Close Close

Regulation and Compliance > State Regulation

New York Tightens Key-Person Definition

Your article was successfully shared with the contacts you provided.

Empire State regulators want to keep employers from insuring building maintenance engineers as key persons.[@@]

The New York State Insurance Department has reacted to the recent uproar about “janitors insurance” by adopting an emergency regulation that tightens the state’s definition of “key person.”

The new regulation, Regulation Number 180, allows an employer to insure an employee as a key person only if the employee falls into 1 of 5 categories:

- The employee is 1 of the 5 highest-paid employees.

- The employee owns at least 5% of the company.

- The employee earns at least $90,000 per year.

- The employee is among the highest-paid 35% of all employees.

- The employee is responsible for management decisions, has special skills or relationships with customers, or has some other skill or attribute that would be hard to replace.

New York is tightening the definition of “key person” because it lets companies choose between insuring employees with ordinary company-owned life insurance and key-person COLI.

When employers cover rank-and-file employees with ordinary COLI, they must notify employees about the existence of the insurance, get the employees’ consent and recognize certain termination rights, New York Insurance Superintendent Gregory Serio writes in a statement about the key-person definition regulation.

The notice, consent and termination rights requirements do not apply to key-person COLI.

The new key-person definition “will serve to ensure that employees insured pursuant to the insurable interest provisions of [the key-person insurance law] are key employees,” Serio writes.

New York has posted the emergency regulation and Serio’s statement on the Web at


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.