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

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following opinion on June 22, 2005, representing the position of the New York State Insurance Department.

RE: Automobile Insurance Advertisements.

Questions Presented:

1. May an insurer use advertisements specifying potential savings up to a particular dollar amount or in terms of an average dollar amount saved on automobile insurance?

2. May an insurance agent or broker use advertisements specifying potential savings up to a particular dollar amount or in terms of an average dollar amount saved on automobile insurance?

3. Would the answer to either of the above questions change if the advertisement was in the form of a testimonial?

Conclusions:

1. Yes, an insurer may use advertisements that specify potential savings up to a particular dollar amount or in terms of an average dollar amount saved where the advertisement is not misleading.

2. Yes, an insurance agent or broker may use advertisements that specify potential savings up to a particular dollar amount or in terms of an average dollar amount where the advertisement complies with the disclosure requirement of N.Y. Ins. Law §2122 and where the advertisement is not misleading.

3. An advertisement containing a testimonial must comply with the disclosure requirement of N.Y. Ins. Law § 2122.

Facts:

No specific facts were provided. Accordingly, this opinion is general in nature.

Analysis:

Insurance agent and broker advertising must comply with the applicable sections of the N.Y. Ins. Law and Regulations. 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.

This Department has opined that if an agent or broker represents several insurers, uses general language demonstrating the ability to shop around for a favorable rate and does not mention specific prices in the advertisement, the advertisement would be permissible under N.Y. Ins. Law § 2122(b). However, by mentioning potential savings up to a particular amount or an average dollar amount saved across the board, such an advertisement refers to a specific insurer, and must therefore comply with § 2122. An insurer may advertise its own rates and potential for savings, but must specify in the advertisement its name in full and city, town or village of its principal office in the United States.

In an advertisement containing a testimonial, an insured that shares his or her experience saving money thereby makes reference to the insurer that issued the policy. Accordingly, this Department has opined that an advertisement including a testimonial must comply with N.Y. Ins. Law § 2122(b) by specifying the name in full of the insurer referred to and the name of the city, town or village of its principal office in the United States. In addition, N.Y. Comp. Codes R. & Regs tit 11, § 215.8, (McKinney 1999)(Regulation 34) , applicable to accident and health insurance, and N.Y. Comp. Codes R. & Regs tit 11, § 219.4, (McKinney 1999)(Regulation 34-A), applicable to life insurance, set out further disclosure requirements that can serve as general guidance for property insurance advertisements utilizing testimonials. § 215.8 of Regulation 34 and § 219.4 of Regulation 34-A both state that a testimonial must be genuine, represent the current opinion of the person giving the testimonial, and be applicable to the policy advertised.

In addition to disclosure requirements, an automobile insurance advertisement must also comply with N.Y. Penal Law §190.20 (McKinney 1999), which prohibits any false advertisement and 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….

Accordingly, an automobile insurance advertisement made by an insurance agent or broker must comply with the disclosure requirement of N.Y. Ins. Law § 2122(b) if it refers to a particular insurer by mentioning specific prices, using a testimonial, or otherwise. Additionally, an automobile insurance advertisement must be accurate and not misleading as required by N.Y. Penal Law § 190.20.

For further information you may contact Principal Attorney Paul A. Zuckerman at the New York City Office.