New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on November 26, 2001, representing the position of the New York State Insurance Department.

RE: N.Y. Comp. Codes R. & Regs. tit. 11, §§ 420.0- 420.24 (2001) and Group Self-Insurance Trusts.

Questions Presented:

1. Is a group self-insurance trust that provides workers’ compensation or statutory disability coverage to trust participants subject to N.Y. Comp. Codes R. & Regs. tit. 11, §§ 420.0- 420.24 (2001)? If not, is it a financial institution that is subject to regulation by the Federal Trade Commission under section 6805 of the Gramm-Leach Bliley Act?

2. Is a licensed insurance broker who provides administrative, marketing and loss control consulting services to a group self-insurance trust subject to the requirements of N.Y. Comp. Codes R. & Regs. tit. 11, §§ 420.0- 420.24 (2001)?

Conclusions:

1. No. A group self-insurance trust that provides workers’ compensation and statutory disability coverage is not subject to the requirements of N.Y. Comp. Codes R. & Regs. tit. 11, §§ 420.0- 420.24 (2001). The Department expresses no opinion regarding whether such trusts are regulated by the Federal Trade Commission or any other federal entity.

2. No. A licensed insurance broker who provides administrative, marketing and loss control consulting services to a group self-insurance trust is not subject to the requirements of N.Y. Comp. Codes R. & Regs. tit. 11, §§ 420.0- 420.24 (2001), so long as the insurance broker obtained the nonpublic personal financial information in a manner and for a purpose that does not require licensing as an insurance broker.

Facts:

The inquirer represents a licensed insurance broker who provides various administrative, marketing and sales, and loss control services to group self-insurance trusts. The trusts, which are often affiliated with trade associations, provide workers’ compensation or statutory disability coverage to employers who participate in these trusts. The inquirer asked whether these trusts, and/or the insurance broker are subject to the requirements of N.Y. Comp. Codes R. & Regs. tit. 11, §§ 420.0- 420.24 (2001).

Analysis:

The inquirer asked whether a group self-insurance trust that provides workers’ compensation and statutory disability coverage to trust participants is subject to the requirements of N.Y. Comp. Codes R. & Regs. tit. 11, §§ 420.0- 420.24 (2001).

N.Y. Comp. Codes R. & Regs. tit. 11, § 420.1(a) (2001) provides as follows:

(a) Purpose. This Part governs the treatment of nonpublic personal information about individuals (defined in this Part as consumers or customers) in this State by all licensees of the Insurance Department. This Part:

(1) Requires a licensee to provide notice to individuals about its privacy policies and practices;

(2) Describes the conditions under which a licensee may disclose nonpublic personal health information and nonpublic personal financial information about individuals to nonaffiliated third parties;

(3) Provides methods for individuals to prevent a licensee from disclosing that information; and

(4) Provides a method for individuals to prevent a licensee from disclosing nonpublic personal health information by not affirmatively consenting to such disclosure, subject to the exceptions in section 420.17(b) of this Part.

N.Y. Comp. Codes R. & Regs. tit. 11, § 420.3(p)(1) (2001) defines the term "licensee" as follows:

(p)(1) [A] person licensed, or required to be licensed, or authorized, or required to be authorized, or registered, or required to be registered pursuant to the Insurance Law of this State; a health maintenance organization holding, or required to hold, a certificate of authority pursuant to Article 44 of the Public Health Law; or an unauthorized insurer in regard to the excess line business conducted pursuant to section 2118 of the Insurance Law and Part 27 of this Title (Regulation 41); but shall not include a registered service contract provider, charitable annuity society, or a licensed viatical settlement company or viatical settlement broker.

Self-insurance trusts that provide workers’ compensation and statutory disability coverage are established pursuant to the provisions of the Workers’ Compensation Law and are exempted from licensing under the New York Insurance Law. Consequently, they do not come within the definition of licensee in N.Y. Comp. Codes R. & Regs. tit. 11, § 420.3(p)(1)(2001) and, pursuant to § 420.1(a), they are not governed by the regulation.

The inquirer also asked whether these group self-insurance trusts are considered financial institutions that are regulated by the Federal Trade Commission under section 6805 of the Gramm-Leach Bliley Act. The Department expresses no opinion regarding whether such trusts are regulated by the Federal Trade Commission or any other federal entity.

The inquirer further questioned whether a licensed insurance broker who provides administrative, marketing and loss control consulting services to a group self-insurance trust is subject to the requirements of N.Y. Comp. Codes R. & Regs. tit. 11, §§ 420.0- 420.24 (2001).

In the present case, we assume that the insurance broker obtained the nonpublic personal financial information in a manner and for a purpose that does not require licensing as an insurance broker. As such, the insurance broker would not be treated as a licensee, as that term is defined in § 420.3, and consequently would not be subject to the requirements of N.Y. Comp. Codes R. & Regs. tit. 11, §§ 420.0- 420.24 (2001).

For further information, you may contact Attorney Pascale Joasil at the New York City office.