The Office of General Counsel issued the following informal opinion on November 25, 2002, representing the position of the New York State Insurance Department.

Re:  Licensing Requirements to Sell HMO Policies to Filipino Residents

Question Presented:

May an unlicensed individual solicit New York residents to purchase a policy issued by an unauthorized Health Maintenance Organization ("HMO"), which will cover their relatives living in the country in which the Health Maintenance Organization is located?

Conclusion:

No. Both the unauthorized HMO, and the individuals acting on behalf of the HMO would be in violation of the New York Insurance Law. N.Y. Ins. Law §§ 1102, 2117 (McKinney 2000 & Supp. 2002).

Facts:

The inquirer’s company has negotiated a joint venture agreement to sell a Philippines based HMO’s health care policies outside the Philippines for coverage of individuals in the Philippines. The inquirer has an exclusive sales and marketing arrangement to offer the full line of the HMO’s products and services. The inquirer plans on advertising through television, newspaper ads, calling cards and by placing advertisements in brochures that are intended to reach Filipinos living in the United States.

The corporate headquarters of the inquirer’s company are in New York City and the inquirer intends to bring on-line additional offices in the United States and around the world. Sales facilitators in the United States will sell directly to Filipinos living in the United States. The policies will be either faxed, mailed or completed on the web site. Individuals may also complete applications on the web without the need of a sales facilitator. The payment will be made either by credit card or bank draft to the inquirer’s company at the same time. The policy will then be submitted to the HMO for fulfillment and the payment will be deposited into the HMO’s United States bank account in New York. The HMO will process the policy and provide the covered individual with policy information. The international web site belonging to the inquirer’s company will be the main portal for operations, marketing information, distributor support and customer services.

Analysis:

N.Y. Ins. Law § 1101(b)(1) (McKinney Supp. 2002) delineates those acts which constitute "doing an insurance business in New York" and require licensing under N.Y. Ins. Law § 1102 (McKinney 2000). Although there are certain "mail order" exceptions contained in N.Y. Ins. Law § 1101(b)(2) (McKinney Supp. 2002), none of them are applicable to the inquirer’s facts. Accordingly, the HMO is an unauthorized insurer in New York and, as such, cannot do any act in this state that would constitute "doing an insurance business in New York".

What is prohibited for an insurer under N.Y. Ins. Law § 1102 (McKinney 2002) is prohibited for any person acting on behalf of the insurer under N.Y. Ins. Law § 2117 (McKinney Supp. 2002). That section provides, in pertinent part:

The acts that the inquirer proposes to have his company and the facilitators perform would violate the above provision.

The Department has reviewed and opined on a proposal that is almost identical to the inquirer’s. General Counsel Opinion 6-20-2001 is available on the Department’s web site, www.ins.state.ny.us, as are other opinions that address proposals similar to the inquirer’s. Applying the conclusions reached in those opinions to the inquirer’s facts requires that, in order to implement the inquirer’s proposal in New York, the HMO, as well as the inquirer’s firm and the facilitators, will have to be appropriately licensed. The inquirer should also review Department Circular Letter 5 (2001), which is available on the Department web site.

For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.