The Office of General Counsel issued the following opinion on November 21, 2007, representing the position of the New York State Insurance Department.
Re: Licensing Requirements for Firm Performing Services Related to Medicare Advantage
Does an out-of-state company, which is hired by an authorized insurer to perform the tasks set forth below, need a license to act as an insurance agent?
A company, whether in-state or out-of-state, that is hired by an authorized insurer to perform only the tasks set forth below would not need to become licensed as an insurance agent.
The inquirer reports that effective January 2008, ABC Health Plan (“ABCHP”) will be licensed to enroll members in four of New York City’s boroughs in its Medicare advantage plans. The inquirer states that ABCHP intends to hire an out-of-state company, which will act as a call center, and whose employees will, on ABCHP’s behalf, schedule appointments and make reservations for seminars. The inquirer further notes that the contact information for insureds or potential insureds will result from ABCHP’s marketing efforts, ABCHP’s website, and from incoming telephone inquiries. The call center will have access to this information, and will only place calls to prospects/insureds who already have showed interest in ABCHP’s insurance products as a result of ABCHP’s marketing efforts. The call center also will collect missing information, correct information, or schedule, reschedule or confirm appointments and seminars. The inquirer states that the call center will refer to licensed employees of ABCHP any prospects/insureds with insurance-related questions.
In addition, the inquirer asserts that neither the call center nor its employees will be paid a commission, and that they will not be compensated based on the number of prospects/insureds who enroll in ABCHP.
N.Y. Insurance Law § 2101(k) (McKinney 2006) is relevant to this inquiry. It defines an “insurance producer” as “an insurance agent, insurance broker … or any other person required to be licensed under the laws of this state to sell, solicit or negotiate insurance.” Insurance Law § 2101(a), which also is relevant to this inquiry, defines an “insurance agent” as any authorized or acknowledged agent of an insurer “who acts as such in the solicitation of, negotiation for, or sale of, an insurance . . . contract. . ..”
Insurance Law § 2101(m) and (o) define the terms “negotiation” and “solicitation”, respectively, in pertinent part as follows:
(m) In this article, “negotiate” or “negotiation” means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from licensed insurers….
(o) In this article, “solicit” or “solicitation” means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular licensed insurer.
Further, Insurance Law § 2102(a)(1) provides as follows:
(a)(1) No person, firm, association or corporation shall act as an insurance producer 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.
In general, a person who, directly or indirectly, engages in any activity that constitutes the solicitation, negotiation or sale of insurance, or who otherwise acts as an insurance agent in New York, needs to be licensed as such. In determining whether licensing is required, the Insurance Department generally looks at the totality of the conduct in question. See Office of General Counsel Opinion 03-11-12 (November 18, 2003).
The inquirer reports that ABCHP will hire a call center, located out-of-state, to schedule appointments and make reservations for seminars on behalf of ABCHP. The call center employees will only place calls to prospects/insureds who already have showed interest in ABCHP’s insurance products through ABCHP’s marketing efforts, and will only do so to collect missing information from prospects/insureds, correct information on applications, or to schedule, reschedule or confirm appointments or seminars. The call center employees will not make calls to prospects/insureds who had not previously expressed interest in obtaining insurance from ABCHP. In addition, the call center’s employees will refer all prospects/insureds with insurance-related questions to licensed employees of ABCHP.
To the extent that the call center employees would, without more, merely engage in scheduling appointments, making seminar reservations, and collecting and correcting purely factual information on applications, no license would be required from the Department. However, if the call center employees’ activities were to go beyond those actions to include, for example, discussion of policy terms and conditions, or specific insurance coverages or solicitation, or if such employees were compensated based upon the sale of insurance, licensing would be required.
For further information, you may contact Associate Attorney D. Monica Marsh at the New York City office.