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 May 17, 2006, representing the position of the New York State Insurance Department.

RE: Advertising/Quote Incentives

Question Presented:

May an accident and health insurance agent offer an $8 novelty item to a potential insured in exchange for an opportunity to quote the insured’s group health insurance?

Conclusion:

No, an accident and health insurance agent may not offer an $8 novelty item to a potential insured in exchange for an opportunity to quote the insured’s group health insurance pursuant to N.Y. Ins. Law § 4224(c) (McKinney’s Supp. 2006).

Facts:

An accident and health insurance agent inquires whether he may distribute a gift to potential insureds. The gift is a bracelet, valued at $8, which comes in a box imprinted with the name of the insurance agency in large type. It is the intent that this item will be given in exchange for the opportunity to quote a potential client’s group health insurance.

Analysis:

N.Y. Ins. Law § 4224(c) (McKinney’s Supp. 2006) which applies to health insurance brokers, 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 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, an accident and health insurance agent is prohibited from distributing any item of valuable consideration or inducement not specified in the policy, which would include the $8 bracelet described herein, as this would constitute a violation of N.Y. Ins. Law § 4224(c) (McKinney’s Supp. 2006).

For further information you may contact Associate Attorney Sally A. Geisel at the New York City Office.