The Office of General Counsel issued the following informal opinion on May 28, 2002, representing the position of the New York State Insurance Department.
Re: Internet web site of a corporate life insurance agent
Does the N.Y. Insurance Law require that telemarketers be licensed in every state in order to give premium rate quotes by telephone to persons in various states who respond to a life insurance agents Internet web site, and to fill out applications to mail to such prospective clients to obtain signatures and premium checks?
The N.Y. Insurance Law requires that persons who engage in certain insurance activities in New York, for which licensure is required, be licensed in New York. Thus, where the inquirer to the web site of a New York licensed insurance agent is a New York resident, the telemarketer, who returns the inquiry by making a phone call, provides a requested rate quote, fills out the life insurance application based on information provided by the inquirer, mails the application, and who is paid a commission on sales, must be licensed as an insurance agent. Licensing in other states is dependent upon the laws of those states.
ABC Life Insurance Agency ("the Agency") is a New York licensed insurance agent with an Internet web site on which it offers to sell life insurance to persons across the country. Prospective insureds contact the Agency web site, provide detailed underwriting information, request premium quotes from the Agency, and often provide their telephone numbers, in which case an Agency telemarketer contacts them by telephone. The Agency is licensed as an insurance agent in approximately 40 states and intends to become licensed in almost all of the other states. It employs telemarketers licensed to sell life insurance in New York and Pennsylvania. The telemarketers contact those who provided information on the web site to give them premium quotes, to fill out the insurance applications, to send the applications to the prospective insureds to get their signature, and to request a premium check. On receipt of the signed application and check, someone who is licensed in all the states reviews the paperwork, signs the application as producer of record, submits same to an insurer, and arranges for the policy to be delivered and placed. The telemarketers are paid a commission on the sale of each life insurance policy regardless of from which state the application comes.
According to the facts as presented, the insurance activities for which licensure is required in New York appear to be done by licensees of the Department. When the signed application and premium check from a New York insured are submitted to the Agency, a New York licensed agent must review same, sign as producer of record, and submit the paperwork to the insurer. These activities come within the acts of "solicitation of, negotiation for, or procurement or making of, an insurance . . . contract," which acts define what a licensed insurance agent does, as set forth in N.Y. Ins. Law § 2101(a) (McKinney 2000), and require an agents license pursuant to N. Y. Ins. Law § 2103(a) (McKinney 2000). N. Y. Ins. Law § 2117(a) (McKinney 2000) requires that a licensee can only act as an agent on behalf of insurers licensed to do business in New York.
N. Y. Law § 2114(a)(1) and (2) (McKinney Supp. 2001-2002) provide that no insurer or agent may pay a commission for selling life insurance except to a licensed life insurance agent, with a limited exception for brokers. Department Circular Letter No. 5 (2001), copy enclosed, states that "[p]ursuant to Sections 1102 and 2102 of the [N.Y.] Insurance Law, insurance companies . . . as well as agents and brokers that maintain web sites where the solicitation of insurance takes place, must be licensed, . . . "
An authorized life insurer, and its agent, may market and sell life insurance policies in New York State on the Internet. For further details on electronic commerce, see the enclosed copy of the Department Circular Letter No. 33 (1999).
Although the N.Y. Insurance Law does not address whether the telemarketers working for the Agency must be licensed in other states, the law of the other states may require them to be licensed.
As far as other states where the Agencys web site respondents may reside, you will have to make inquiry to the insurance regulators of those other states regarding the Agencys web site and licensing requirements.
For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.