New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Gregory V. Serio
Superintendent

This Office of General Counsel issued the following opinion on June 10, 2004 representing the position of the New York State Insurance Department.

RE: Advertising

Questions Presented:

1) Is the quote in an advertisement "We guarantee to save you money" misleading?

2) May the statement "We guarantee satisfaction in doing business with our agency" be included in an advertisement?

3) May a testimonial from an insured, which states, "I saved over $102 on my car insurance" be included in an advertisement?

Conclusions:

1) The quote "We guarantee to save you money" is misleading.

2) The statement "We guarantee satisfaction in doing business with our agency" is misleading.

3) The testimonial from the insured is misleading because it does not state whether the savings resulted from a change in coverage. Additionally, because a specific amount of money is mentioned, the name of the insurer, as well as the city in which the insurer’s principal office is located, must be provided pursuant to N.Y. Ins. Law § 2122(b) (McKinney 2000).

Facts:

An advertisement was placed in a local Pennysaver that states:

"Young Drivers!
Don’t pay outrageous
insurance premiums!

We guarantee to save you money!
Seriously…guarantee!

Beneath that is a picture of a woman and next to the picture is the statement "I saved over $102 on my car insurance." – Cathie, Bloomfield.

Analysis:

Insurance agency advertisements must be in compliance with applicable sections of the New York Insurance Law and the Regulations promulgated pursuant thereto. N.Y. Ins. Law § 2122(b) (McKinney 2000) provides:

Every agent of any insurer and every insurance broker shall, in all advertisements, public announcements, signs, pamphlets, circulars and cards, which refer to an insurer, set forth therein the name in full of the insurer referred to and the name of the city, town or village in which it has its principal office in the United States.

N.Y. Penal Law § 190.20 (McKinney 1999) provides:

A person is guilty of false advertising, when, with intent to promote the sale or to increase the consumption of property or services, he makes or causes to be made a false or misleading statement in any advertisement . . . .

An advertisement guaranteeing to save the insured money, as well as an advertisement guaranteeing satisfaction with the services provided by an insurance agency are both misleading. It cannot be guaranteed that every insured can save money by purchasing insurance through the advertised insurance agency, nor can it be guaranteed that every insured will be satisfied with the services provided. Changing the word "guarantee" to "promise," as was suggested, is still misleading and, therefore, not acceptable.

This advertisement is different from one that states that there may be a potential savings by using a particular producer who has the ability to shop around and perhaps obtain a more favorable rate for an insured. Office of General Counsel Opinions dated February 19, 2003 and February 28, 2000 address the distinction between advertising the potential for savings, which is acceptable, and guaranteeing savings, which is not. If an agent represents several insurers, uses general language and does not mention specific prices in the advertisement, it would fall outside the bounds of N.Y. Ins. Law § 2122(b) (McKinney 2000) and would not constitute a violation thereof.

The testimonial that states "I saved over $102 on my car insurance" violates N.Y. Ins. Law § 2122(b) (McKinney 2000). By mentioning a specific amount saved, this advertisement must be making reference to a specific insurer. Accordingly, it is a violation of N.Y. Ins. Law § 2122(b) (McKinney 2000), which requires an advertisement that makes reference to a specific insurer to mention the name of the insurer, as well as the city in which the insurer’s principal office is located. Office of General Counsel Opinion dated February 19, 2003 addresses this issue.

It was suggested that fine print at the bottom of the ad be included, giving the prospect a nominal bonus if the agency failed to meet its advertised guarantee. This would not cure the violation discussed above. Additionally, distributing a key chain or mini flashlight may constitute an inducement in violation of N.Y. Ins. Law § 2324(a) (McKinney Supp. 2004). Office of General Counsel Opinion dated November 7, 2001 discusses this subject.

For further information you may contact Supervisory Attorney Joan Siegel at the New York City Office.