The Office of General Counsel issued the following informal opinion on June 20, 2001, representing the position of the New York State Insurance Department.
Re: Internet Web Site
Question Presented:
Under circumstances where Attorney As client who is physically located and properly licensed in a foreign country, represents an insurer not authorized to do an insurance business in New York but which is licensed in said foreign country, and has an Internet web site from which the client will offer to sell insurance to certain alien residents of New York, must Attorney As client be licensed in New York?
Conclusion:
Yes. Attorney As client must be licensed by this Department under the circumstances described. Furthermore, the insurer will also need to be licensed in New York.
Facts:
Attorney As firm represents a client located in a foreign country where the client is a licensed Managing General Agent ("MGA"). Attorney As client is not licensed in New York. Attorney As client has an Internet web site, accessible in New York, which offers to sell a health insurance plan issued by a health insurer licensed in said foreign country but not in New York. The only insureds acceptable to buy membership in this plan are citizens of that foreign country who reside in New York and other states. The alien resident in New York can buy the insurance policy through the web site but the policy itself and a card to access services is first delivered to an address in the foreign country. It is not indicated how the policy and card are transferred to the insured in New York. Payment must be made by credit card or by withdrawal from a bank in the foreign country. There is a Third Party Administrator ("TPA") in the U.S. who helps administer the plan benefits in New York and other states. Hospitals, doctors, and other providers in New York and other states accept the plan as health insurance.
Analysis:
N.Y. Ins. Law § 1101 (McKinney 2000) defines what constitutes the doing of an insurance business. N.Y. Ins. Law § 1102 (McKinney 2000) prohibits any person, firm, etc. from doing an insurance business in this state without a license. As stated in Circular Letter No. 5 (2001), "[t]he Department does not consider the mere maintenance of a passive web site that is accessible to New York residents containing information about specific insurance products or services to constitute solicitation under New York Insurance Law." The Circular Letter also states that "if the insurance products or services are not being offered by a New York authorized insurer, the advertisements or the web sites upon which the advertisements appear must contain a clear and conspicuous disclaimer indicating that the advertised products or services are not available in New York State, and such products and services cannot, in fact, be made available in New York."
Circular Letter No. 5 also states that "[p]ursuant to Sections 1102 and 2102 of the Insurance Law, insurance companies . . . as well as agents and brokers that maintain web sites where the solicitation of insurance takes place, must be licensed, and commissions for such business may be paid only to licensees. Web sites of non-licensees must be designed to prevent insurance transactions with New York residents."
The web site belonging to Attorney As client will allow insureds to purchase health insurance from unauthorized insurers while residing in New York. The fact that the potential insureds are citizens of a foreign country is not relevant since the insurance transaction occurs in New York. It is also not relevant to the analysis that policies and the insurance card are initially mailed to an address outside of New York.
In addition, N. Y. Ins. Law § 2102 (McKinney 2000) prohibits any person from acting as an agent or broker without a license and N. Y. Ins. Law § 2117 (McKinney 2000) prohibits any person from acting as an agent on behalf of an unauthorized insurer in soliciting, negotiating or otherwise effectuating or placing risks with an unauthorized insurer, or in any way or manner aiding an unauthorized insurer in effecting any insurance or contract.
Accordingly, Attorney As client must be licensed if an insurance solicitation will occur on its web site with a New York resident. The Department has enclosed a copy of Circular Letter No. 5 for Attorney As information.
For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.