The Office of General Counsel issued the following informal opinion on November 25, 2002, representing the position of the New York State Insurance Department.
Re: Licensing Requirements to Sell HMO Policies to Filipino Residents
May an unlicensed individual solicit New York residents to purchase a policy issued by an unauthorized Health Maintenance Organization ("HMO"), which will cover their relatives living in the country in which the Health Maintenance Organization is located?
No. Both the unauthorized HMO, and the individuals acting on behalf of the HMO would be in violation of the New York Insurance Law. N.Y. Ins. Law §§ 1102, 2117 (McKinney 2000 & Supp. 2002).
The inquirers company has negotiated a joint venture agreement to sell a Philippines based HMOs health care policies outside the Philippines for coverage of individuals in the Philippines. The inquirer has an exclusive sales and marketing arrangement to offer the full line of the HMOs products and services. The inquirer plans on advertising through television, newspaper ads, calling cards and by placing advertisements in brochures that are intended to reach Filipinos living in the United States.
The corporate headquarters of the inquirers company are in New York City and the inquirer intends to bring on-line additional offices in the United States and around the world. Sales facilitators in the United States will sell directly to Filipinos living in the United States. The policies will be either faxed, mailed or completed on the web site. Individuals may also complete applications on the web without the need of a sales facilitator. The payment will be made either by credit card or bank draft to the inquirers company at the same time. The policy will then be submitted to the HMO for fulfillment and the payment will be deposited into the HMOs United States bank account in New York. The HMO will process the policy and provide the covered individual with policy information. The international web site belonging to the inquirers company will be the main portal for operations, marketing information, distributor support and customer services.
N.Y. Ins. Law § 1101(b)(1) (McKinney Supp. 2002) delineates those acts which constitute "doing an insurance business in New York" and require licensing under N.Y. Ins. Law § 1102 (McKinney 2000). Although there are certain "mail order" exceptions contained in N.Y. Ins. Law § 1101(b)(2) (McKinney Supp. 2002), none of them are applicable to the inquirers facts. Accordingly, the HMO is an unauthorized insurer in New York and, as such, cannot do any act in this state that would constitute "doing an insurance business in New York".
What is prohibited for an insurer under N.Y. Ins. Law § 1102 (McKinney 2002) is prohibited for any person acting on behalf of the insurer under N.Y. Ins. Law § 2117 (McKinney Supp. 2002). That section provides, in pertinent part:
(a) No person, firm, association or corporation shall in this state act as agent for any insurer or health maintenance organization which is not licensed or authorized to do an insurance or health maintenance organization business in this state, in the doing of any insurance or health maintenance organization business in this state or in soliciting, negotiating or effectuating any insurance, health maintenance organization or annuity contract or shall in this state act as insurance broker in soliciting, negotiating or in any way effectuating any insurance, health maintenance organization or annuity contract of, or in placing risks with, any such insurer or health maintenance organization, or shall in this state in any way or manner aid any such insurer or health maintenance organization in effecting any insurance, health maintenance organization or annuity contract.
The acts that the inquirer proposes to have his company and the facilitators perform would violate the above provision.
The Department has reviewed and opined on a proposal that is almost identical to the inquirers. General Counsel Opinion 6-20-2001 is available on the Departments web site, www.ins.state.ny.us, as are other opinions that address proposals similar to the inquirers. Applying the conclusions reached in those opinions to the inquirers facts requires that, in order to implement the inquirers proposal in New York, the HMO, as well as the inquirers firm and the facilitators, will have to be appropriately licensed. The inquirer should also review Department Circular Letter 5 (2001), which is available on the Department web site.
For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.