OGC Op. No. 04-04-20
This Office of General Counsel issued the following opinion on April 22, 2004, representing the position of the New York State Insurance Department.
Re: Outbound Calls & Referrals by Non-Licensees
Question Presented:
May non-licensees, including telemarketing firms, initiate contact with prospective insureds (by making outbound telephone calls to such prospective insureds) to determine their interest in speaking to licensed insurance agents and brokers about insurance products if there is no discussion of specific insurance policy terms and conditions, and the non-licensees compensation is not based on the purchase of insurance?
Conclusion:
Yes. Non-licensees, including telemarketing firms, may initiate contact with prospective insureds (by making outbound telephone calls to such prospective insureds) to determine their interest in speaking to licensed insurance agents and brokers about insurance products if there is no discussion of specific insurance policy terms and conditions, and the non-licensees compensation is not based on the purchase of insurance.
Facts:
No facts are provided.
Analysis:
Regarding the payment of commissions to life, accident and health insurance agents, N.Y. Ins. Law § 2114(a)(4) (McKinney Supp. 2004) provides:
Services of the kind specified in this subsection 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.
Regarding the payment of commissions to property/casualty insurance agents, N.Y. Ins. Law § 2115(a)(1) (McKinney Supp. 2004) provides:
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.
Regarding the payment of commissions to insurance brokers, N.Y. Ins. Law § 2116 (McKinney Supp. 2004) provides:
No insurer authorized to do business in this state, and no officer, agent or other representative thereof, shall pay any money or give any other thing of value to any person, firm, association or corporation for or because of his or its acting in this state as an insurance broker, unless such person, firm, association or corporation is authorized so to act by virtue of a license issued or renewed pursuant to the provisions of section two thousand one hundred four of this article. For the purposes of this section, "acting as insurance broker" 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.
A "referral" encompasses the act of a non-licensee, including a telemarketing firm, initiating contact with prospective insureds (by making outbound telephone calls to such prospective insureds) to determine their interest in speaking to licensed insurance agents and brokers about insurance products if there is no discussion of specific insurance policy terms and conditions, and such non-licensees compensation is not based on the purchase of insurance. The non-licensee may neither compare various plans or policies with the prospective insured, nor discuss, or give advice about, the prospective insureds specific insurance needs. In addition, please note that the Department considers the totality of the non-licensees conduct when determining whether the communication between the non-licensee and the prospective insured constitutes a referral, or requires the non-licensee to become licensed as an agent or broker.1
For further information you may contact Senior Attorney Kristian Earl Lynch at the New York City Office.
1 Licensees should be aware that N.Y. Comp. Codes R. & Regs. tit 11, Pt. 52 (Regulation 62) and N.Y. Comp. Codes R. & Regs. tit 11, Pt. 360 (Regulation 145) provide additional restrictions on communications regarding Medicare supplement insurance.