The Office of General Counsel issued the following informal opinion on June 5, 2001, representing the position of the New York State Insurance Department.
Re: Advertising by an Insurance Agency
Questions Presented:
1. May an insurance agent or broker advertise "Savings of up to 37% on Auto Insurance" if it has recently saved an individual up to 37% on his auto insurance with no change in coverage?
2. May an insurance agent or broker use signed testimonials from insureds in advertising campaigns?
Conclusions:
1. Yes, as more fully discussed below, an insurance agent or broker may advertise that it has recently saved an individual up to 37% on his auto insurance with no change in coverage without violating New York Insurance Law § 2122(b) (McKinney 2000), where the licensee represents more than one insured.
2. It depends on the content of the testimonial. As more fully discussed below, testimonials that are used in advertisements are subject to New York Insurance Law § 2122(b) (McKinney 2000), and other requirements may apply in specific cases.
Facts:
No specific facts were provided. Mr. A, of Insurance Agency B, inquires regarding advertising (ie: yellow pages, radio, agency newsletter) as indicated above in the questions presented.
Analysis:
Insurance agency advertisements must be in compliance with applicable sections of the Insurance Law and regulations. New York Insurance Law § 2122(b) (McKinney 2000), entitled advertising by insurance agents and brokers, provides as follows:
(b) Every agent of any insurer and every insurance broker shall, in all advertisements, 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.
The advertisement by an insurance agent or broker indicating "Savings of up to 37% on Auto Insurance" (with no change in coverage) does not refer to a particular insurer and indicates only a potential "savings up to 37%" where the producer represents more than one insurer. It reflects the licensees ability to shop around and obtain a more favorable rate for the insured although not necessarily from the same insurer in each case. Therefore, by indicating savings up to 37% and not naming an insurance company this advertisement does not violate New York Insurance Law § 2122(b) (McKinney 2000). This would not be the case where the producer represented only one insurer, since the producer would have to be referring to a specific insurer.
Mr. As inquiry concerning the use of testimonials in advertising campaigns is very broad and the response depends upon the facts of each particular situation. A testimonial that is used in an advertisement is subject to Section 2122(b) of the Insurance Law. Different provisions of the Insurance or other Laws may also apply depending upon the particular factual circumstances. For example, Life and Health testimonials are subject to N.Y. Comp. Codes. R. & Regs. Tit 11 § 219.4(b).
Mr. A should consult with his own counsel regarding use of particular advertising to insure that it is in compliance with applicable law.
For further information you may contact Senior Attorney Kay Rahbar at the New York City Office.