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 December 18, 2006, representing the position of the New York State Insurance Department.

Fraud Warning

Question Presented:

Must the Fraud Warning Statement appear on the revised Application for the NY Construction Classification Premium Adjustment Program found in the NY Compensation Insurance Rating Board ("NYCIRB") Bulletin R.C. 2119?

Conclusion:

Since the "Application" in issue is not an actual application for coverage, but is a form to request a premium discount or credit, the Fraud Warning Statement need not appear thereon.

Facts:

A company would like to adopt the revised NYCIRB premium credit request form but was concerned that the approved application form did not recite the fraud warning.

Analysis:

Section 86.4 of N.Y. Comp. Codes R. & Regs. tit. 11, pt. 86 (2003) (Reg. 95) states in relevant part:

(a) . . . all claim forms for insurance, and all applications for commercial insurance and accident and health insurance, provided to any person residing or located in this State in connection with insurance policies for issuance or issuance for delivery in this State, shall contain the following statement:

"Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information, or conceals for the purpose of misleading, information concerning any fact material thereto, commits a fraudulent insurance act, which is a crime, and shall also be subject to a civil penalty not to exceed five thousand dollars and the stated value of the claim for each such violation."

. . . .

(d) Location of warning statements and type size. The warning statements required by subdivisions (a). . . of this section shall be placed immediately above the space provided for the signature of the person executing the application or claim form. . .

(e) Notwithstanding the provisions of subdivisions (a) . . . of this section, insurers may use substantially similar warning statements provided such warning statements are submitted to the Insurance Frauds Bureau for prior approval.

Pursuant to Regulation 95, a written fraud warning statement must be provided on the physical application above the insured’s signature line. The written fraud warning must be provided to the applicant during the application process.

Although Section 86.4 of N.Y. Comp. Codes R. & Regs. tit. 11, pt. 86 (2003) (Reg. 95) requires that the fraud warning statement be contained on insurance claim forms and applications for specified types of insurance, the "Application" in issue is not an actual application for coverage, notwithstanding the use of that word, but is merely a form to request a premium discount or credit. The actual application for Workers’ Compensation coverage does contain the required fraud warning statement.

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