OGC Opinion No. 06-01-27
The Office of General Counsel issued the following opinion on January 11, 2006, representing the position of the New York State Insurance Department.
Re: Agency Advertisement
Questions Presented:
1) Is a proposed advertisement that states that the insurance agency "provides affordable policies for all trade contractors" in compliance with the requirements set forth in the applicable N.Y. Insurance Laws and Regulations regarding advertisements of insurance agents and brokers?
2) May the advertisement contain a statement stating that "This advertisement conforms to section 2122 of the N.Y. Insurance Law"?
Conclusion:
1) No. The quote is false and misleading, and therefore, the proposed advertisement does not comply with N.Y. Insurance Law § 2122 (McKinney 2005).
2) No. An advertisement may not contain a statement stating that it complies with § 2122 of the N.Y. Insurance Law unless such statement is accurate.
Facts:
The inquirer is a company that is a licensed insurance agent and provides policies for contractor's insurance. In the proposed advertisement, the company states that it "provides affordable policies for all trade contractors." The proposed advertisement also lists sample contractor's liability rates with the shortened name of the insurance companies being quoted as well the name of the city in which each has its principal office. The company also proposes to place a statement on the bottom of the advertisement stating that it conforms to § 2122 of the N.Y. Insurance Law.
Analysis:
Insurance agency advertisements must be in compliance with applicable sections of the Insurance Law and regulations.
N.Y. Insurance Law § 2122(b) (McKinney 2005) in pertinent part states that:
Every agent of any insurer and every insurance broker shall, in all advertisement, public announcements, signs, pamphlets, circulars and cards, which refer to an insurer, set forth therein the name in full of the insurer referred to and the name of the city, town, or village in which it has its principal office in the United States.
Further, N.Y. Penal Law § 190.20 (McKinney 2005) provides that:
A person is guilty of false advertising, when, with intent to promote the sale or to increase the consumption of property or services, he makes or causes to be made a false or misleading statement in any advertisement. . . .
In addition, § 350 of the General Business Law (2005) states:
False advertising in the conduct of any business, trade or commerce or in the furnishing of any service in this state is hereby declared unlawful.
An advertisement that states that the insurance agency "provides affordable policies for all trade contractors" is misleading and therefore improper. The company does not provide every type of contractor policy nor can the company assert that coverage for every contractor would be affordable even for those types that it does provide. A licensee that makes false and misleading advertisements would be acting in an untrustworthy manner and the advertisements may constitute violations of laws other than the Insurance Law such as the N.Y. Penal Law and the General Business Law. In addition, § 2122(b) states that when quoting an insurance company, the full name of the insurer referred to, and the name of the city, town or village in which it has its principal office in the United States must be included. A shortened name of an insurance company does not comply with the requirements provided under § 2122(b).
Please note that the Insurance Department does not approve advertisements. An advertisement may not contain a statement stating that it complies with the N.Y. Insurance Laws and Regulations unless such statement is accurate. Otherwise, the statement itself may be misleading.
For further information please contact Associate Attorney Sam Wachtel at the New York City Office.