The Office of General Counsel issued the following informal opinion on February 14, 2002, representing the position of the New York State Insurance Department.
RE: Insurance Fraud Prevention: Satisfying Regulation 95 Requirement that Insurers Develop Public Awareness Programs
Question Presented:
May an insurer satisfy the public awareness program requirement contained in N.Y. Comp. Codes R. & Regs. tit. 11, § 86.6(b)(8) (1998) (Regulation 95), by advertising in ABC Magazine, a new publication that will reach, among other groups, insurance industry personnel, law enforcement agencies and automobile club members and will primarily report on fraud and its cost to the industry and the public?
Conclusion:
There is nothing in the Regulation or the Insurance Law that specifies what medium or channel an insurer must utilize when launching a public awareness program to disseminate its anti-fraud message. What is clear, however, is that such public awareness program must focus on the cost and frequency of insurance fraud and the methods by which the public can prevent it. Utilizing ABC Magazine as a medium to disseminate the required anti-fraud message appears to be insufficient by virtue of the fact that, except for dissemination to certain club association members and clients of insurance agents, the public is not widely targeted, a requirement of the Regulation.
Facts:
There is a new publication, ABC Magazine, that is slated for distribution in March of 2002. Distribution is marked at 80,000 relevant readers. ABC Magazine will report on all issues pertaining to fraud, including arrests, legislative updates, costs of fraud to the insurance industry and the public, patterns of corruption and the negative effects fraud has on individuals. In addition ABC Magazine will target, among other groups, insurance agents and their clients, claims professionals, law enforcement agencies, business associations, consumer advocates, members of automobile organizations and district attorneys. Further, there is an expectation that ABC Magazine should have a positive effect on the deterrence of medical provider and policyholder fraud.
The inquirer asks whether, by utilizing ABC Magazine to disseminate its anti-fraud message, it would satisfy the public awareness program requirement in Regulation 95.
Analysis:
N.Y. Comp. Codes R. & Reg., tit. 11, part 86.6(a) & (b) (1998) (Regulation 95) provide that:
Every insurer writing private or commercial automobile insurance, workers compensation insurance, or individual, group or blanket accident and health insurance policies issued or issued for delivery in this State, which writes 3,000 or more of such policies in any given year, or in the case of policies issued on a group basis, provides insurance coverage for 3,000 or more individuals in any given year, shall develop and file with the superintendent a plan for the detection, investigation and prevention of fraudulent insurance activities in this State and those fraudulent insurance activities affecting policies issued or issued for delivery in this State. Notwithstanding the foregoing, insurers writing only reinsurance contracts shall not be required to comply with the provisions of this section.
The plan shall include the following provisions:
(8) development of a public awareness program focused on the cost and frequency of insurance fraud, and methods by which the public can prevent it.
The inquirer questions whether running advertisements with an anti-fraud message in ABC Magazine, an industry type magazine, would satisfy the requirement in N.Y. Comp. Codes R. & Regs. tit. 11, § 86.6(b)(8) (1998) (Regulation 95). ABC Magazine will report on, among other issues, fraud, arrests, legislative updates and the cost of insurance fraud to the insurance industry and the public. ABC Magazines intended market includes, among other groups, insurance agents and their clients, claims professionals, law enforcement agencies, business associations, consumer advocates, members of automobile organizations and district attorneys.
There is nothing in the Regulation or the Insurance Law that specifies what medium or channel an insurer must utilize when launching the required public awareness program to disseminate its anti-fraud message. What is clear, however, is that such public awareness program must focus on the cost and frequency of insurance fraud and the methods by which the public can prevent it. Utilizing ABC Magazine as a medium to disseminate the required anti-fraud message appears to be an unacceptable means of satisfying the public awareness program requirement in in N.Y. Comp. Codes R. & Regs. tit. 11, § 86.6(b)(8) (1998) (Regulation 95), by virtue of the fact that, except for the clients of insurance agents and automobile club members, ABC Magazine will reach mostly insurance industry personnel and law enforcement agencies. As a result, the anti-fraud message will not be directed at members of the general public, a requirement of the Regulation.
For further information you may contact Senior Attorney D. Monica Marsh at the New York City Office.