OGC Opinion No. 07-05-11

The Office of General Counsel issued the following opinion on May 22, 2007 representing the position of the New York State Insurance Department.

Re: Communicating Directly with a Third Party Claimant Represented by Counsel.

Questions Presented

1. Does § 216.9 of N.Y. Comp. Codes R. & Reg. tit. 11, Part 216 (Regulation 64) serve as an express exception to the customary policy that an insurer's claims personnel should not deal directly with a claimant that the insurer knows is represented by an attorney?

2. May an insurance company that maintains headquarters and regional operation in the state of New York but that actively seeks business in the state of Ohio voluntarily adopt a third-party claimant notification practice in the state of Ohio?


1. Yes. Since 11 NYCRR § 216.9 has the force and effect of law, it serves as an exception to the customary rule that an insurer's claims personnel should not deal directly with an attorney represented claimant.

2. The Department will not provide an opinion on this question, as it involves a business practice governed by the laws and regulations of the State of Ohio.


An insurance company informed the Department that it made it a practice in various states to notify payees/clients of insurance settlements. The company adopted the practice of third-party claimant notification in the State of New York, and inquired whether this practice was authorized under 11 NYCRR § 216.9. The company further stated that it was considering voluntarily adopting a third-party claimant notification practice in the State of Ohio, and inquired whether 11 NYCRR § 216.9 authorized it to do so.


The Insurance Department's consistent position is that once a claim is filed and the insurer knows that the third-party claimant is being represented by counsel, ethical standards of conduct require that any necessary communications be made to the counsel rather than to the third-party claimant. See General Counsel Opinion dated November 21, 2006. An insurer, or its representatives, may not communicate directly with a claimant represented by counsel without counsel's consent, as there is a real or potential conflict of interest inherent in the unauthorized communications.

Section 216.9 of 11 NYCRR 216, which pertains to liability claims, reads as follows:

Upon payment of $5,000 or more in settlement of any third party liability claim, where the claimant is a natural person, the insurer shall cause written notice to be mailed to the claimant at the same time payment is made, by the insurer or its representative (including the insurer's attorney), to the claimant's attorney or other representatives of the claimant by draft, check or otherwise.

In instances where a claimant is a natural person, and where an insurer makes a payment to a claimant's attorney or other representative of $5,000 or more in settlement of a third-party liability claim, § 216.9 requires that the insurer provide notice to the claimant that payment is made. The Department promulgated § 216.9 at the request of the Lawyers’ Fund for Client Protection (formerly known as the Clients" Security Fund) of the State of New York, which saw the regulation as a necessary response to documented instances of theft by attorneys who had forged their clients" endorsements on settlement checks and pocketed the proceeds. See General Counsel Opinion 02-04-01, dated April 1, 2002.

Although the Insurance Department's customary position is that any necessary communications by an insurer must be made to the counsel of a third-party claimant known to be represented by an attorney, § 216.9 functions as an express exception to the general policy. Thus, an insurance company is not only permitted to adopt a third-party claimant notification practice under the circumstances described, but is obligated to issue written notice of an insurance settlement.

The provisions of Regulation 64 do not generally apply to the settlement of insurance claims outside of the State of New York. For a determination or opinion regarding the voluntary adoption of a third-party notification program in the State of Ohio, guidance must be sought from the Ohio Department of Insurance.

For further information you may contact, Principal Attorney Paul Zuckerman at the New York City Office.