The Office of General Counsel issued the following opinion on June 26, 2001 representing the position of the New York State Insurance Department.
RE: Website Arrangement
May ABC, a licensed real estate broker, provide names and addresses to a licensee of customers interested in insurance via a questionnaire located on the non-licensees web site and receive compensation for such activities?
The inquirer stated that ABC, a licensed real estate broker, desires to provide names and addresses of prospective insureds to a licensed insurance broker. ABCs home page will include an insurance link to facilitate qualified lead generation. The hyperlink will connect the user to a new web page on the non-licensees web site featuring an insurance questionnaire that can be completed by the user. No mention of the insurance broker will be made on ABCs web site or in any e-mail from ABC. The questionnaire will be simple and ask for contact information and whether the user is interested in obtaining insurance services. ABC will be compensated on a flat amount by the insurance broker per lead; however, compensation will not be based upon the successful placement of insurance by the licensee.
In Circular Letter No. 5 (2001), the Department examined insurance advertisements, referrals and solicitations in the context of electronic commerce.
In regard to advertisements, the Department stated that the mere maintenance of a passive web site that provides information regarding specific insurance products but contains no recommendations, endorsements or promotions does not constitute solicitation by a non-licensee. The advertisements of a licensee may appear on the web site of a non-licensee even if they lead the consumer to the licensees web site where the insurance solicitation takes place. A non-licensee may receive compensation calculated in any manner, including flat fees, for hosting such advertisements.
In regard to referrals, if the web site contains recommendations, endorsements or promotions by a non-licensee, this would constitute a referral, subject to the provisions of N.Y. Ins. Law Sections 2114, 2115 and 2116 (McKinney 2000), as amended by sections 4, 5 and 6 of Chapter 418 of the Laws of 2000.
N.Y. Ins. Law § 2116 (McKinney 2000), as amended by Section 6 of Ch. 418 of the Laws of 2000) provides as follows:
No insurer authorized to do business in this state, and no officer, agent or other representative thereof, shall pay any money or give any other thing of value to any person, firm, association or corporation for or because of his or its acting in this state as an insurance broker, unless such person, firm, association or corporation is authorized so to act by virtue of a license issued or renewed pursuant to the provisions of section two thousand one hundred four of this article.
For the purposes of this section, "acting as insurance broker" shall not include the referral of a person to a licensed insurance agent or broker that does not include a discussion of specific insurance policy terms and conditions and where the compensation for referral is not based upon the purchase of insurance by such person. (new language underscored).
N.Y. Ins. Law § 2114 (McKinney 2000), as amended by Section 4 of Ch. 418 of the Laws of 2000, in regard to life, accident and health agents and Section 2115 (McKinney 2000), as amended by Section 5 of Ch. 418 of the Laws of 2000, in regard to property/casualty insurance agents contain identical provisions.
Thus, pursuant to the recent amendments to N.Y. Ins. Law Sections 2114, 2115 and 2116 (McKinney 2001), unlicensed persons may receive fees for referrals to licensed insurance agents or brokers where there is no discussion of specific insurance policy terms and conditions and the compensation is not based on whether insurance is purchased.
However, the New York Insurance Law does not prohibit licensees from purchasing lists of customer names and addresses from non-licensees for the purposes of soliciting insureds. The compensation payable to non-licensees for such lists may be contingent upon the successful placement by the licensee of the insurance and may be a percentage of the insurance commission that the licensee earned from placing the business.
In accordance with the above, ABC may collect names and addresses of potential customers who are interested in insurance, refer these names and addresses to a licensee and receive compensation for these activities.
For further information, you may contact Attorney Pascale Joasil at the New York City office.