designation  of  particular  insurer,  agent  or  broker  in
property  financing  transactions.  (a)  No  person, firm or corporation
engaged in the business of financing the purchase of  real  or  personal
property, lending money on the security thereof, or servicing a mortgage
thereon,  and none of its trustees, directors, officers, agents or other
employees, shall require, as a condition precedent to financing any such
purchase or making any such loan or renewing or extending any such  loan
or  mortgage  or  performing any other act in connection therewith, that
the person, firm or corporation for whom the transaction  is  undertaken
negotiate  any  policy  of  insurance  or  renewal thereof covering such
property through a particular insurance company, agent or broker.
(b) This section shall not  prevent  the  exercise  of  any  right  to
approve  or  disapprove  of the insurance company selected to underwrite
the insurance, except that in exercising such right, whether pursuant to
this section or any other law, such person, firm, or corporation and its
trustees, directors, officers, agents and employees shall not:
(1) discriminate against an insurance company which issues a policy of
insurance that is non-assessable as to any designated mortgagee  or  any
secured  creditor  designated  as  a loss payee because of the insurer's
type of organization, or
(2) refuse to accept an insurance policy because it was not negotiated
through a particular insurance company, agent or broker.
(c) No such person, firm or  corporation  shall,  in  connection  with
compliance  with  a covenant to insure, require that the person, firm or
corporation for whom the purchase of the property is financed or to whom
a mortgage loan is made or who owns the property  shall  pay  a  fee  or
other charge as a condition to accepting, during the unexpired term of a
policy then held, another policy of insurance in substitution therefor.
* NB Effective September 10, 2024