The Office of General Counsel issued the following informal opinion on June 15, 2001, representing the position of the New York State Insurance Department.

Re: Dental Services

Question Presented:

Does the proposed dental program constitute the "doing of an insurance business" for which licensing is required pursuant to N.Y. Ins. Law § 1102 (McKinney 2000)?


If each separate fee charged by a dentist for services that are dependent upon a fortuitous event, covers the cost of rendition to the dentist, including reasonable overhead, then such a program would not constitute the "doing of an insurance business" for which licensing is required.


A New York licensed mutual life and health insurance company seeks confirmation that the product described below is (1) not an insurance product and (2) does not violate the insurance laws or any other laws of which we are aware.

The following facts have been provided:

The [insurer] has contracted with various dentists ("Participating Dentists") in many states, including yours. The Participating Dentists have agreed to provide dental services for certain persons pursuant to a reduced fee schedule.

An entity ("Card Entity") would like to offer its customers ("Card Customers") the opportunity to receive services from the Participating Dentists pursuant to the reduced fee schedule. The Card Entity proposes to issue an identification card which will bear the name of the [insurer] and the Card Entity. Card Customers will present the card to the Participating Dentist so that the Card Customer can pay pursuant to the reduced fee schedule.

The Card Entity will pay an administrative access fee to [insurer] for the right to have Card Customers access the reduced fee schedule and for the services provided by the [insurer] in administering its contracts with Participating Dentists. The fee will be calculated on the number of Card Customers that purchase the product.

The reasons for why, in your view, the proposed product is not insurance:

Card Customers will be entirely responsible for paying the professional fees to the Participating Dentists pursuant to the reduced fee schedule. The Card Entity’s enrollment information will state that the Card Customer acknowledges that there is no other entity that will pay the fees for any professional services. Therefore, as there is no responsibility for the Card Entity or the [insurer] to reimburse nor pay for any professional fees, the product should not be considered to be an insurance product.

Furthermore, there are two product choices which both require the payment of an annual membership fee to the Card Entity. These are:

Flat Fee- On a fixed schedule (e.g. monthly) the Card Customer will either pay: (i) a flat amount to the Card Entity for the right to receive services pursuant to the reduced fee schedule; or (ii) a flat amount per visit. For example, the Card Customer will pay $10 to the Card Entity each month or each time a visit is made to the Participating Dentists (in addition to paying the Participating Dentists the professional fees owed).

Percentage of Fee- Each time that a fee is incurred for a professional service, the Card Customer must pay the Card Entity a fixed percentage of the fee that is listed on the reduced fee schedule. For example, if the discounted fee is $100, a Card Customer may be required to pay 10% of such fee, or $10, to the Card Entity (in addition to paying $100 to the Participating Dentists).


N.Y. Ins. Law § 1101 (McKinney 2000) states that the making of any insurance contract constitutes the doing of an insurance business in this state. N.Y. Ins. Law § 1101(a) (McKinney 2000) defines the terms "insurance contract" and "fortuitous event" as follows:

(1) "Insurance contract" means any agreements or other transaction whereby one party, the "insurer", is obligated to confer a benefit of pecuniary value upon another party, the "insured" or "beneficiary", dependent upon the happening of a fortuitous event in which the insured or beneficiary has, or is expected to have at the time of such happening, a material interest which will be adversely affected by the happening of such event.

(2) "Fortuitous event" means any occurrence or failure to occur which is, or is assumed by the parties to be, to a substantial extent beyond the control of either party.

The making of a service plan that, for a pre-paid fee, obligates one party to provide a benefit dependent upon a fortuitous event, would constitute insurance under N.Y. Ins. Law § 1101 (McKinney 2000) and require a license pursuant to N.Y. Ins. Law § 1102 (McKinney 2000), unless the fee covered the cost of the rendition of services plus the cost of reasonable overhead expenses.

Regarding the proposed dental program, the dentist and the Card Entity would be acting as insurers unless the dentist received the actual cost of rendering the service (plus overhead costs) as a fee. This is because certain of the services provided under the dental program would be dependent upon the happening of a fortuitous event, that being the need for dental care, which is beyond the control of either party.

This Department expresses no opinion as to how the proposed dental program would be impacted by other applicable statutes.

For further information, you may contact Senior Attorney Meredith S. Kaufer at the New York City Office.