The Office of General Counsel issued the following opinion on June 20, 2003, representing the position of the New York State Insurance Department.
Re: Promotional Gifts
Question Presented
May an insurance agent or broker give a promotional novelty item to prospective clients without violating New York Insurance Law?
Conclusion
With respect to property and casualty insurance, pursuant to N.Y. Ins. Law § 2324(a) (McKinney Supp. 2003), an authorized insurer, insurance agent or broker, and an employee or representative of any such property/casualty insurance company, agent or broker may provide to prospective clients a promotional novelty item that does not exceed $15.00 in value which shall have conspicuously stamped or imprinted thereon the advertisement of the insurer, agent or broker. With respect to life, accident and health insurance, an agent or broker subject to the provisions of N.Y. Ins. Law § 4224(c) (McKinney Supp. 2003), may not distribute promotional novelties in connection with the sale of insurance unless it is specified in the policy or contract.
Facts
The inquirer would like to distribute by mail a novelty item, such as a cup, magnet, pen or magic item to prospective clients. The inquirer anticipates the item to cost between $10.00 to $15.00 per mailing. The inquirer wanted to know if so doing is allowed by New York Insurance Law, and if it is allowed, what is the maximum amount of money that the novelty can cost.
Analysis
With respect to property and casualty insurance, N.Y. Ins. Law § 2324(a) (McKinney Supp. 2003) states in the relevant part:
No authorized insurer, no licensed insurance agent, no licensed insurance broker, and no employee or other representative of any such insurer, agent or broker shall . . . give or offer to give any valuable consideration or inducement of any kind, directly or indirectly, which is not specified in such policy or contract, other than any article of merchandise not exceeding fifteen dollars in value which shall have conspicuously stamped or printed thereon the advertisement of the insurer, agent or broker, or shall give, sell or purchase or offer to give, sell or purchase as an inducement to the making of such insurance or in connection therewith, any stock, bond or other securities or any dividends or profits accrued thereon, . . .
With respect to life, accident and health insurance, N.Y. Ins. Law § 4224(c) (McKinney Supp. 2003) states:
No such life insurance company and no such savings and insurance bank and no officer, agent, solicitor or representative thereof and no such insurer doing in this state the business of accident and health insurance and no officer, agent, solicitor or representative thereof, and no licensed insurance broker and no employee or other representative of any such insurer, agent or broker, shall pay, allow or give, or offer to pay, allow or give, directly or indirectly, as an inducement to any to any person to insure, or shall give, sell or purchase, or offer to give, sell or purchase, as such inducement, or interdependent with any policy of life insurance or annuity contract or policy of accident and health insurance, any stocks, bonds or other securities or any dividends or profits accruing or to accrue thereon, or any valuable consideration or inducement whatever not specified in such policy or contract; nor shall any person in this state knowingly receive as such inducement, any rebate of premium or policy fee or any special favor or advantage in the dividends or other benefits to accrue on any such policy or contract, or knowingly receive any paid employment or contract for services of any kind, or any valuable consideration or inducement whatever which is not specified in such policy or contract.
Accordingly, Section 2324 would allow an insurance agent or broker subject to its provisions to distribute as a "keepsake" an item which does not exceed $15.00 in value, and is designed to keep the name of the insurer or producer before the customer by embossing the insurers or producers name on the item. An agent or broker subject to the provisions of N.Y. Ins. Law § 4224(c) (McKinney Supp. 2003), may not distribute promotional novelties in connection with the sale of insurance unless it is specified in the policy or contract.
For further information one may contact Senior Attorney Susan Dess at the New York City Office.