The Office of General Counsel issued the following opinion on April 18, 2001 representing the position of the New York State Insurance Department.
Re: Theater ticket insurance program
1. May a policy of insurance cover a purchaser of tickets to a public event, such as a concert or a play, for the cost of the tickets, in the event that the purchaser is unable to attend due to specified conditions beyond the purchasers control?
2. If such a policy is permissible, may the ticket seller sell it to the purchaser?
1. A policy of insurance may cover a purchaser of tickets for the cost of the tickets, in the event that the purchaser is unable to attend due to specified conditions beyond the purchasers control. Such a policy and its rates would have to be filed with the appropriate bureau.
2. A ticket seller may not sell an insurance policy unless the ticket seller was licensed as an insurance agent or broker.
As stated in the inquirers letter, a policy of insurance would provide coverage to a purchaser of tickets to the theater, sporting events, operas and other similar public events. The policy would cover the ticket purchaser for the cost of the tickets, in the event that the purchaser is unable to attend due to specified conditions beyond the purchasers control. The contingencies would include sickness, accident, bereavement, mechanical breakdown, roadway or common carrier accident, flood, snow or extreme weather. The inquirer suggested that the policy could be written as a combination of inland marine insurance and accident and health insurance, in the same manner as travel insurance, or as substantially similar to one of those kinds of insurance. While the inquirers letter did not address how the program would be marketed, in a phone conversation the inquirer indicated that the intent would be to market it through the ticket sellers. However, the inquirer did not have any specific proposal other than that the ticket sellers would be compensated and that the coverage would be optional and not included automatically in the sale of the ticket.
As is the case with travel insurance, the coverage under the proposed policy involves a combination of property and non-property coverages. We will address the property coverages first (which are the specified coverages other than sickness, accident, and bereavement). They would fall under one or more kinds of insurance that are permitted under N.Y. Ins. Law § 1113 (McKinney 2000), depending upon the specific trigger. For the most part, they would appear to fall within miscellaneous property insurance under paragraph (a)(5) of said section. A more specific analysis could be done when an actual form filing is submitted. We do not, however, consider these coverages to be inland marine insurance because they do not involve transit and the coverages are not contained in the 1976 Revision of the National Association of Insurance Commissioners Nation-wide Marine Definition, which the Department adopted in Circular Letter 19 (1987), with some exceptions. Hence, the rates and forms must be filed with the Property Bureau in accordance with the Insurance Law.
The balance of the coverages would appear to come within accident and health insurance. The rates and forms would have to be filed with the Health Bureau in accordance with the Insurance Law. Since the Bureau had some questions about what would be covered under the bereavement coverage, any detailed analysis in regard to it would have to await a specific filing.
In regard to the marketing of the coverage, a ticket seller that markets or sells the insurance would be acting as an insurance agent or broker, as defined in N.Y. Ins. Law § 2101 (McKinney 2000), and would be acting in violation of N.Y. Ins. Law § 2102 (McKinney 2000) unless properly licensed as an insurance agent or broker by the Department. N.Y. Ins. Law § 2114, 2115 and 2116 (McKinney 2000), as amended by Section 4 of Ch. 418 of the Laws of 2000, now permits a non-licensee to be compensated for referrals to a licensed agent or broker. However, the nonlicensee may not discuss the specific insurance policy terms and conditions and such person may not base the compensation for the referral upon the purchase of insurance.
For further information, you may contact Supervising Attorney Paul A. Zuckerman at the New York City Office.