OGC Opinion No. 06-11-03
The Office of General Counsel issued the following opinion on November 2, 2006 representing the position of the New York State Insurance Department.
Re: Alien insurers
Question Presented:
Must an alien insurer obtain a New York State license to sell accident and health insurance in order to offer health insurance policies to New York State residents covering persons who reside in a foreign country in which such insurer is licensed?
Conclusion:
Under the facts presented, the alien insurer must obtain a New York State license as an insurer to sell accident and health insurance because of the activities the alien insurer proposes to conduct in New York State. All of such proposed activities would constitute the doing of an insurance business pursuant to Section 1101 of the Insurance Law in violation of Section 1102.
Facts:
1. The alien insurer is duly authorized to do an insurance business in the country of its domicile (the "foreign country").
2. The alien insurer would market health insurance policies (the "policies") to New York residents, using face-to-face sales, telephone solicitation, and possibly print advertising. The alien insurer is not planning to market any other product or service constituting an "insurance contract" within the meaning of Section 1101 of the New York State Insurance Law.
3. The alien insurer would employ the services of salespeople, agents, brokers or representatives in the State of New York.
4. The beneficiaries of the policies would in all cases be residents of the foreign country. Neither the policyholder nor any other New York resident would be an insured or a beneficiary under any of the policies.
5. The alien insurer will negotiate and execute the purchase and sale of a policy with New York residents while such New York residents are located in New York.
6. The alien insurer will issue all policies in the foreign country in accordance with the law thereof.
7. The alien insurer will not transfer possession of a duly issued policy or insurance to the policyholder in New York; it will deliver all policies in the foreign country.
8. The New York resident policyholders will make payment of policy premiums from the State of New York by an undetermined method.
Analysis:
N.Y. Ins. Law § 1102(a) (McKinney 2006) states in pertinent part:
No person, firm, association, corporation or joint-stock company shall do an insurance business in this state unless authorized by a license in force pursuant to the provisions of this chapter, or exempted by the provisions of this chapter from such requirement.
N.Y. Ins. Law § 1101(b)(1) (McKinney 2006) states in pertinent part:
Except as provided in paragraph two, three or three-a of this subsection, any of the following acts in this state, effected by mail from outside this state or otherwise, by any person, firm, association, corporation or joint-stock company shall constitute doing an insurance business in this state and shall constitute doing business in the state within the meaning of section three hundred two of the civil practice law and rules:
(A) making, or proposing to make, as insurer, any insurance contract, including either issuance or delivery of a policy or contract of insurance to a resident of this state or to any firm, association, or corporation authorized to do business herein, or solicitation of applications for any such policies or contracts;
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(C) collecting any premium, membership fee, assessment or other consideration for any policy or contract of insurance.
In this case, the alien insurer would market health insurance policies (the "policies") in New York, using face-to-face sales, telephone solicitation, and possibly print advertisement prior to the issuance of the policy. Such acts would violate N.Y. Insurance Law § 1102 (McKinney 2006). Further, having the New York resident policyholders make payment of policy premiums would also violate Section 1102.
In addition, N.Y. Ins. Law § 2117(a) (McKinney 2006) prohibits aiding an unauthorized insurer and states:
(a) No person, firm, association or corporation shall in this state act as agent for any insurer or health maintenance organization which is not licensed or authorized to do an insurance or health maintenance organization business in this state, in the doing of any insurance or health maintenance organization business in this state or in soliciting, negotiating or effectuating any insurance, health maintenance organization or annuity contract or shall in this state act as insurance broker in soliciting, negotiating or in any way effectuating any insurance, health maintenance organization or annuity contract of, or in placing risks with, any such insurer or health maintenance organization, or shall in this state in any way or manner aid any such insurer or health maintenance organization in effecting any insurance, health maintenance organization or annuity contract.
Any person who aides an unauthorized insurer including the alien insurer in this case, in selling accident and health insurance in New York would be acting in violation of Section 2117(a) of the Insurance Law.
The inquirer also asked if whether the alien insurer offers accident and health insurance in the form of a health maintenance organization ("HMO") affects whether the alien insurer needs to be licensed. Only a HMO licensed pursuant to New York Public Health Law Article 44 is exempt from being licensed as an insurer by the Insurance Department.
For further information you may contact Senior Attorney Elizabeth Barrett at the New York City Office.