The Office of General Counsel issued the following opinion on August 1, 2003, representing the position of the New York State Insurance Department.
Re: Marketing in New York health insurance that is to be provided outside of New York
If a contract for medical service is signed, delivered, and the contracted services performed in the Dominican Republic, but payment for and marketing of such contract is done in New York, does the person who offers this service in New York need to be licensed by the Department?
Yes. Pursuant to N.Y. Ins. Law § 2102 (a)(1) (McKinney 2000), a person must be licensed by the Department to act as an insurance agent or broker in New York, which includes selling an insurance product in New York.
The inquirer would like to market to, and collect payments from, residents of New York for medical services that would be performed in the Dominican Republic. The inquirer states that the contract will be signed, delivered and performed in the Dominican Republic. The inquirer wants to know if one needs to be licensed by the Department to carry out the inquirers plan.
N.Y. Ins. Law § 1101 (McKinney Supp. 2003) defines those acts that constitute the doing of an insurance business in New York State. N.Y. Ins. Law § 1102(a) (McKinney 2000) states that "[n]o person, firm, association, corporation or joint-stock company shall do an insurance business in this state unless authorized by a license. . .". 1 N.Y. Ins. Law § 1101(b) (McKinney Supp. 2003) contains the so-called "mail-order" exceptions to the above noted requirements; however, none of those exceptions are applicable to the facts that the inquirer presented. The Department has previously reviewed and opined on a proposal similar to the inquirers and this General Counsel opinion, dated 04-24-02, is available on the Departments web site, www.ins.state.ny.us.
Concerning the licensing of agents, brokers, reinsurance intermediaries and adjusters, N.Y. Ins. Law § 2102(a)(1) (McKinney 2000) states:
No person, firm, association or corporation shall act as an insurance agent, insurance broker, reinsurance intermediary or insurance adjuster in this state without having authority to do so by virtue of a license issued and in force pursuant to the provisions of this chapter.
N.Y. Ins. Law § 2101 (McKinney 2000) defines, in pertinent part, an "insurance agent" and "insurance broker":
(a) In this article, "insurance agent" means any authorized or acknowledged agent of an insurer . . . or health maintenance organization organization . . . who acts as such in the solicitation of, negotiation for, or procurement or making of, an insurance, health maintenance organization. . . contract . . . "
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(c) In this article, "insurance broker" means any person, firm, association or corporation who or which for any compensation, commission or other thing of value acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance or annuity contract or in placing risks or taking out insurance, on behalf of an insured other than himself or itself or on behalf of any licensed insurance broker, . . ."
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Thus, in New York, a person must be licensed as an insurance agent or broker to engage in the activity about which the inquirer inquired. In addition, if the medical service provider is not an authorized insurer, the medical service provider may not solicit for and/or make insurance contracts in New York pursuant to N.Y. Ins. Law § 1102(a) (McKinney 2000). However, even if the person was licensed, but the medical service provider is not licensed, then selling the contracts in New York would violate N.Y. Ins. Law § 2117 (a)(1) (McKinney Supp. 2003) which states:
No person, firm, association or corporation shall in this state act as agent for any insurer or health maintenace organization which is not licensed or authorized to do an insurance or health maintenance organization business in this state or in soliciting, negotiating or effectuating any insurance, health maintenance organization or annuity contract or shall in this state act as insurance broker in soliciting, negotiating or in any way effectuating any insurance, health maintenance organization or annuity contract of, or in placing risks with, any such insurer or health maintenance organization, or shall in this state in any way or manner aid any such insurer or health maintenance organization in effecting any insurance, health maintenance organization or annuity contract.
In conclusion, in order to market this product and collect money for it in New York, the medical service provider must be licensed as an insurer. The person marketing it, and collecting money for it, must be licensed as an insurance agent or broker in New York.
The inquirer may wish to review N.Y. Ins. Law §1101(b) (McKinney Supp. 2003) because it contains exceptions to the above stated licensing requirement. However, none of these exceptions apply to the inquirers factual situation, as currently structured.
For further information one may contact Senior Attorney Susan Dess at the New York City Office.
1Pursuant to N.Y. Ins. Law § 107(10) (McKinney Supp. 2003):
"Authorized insurer" means an insurer authorized as such to do an insurance business in this state in compliance with this chapter, by reason of a license so to do issued and in force pursuant to the laws of this state or of a corporate charter granted and in force pursuant to the laws of this state, but not including any insurer herein exempted from compliance with the requirement that it obtain a license to do business.