OGC Opinion No. 06-03-01

The Office of General Counsel issued the following opinion on March 2, 2006, representing the position of the New York State Insurance Department.

Re: Licensing Requirement for Foreign Call Centers Offering Insurance Quotes

Question Presented:

Must an entity that operates an authorized insurer's call center (located in a foreign country), and its employees who offer insurance quotes to callers located in New York, obtain licenses in New York as an insurance agent or broker?

Conclusion:

An entity that operates an authorized insurer's call center (located in a foreign country), and its employees who offer insurance quotes to callers located in New York are required to obtain the appropriate licenses in New York as an insurance agent or broker.

Facts:

The inquirer seeks confirmation that his client's call center is distinguishable from the call center that was referenced in our October 20, 2005 opinion. That opinion concluded, among other things, that enrollers who are located outside of New York and who engage in activities that constitute acting as an insurance agent, will need to obtain a non-resident insurance agent license even if their compensation is not based on the sale of insurance.

The inquirer distinguishes his call center by stating that, other than mailing the application to the caller, the call center plays no role in the caller's enrollment process. The inquirer states that he represents an insurance company that is authorized in New York to sell automobile insurance. Under the arrangement, when a person calls the insurance company asking for a quote, the quote is provided by an employee of a call center that is located in a foreign country. If the caller requests an application, the call center mails the application on the company's New York letterhead. The inquirer states that during the call, the call center is not identified by name to the caller and the caller is under the impression that he or she is speaking only with the company. Therefore, the inquirer asks whether the call center employees need to obtain licenses in New York.

Analysis:

 N. Y. Ins. Law § 2101(a) (McKinney Supp. 2006) defines an insurance agent as one "who acts as such in the solicitation of, negotiation for, or sale of, an insurance . . . contract. . .." N.Y. Ins. Law § 2101(m) – (o) defines these terms, in pertinent part, as follows:

N.Y. Ins. Law § 2102(a)(1) (McKinney Supp. 2006) provides, as follows:

The October 20, 2005 opinion to which the inquirer referred concluded, among other things, that if a person at any time, directly or indirectly, engages in any activity in New York that constitutes acting as an insurance agent, such person would need to be licensed as an insurance agent. Based on the information supplied, the employees of the call center will provide insurance premium quotes on behalf of the insurance company to members of the public, including callers located in New York.

In terms of providing premium quotes, the inquirer states that the call center and its employees would not be compensated based on sales but on an hourly basis. In addition, the call center will only handle incoming calls; it will not originate calls. The inquirer also states that the call center will not discuss coverage options such as the availability of different limits or deductibles with the caller. Instead, the employees will be required to limit their inquiries to the caller's existing coverage in order to give a premium quotation. The inquirer also states that the call center employees will not be allowed to ask whether the caller desires a quotation for limits of liability or coverage that is different than their existing insurance. If the caller has questions about coverage, he or she would be directed to the insurance company's employee.

Inasmuch as the inquirer maintains that the call center employees, in providing quotes, would not discuss policy terms and conditions, it is the Department's belief that the employees will, out of necessity, have to discuss policy terms and conditions, among other things, with the callers in an effort to provide proper quotes. The inquirer argues that the employees will limit their inquiries to the caller's existing coverage. However, in order to know what existing coverage the callers have the employees will be required to ask about, for example, what coverage they now have and what coverage they will need (liability or full coverage, for example), among other things. At the very least, such questions will involve conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, pursuant to Section 2101(m) above. In addition, the inquirer failed to discuss situations where there is no existing coverage because, for example, the caller has bought an additional or new vehicle. Accordingly, it is the Department's position that, under the inquirer's specific proposal, which involves motor vehicle insurance, unlicensed individuals or entities who quote premiums act in the capacity of an insurance agent and must be licensed, because in offering quotes they will be required to interview potential insureds and to discuss policy terms, benefits and conditions.

For assistance with applying for appropriate licenses, please contact the Department's Licensing Bureau, either on line at the Department's website www.ins.state.ny.us, or by telephone at 516-473-7661 and/or 518-486-6876.

For further information please contact Associate Attorney D. Monica Marsh at the New York City Office.