The Office of General Counsel issued the following opinion on February 6, 2003, representing the position of the New York State Insurance Department.
Re: Banks and Insurance.
Questions Presented:
1. Does N.Y. Ins. Law § 2402(b) (McKinney 2000) provide an exclusive list of acts that constitute unfair trade practices?
2. May a national bank become licensed as an insurance agent to sell insurance products?
3. Does N.Y. Comp. Codes R. & Regs. tit. 11, §§ 51.1- 51.8 (1998) (Regulation 60) and N.Y. Comp. Codes R. & Regs. tit. 11, §§ 53-1.1- 53-3.7 (1999) (Regulation 74) apply to property/casualty insurers?
4. Does the Telemarketing Sales Rule (16 CFR Part 310) apply to insurance agents?
5. Does the Telemarketing Sales Rule preempt N.Y. Gen. Bus. Law §§ 399-pp and 399-z (McKinney Supp. 2003)?
Conclusions:
1. No. N.Y. Ins. Law § 2402 (McKinney 2000) provides for both defined and determined violations.
2. Yes. The New York Insurance Law does not prohibit a national bank and its subsidiaries from becoming licensed as insurance agents to sell insurance. See N.Y. Ins. Law § 2103 (McKinney 2000).
3. No. Regulation 60 and 74 apply to life insurance policies and annuity contracts. Since property/casualty insurers are not authorized to sell such insurance, they are not subject to the requirements contained in Regulation 60 and 74.
4. No. The Telemarketing Sales Rule does not apply to insurance agents. However, N.Y. Gen. Bus. §§ 399-pp and 399-z (McKinney Supp. 2003) would apply to insurance agents engaged in telemarketing as defined under the rule.
5. This question is not within the Department's jurisdiction. This is a matter that should be addressed by the Federal Trade Commission ("FTC"), the federal agency charged with administering the Telemarketing Sales Rule.
Facts:
No specific fact pattern was provided relative to this inquiry.
Analysis:
Question 1
Pursuant to N.Y. Ins. Law § 2402(b), a defined violation means the commission by a person of an act prohibited by certain specified sections of the New York Insurance Law. However, under § 2402(c), a determined violation is defined as any unfair method of competition or any unfair or deceptive act or practice, that is not a defined violation, but is determined by the Superintendent pursuant to a hearing. Therefore, § 2402(b) does not contain an exclusive list of acts that constitute unfair trade practices.
Question 2
The New York Insurance Law does not prohibit a national bank or its subsidiaries from becoming licensed as insurance agents to sell insurance. See N.Y. Ins. Law § 2103 (McKinney 2000). To the extent that national banks are permitted under federal law to sell insurance as agents, they may become licensed as such under the New York Insurance Law.
Question 3
Regulations 60 and 74 apply only to life insurance policies and annuity contracts. Since property/casualty insurers are not authorized to sell such insurance, they are not subject to the requirements of Regulation 60 and 74. See N.Y. Ins. Law §§ 4101 & 4102 (McKinney 2000).
Questions 4 & 5
The Telemarketing and Consumer Fraud & Abuse Prevention Act (15 U.S.C. §§ 6101-6108) was enacted in 1994 to protect consumers from telemarketing fraud. The Act required the FTC to issue a rule prohibiting deceptive and abusive telemarketing acts or practices, and specified, among other things, certain acts or practices that the FTC's rule must address. In accordance with this authority, the FTC promulgated the Telemarketing Sales Rule (16 CFR 310 (1995)).
In a Press Release dated December 18, 2002, the FTC announced a series of amendments to the Telemarketing Sales Rule, including the development of a national "do not call" registry that empowers consumers to stop most unwanted telemarketing calls. Pursuant to the amended rule, it will be illegal for most telemarketers or sellers to call a number that is listed on the registry.
It is our understanding that the Telemarketing Sales Rule does not apply to entities that are engaged in the business of insurance, to the extent that they are regulated by state law. However, there is nothing in N.Y. Gen. Bus. Law § 399-pp (McKinney Supp. 2003), entitled Telemarketing and Consumer Fraud and Abuse Prevention Act, that would except an insurance agent engaged in telemarketing from the provisions of such law (except for the registration and bonding requirements). See also N.Y. Gen. Bus. Law § 399-z (McKinney Supp. 2003).
It is not within the Departments jurisdiction to issue an opinion on whether the Telemarketing Sales Rule preempts state laws. For further information, the inquirer was directed to contact the FTC toll free at 1-877-FTC-HELP (1-877-382-4357). Additionally, the FTCs web site is located at http://www.ftc.gov.
For further information you may contact Senior Attorney Pascale Joasil at the New York City Office.