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 April 16, 2002, representing the position of the New York State Insurance Department.

Re: Insurers’ Anti-Fraud Public Awareness Programs: Satisfying Regulation 95

Question Presented:

Would N.Y. Comp. Codes R. & Reg., tit. 11, part 86.6(b) (1998) (Regulation 95) be satisfied where an insurer’s public awareness program consist of anti-fraud messages relayed via a combination of radio broadcasts and print media, as well as advertisements in ABC Magazine, a publication geared toward, among other groups, insurance agents and their clients, law enforcement agencies, business associations, district attorneys, members of automobile organizations and claims professionals?

Conclusion:

Yes. In its totality, the insurer’s public awareness program appears to satisfy the requirements of Regulation 95.

Facts:

In response to my February 14, 2002 opinion, the insurer recently supplied additional information about its public awareness program. In my February 14th opinion, I concluded that:

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.

The insurer now states:

The insurer’s program will consist of radio broadcast, print media and possibly outdoor advertising. Previous written communication failed to state that the insurer’s intent to publish notices in the periodical ABC Magazine is only a small segment of the planned program. The largest segment of the program, approximately 2/3 of our budget, will be through radio spots of 30 and 60 second duration, broadcasting to specific market segments throughout New York State. This insurer will market an anti-fraud message by producing or re-running commercials in both purchased advertising and as public service announcements.

The insurer asks whether, by utilizing ABC Magazine, in addition to the other media outlets described, it would satisfy the public awareness 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, worker’s 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 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 insurer states that, in addition to advertising in ABC Magazine, its public awareness program will also "consist of radio broadcast, print media and possibly outdoor advertising." In addition, the "largest segment of the insurer’s program, approximately 2/3 of its budget, will be through radio spots of 30 and 60 second duration, broadcasting to specific market segments throughout New York State. The insurer will market an anti-fraud message by producing or re-running commercials in both purchased advertising and as public service announcements."

As mentioned in my February 14, 2002 opinion, there is nothing in Regulation 95 or the Insurance Law that specifies what medium or channel an insurer must utilize when launching its 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 methods by which the public can prevent it." In that opinion, we concluded that utilizing ABC Magazine as the sole medium to disseminate the required anti-fraud message is 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, which is necessary because the goal is to enlighten and encourage the public to actively participate in "preventing" fraud.

In light of the new information recently supplied, the Department has concluded that, in its totality, the insurer’s anti-fraud public awareness program, which consist of advertisements in ABC Magazine as well as advertisements via radio broadcast and the print media, appears to satisfy the requirements of Regulation 95, as the anti-fraud message will reach a wider cross-section of the public.

Please note, however, that while the Regulation is broad and does not contain any minimum criteria in terms of, for example, how much "dollar amount" a company has to allocate to its public awareness program, the Regulation requires insurers to file annual reports with the Insurance Frauds Bureau. Each annual report must describe, among other things, the insurer’s experience, performance and cost effectiveness in implementing the plan and its proposals for modifications to the plan to amend its operations, to improve performance or to remedy observed deficiencies. While the Department does not require formal approval of each insurer’s plans, we reserve the right to evaluate each insurer’s annual report to determine whether such insurer has sufficiently complied with Regulation 95.

For further information you may contact Senior Attorney D. Monica Marsh at the New York City Office.


1 See, N.Y. Comp. Codes R. & Reg., tit. 11, part 86.6(d) (1998) (Regulation 95).