The Office of General Counsel issued the following opinion on February 12, 2001, representing the position of the New York State Insurance Department.
Re: Web Site Solicitation
Question Presented:
May the owner of a Web site that is unrelated to insurance solicit the users of the Web site for information about their insurance needs, and then sell the information to specific insurance brokers and insurers, with whom the Web site owner has contracted to gather the information, and who would subsequently contact the insureds directly with offers to sell insurance?
Conclusion:
Under the proposed activity, the Web site owner would be acting as an insurance agent or broker for which licensing would be required.
Facts:
An operator of a Web site unrelated to the insurance industry is interested in using a separate portion of its Web site to solicit its users to provide information about their insurance needs via an optional questionnaire. The Web site operator proposes to gather the information from the potential insurance purchasers and sell the information to specific insurance brokers and insurers, for whom the operator would be gathering the information. The brokers and insurers would subsequently contact the individuals directly with offers to sell insurance. The Web site operator stated that it would not be selling, producing, negotiating, or soliciting with respect to any particular insurance policy, contract or plan. Its role would be to gather and sell information about potential insurance purchasers. The brokers and the insurers would compensate the Web site operator in one of three ways, depending upon the individual agreement. The broker or the insurer would either pay the client: (i) a fixed monthly fee based upon the number of questionnaires submitted, (ii) per lead for each questionnaire submitted, or (iii) a percentage of the proceeds from any resulting sale of a policy. The Web site operator inquired whether the proposal would require licensing in New York.
Analysis:
N.Y. Ins. Law § 2102 (McKinney 2000) provides, in pertinent part, that no person, firm, association or corporation shall act as an insurance agent or broker in this state without a license.
N.Y. Ins. Law § 2101(a) (McKinney 2000) defines an agent, in pertinent part, to mean any authorized or acknowledged agent of an insurer, or any sub-agent or representative of an agent, who acts as such in the solicitation of, negotiation for, or procurement or making of, an insurance contract. N.Y. Ins. Law § 2102(c) (McKinney 2000) defines a broker, in pertinent part, to mean any person, firm, association or corporation, who or which for any compensation, commission or other thing of value, acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance contract, or in placing risks, or taking out insurance, on behalf of an insured other than itself, or on behalf of any licensed insurance broker. None of the exceptions enumerated in § 2101(a) or (c) are relevant to this discussion.
Additional exceptions from acting as an agent or broker were added to the Insurance Law when it was amended last year to permit referrals to a person licensed as an insurance agent or broker under certain circumstances. N.Y. Ins. Law § 2115 (McKinney 2000, as amended by Section 5 of Chapter 418 of the Laws of 2000) provides, in relevant part:
(a)(1) No insurer doing business in this state, and no agent or other representative thereof, except as provided in subsection (b) hereof, shall pay any commission or other compensation to any person, firm, association or corporation for acting as insurance agent in this state, except to a licensed insurance agent of such insurer or to a person described in paragraph two or four of subsection (a) of section two thousand one hundred one of this article or except as provided in subsection (c) of this section. For the purposes of this section, "acting as insurance agent" shall not include the referral of a person to a licensed insurance agent or broker that does not include a discussion of specific insurance policy terms and conditions and where the compensation for referral is not based upon the purchase of insurance by such person.
Section 2115 applies to property/casualty insurance agents. N.Y. Ins. Law § 2114 (McKinney 2000, as amended by Section 4 of Chapter 418 of the Laws of 2000) in regard to life and accident and health insurance agents, and N.Y. Ins. Law § 2116 (McKinney 2000, as amended by Section 6 of Chapter 418 of the Laws of 2000) in regard to insurance brokers, contain similar provisions.
Under the Web site operators proposal, it would be acting as an insurance agent or broker for which licensing is required; it would not merely be referring potential insureds to a licensed agent or broker, as the amended law now permits. Nor would the Web site operator merely be selling customer lists to a licensee for the licensee to solicit the potential insured. Rather, the Web site operator would be actively soliciting insurance by gathering the information on behalf of specific insurers with which it had entered into financial arrangements, and as such becomes their agent. When acting in regard to brokers, the statute precludes an unlicensed person from acting or aiding in any manner in soliciting, negotiating, or procuring insurance; the Web Site operator would be soliciting its users to obtain insurance. The Web site operator would be acting as a middleman in the insurance transaction by affirmatively suggesting that insurance be obtained from an insurer or broker with whom the operator has an existing relationship, and by collecting information from the users for the purpose of selling insurance. The fact that the Web site operator would not be naming a specific broker or insurer does not eliminate the need for licensing since it has compensated relationships with brokers and insurers, and would be engaging in such activity on their behalf.
Circular Letter No. 5 (2001), which addresses permissible activities on Web sites, may be of interest and may be viewed at: http://www.ins.state.ny.us/year01.htm
For further information you may contact Supervising Attorney Paul A. Zuckerman at the New York City Office.