The Office of General Counsel issued the following informal opinion on April 24, 2002, representing the position of the New York State Insurance Department.
Re: License Requirement for Premium Collection within New York State
Does the collection of premiums in New York, by a domestic limited liability company, from United States citizens of Ecuadorian descent residing in New York, for prepaid medical services and health insurance, negotiated, issued and delivered in Ecuador, covering Ecuadorian citizens residing in Ecuador, supplied by Ecuadorian health insurance providers and offered in South America by physicians licensed in Ecuador, require a license issued by the New York State Insurance Department?
Yes. The collection of premiums in New York for a policy or contract of insurance is doing an insurance business in New York, N.Y. Ins. Law § 1101(b)(1)(C) (McKinney 2000), which requires a license from the New York State Insurance Department, N.Y. Ins. Law § 1102(a) (McKinney 2000).
A domestic limited liability company (the "LLC") plans to secure payment from individuals in New York State for prepaid medical services and health insurance covering persons living in Ecuador, South America. The policies will be written by one or more Ecuadorian health insurance providers and will provide coverage for medical services provided exclusively in South America by physicians licensed in Ecuador. The Ecuadorian health insurers will negotiate, issue and deliver all insurance contracts in Ecuador. The New York State individual will either guarantee payment by the Ecuadorian insured or provide payment to the LLC to forward to an Ecuadorian health insurance provider. The LLC will deposit collected premiums in a New York financial institution.
The collection of "any premium, membership fee, assessment or other consideration for any policy or contract of insurance" constitutes doing an insurance business in New York. N.Y. Ins. Law § 1101(b)(1)(C) (McKinney 2000).
"No person, firm, association, corporation or joint-stock company shall do an insurance business in this state unless authorized by a license in force pursuant to this chapter . . . ." N.Y. Ins. Law § 1102(a) (McKinney 2000).
Clearly, the LLC may not collect premiums in New York without a license from the New York State Insurance Department, nor may the LLC aid an unlicensed or unauthorized health insurer, or health maintenance organization, in effecting any insurance, N.Y. Ins. Law § 2117(a) (McKinney 2000).
Under the facts given, however, an Ecuadorian insurance provider may collect premiums by mail, without the aid of the LLC, if it meets the requirements of either N.Y. Ins. Law § 1101(b)(2)(D) (McKinney 2000), or § 1101(b)(2)(E) (McKinney 2000) below:
[T]he following acts or transactions, if effected by mail from outside this state by an unauthorized foreign or alien insurer duly licensed to transact the business of insurance in and by the laws of its domicile, shall not constitute doing an insurance business in this state . . .
(D) transactions with respect to policies or annuity contracts lawfully issued without this state occurring subsequent to issue, if, at the time of issue, such policies or contracts covered subjects of insurance or risks not resident or located in this state;
(E) transactions with respect to policies of insurance on risks located or resident within or without this state (except master policies or contracts of group insurance which are subject to the requirements of subparagraph (B) hereof), which policies are principally negotiated, issued and delivered without this state in a jurisdiction in which the insurer is authorized to do an insurance business . . . .
The New York State Insurance Department strictly limits this opinion to the facts as set forth above.
For further information you may contact Attorney Kristian Earl Lynch at the New York City Office.