The Office of General Counsel issued the following informal opinion on August 13, 2002, representing the position of the New York State Insurance Department.
Re: Mail Order Exception N.Y. Ins. Law § 1101(b)(2)(D) (McKinney Supp. 2002)
May a New York resident make additional payments to an annuity contract that was purchased from an unauthorized insurer outside of New York at a time when the individual was not a New York resident?
There is a mail order exception for "transactions with respect to . . . annuity contracts lawfully issued without this state occurring subsequent to issue, if, at the time of issue, such . . . contracts covered subjects of insurance or risks not resident or located in this state." N.Y. Ins. Law § 1101(b)(2)(D) (McKinney Supp. 2002).
ABC Life, an unauthorized insurer, issued annuity products to individuals in other states who are now New York residents. The company asks whether these individuals can make additional payments to these contracts.
N.Y. Ins. Law § 1101(b)(1) (McKinney Supp. 2002) lists various acts which, whether effected by mail from outside the state or otherwise, constitute the doing of an insurance business in this state. However, N.Y. Ins. Law § 1101(b)(2) (McKinney Supp. 2002) contains what are known as the mail order exceptions. These are certain acts that, if effectuated by mail from outside the state by an unauthorized insurer duly licensed to transact business in the laws of its domicile, do not constitute the doing of an insurance business in this state. Included in these exceptions is:
(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.
The purpose of this exception is not to benefit unauthorized insurers by allowing them to do business in this state, but rather to ensure that a move to New York does not work to the detriment of an insured and that no existing contractual rights will be jeopardized. 1970 N.Y. Laws 2898. Accordingly, the Office of General Counsel has opined that under this exception an unauthorized insurer could offer an insured who moved to New York an opportunity to renew a policy on the same terms with the same coverages, but could not offer increased or additional coverages. NY General Counsel Opinion 6-21-96.
The inquirers letter did not explain the purpose of the additional payments and the writer was unable to reach him by telephone. Consequently, at this time, we cannot opine on whether the facts in question would come within the above-cited exception. Please be assured that, upon receipt of the necessary information, an opinion will be rendered.
For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.