OGC Opinion No. 08-09-09
The Office of General Counsel issued the following opinion on September 24, 2008, representing the position of the New York State Insurance Department.
RE: Names of insurers in advertisements
Questions Presented:
1. May an insurance company use its trade name in a radio, television or “small print” advertisement without also providing the full legal name of the insurance company?
2. Must an advertisement, which uses a brand name to represent an insurance company and its affiliates, list the names of all the licensed affiliates, as well as the location of their principal offices?
Conclusions:
1. No. An entity that uses only an unauthorized trade name in an advertisement does business without a license in violation of N. Y. Ins. Law § 1102(a) (McKinney 2006). Such a practice also could constitute a violation of Insurance Law § 2122(a), as well as an unfair or deceptive trade practice under Article 24 of the Insurance Law.
2. Yes. The Insurance Law and regulations promulgated thereunder require that the names of all insurers, as well as the location of the principal offices of the insurers, be included in any advertisement targeting New York residents.
Facts:
The inquirer represents and advises property/casualty insurance companies regarding the lawful requirements for advertising in the state. The inquirer asserts that it would be “extremely difficult” in some cases to provide the full names of all licensed companies, as well as the location of their principal offices, in advertisements where a trade name is used to represent collectively a group of affiliated insurance companies in the advertisement.
Further, the inquirer states that the inquirer has reviewed the local yellow pages and have found, in many cases, that only the insurance company’s trade name is mentioned in the advertisement, along with the names, addresses and phone numbers of the company’s local agents. The inquirer adds that in some advertisements, the name of the parent company, the phrase “& Affiliates” , as well as the location of the home office, and names, addresses and phone numbers of the insurance company’s local agents are set forth in the advertisements.
The inquirer seeks clarification about the rules regarding the advertisements of property/casualty insurance companies, and asks whether there are exceptions to the rules regarding radio, television and small print advertisements, such as newspaper and yellow pages advertisements.
Analysis:
The Department’s Office of General Counsel (“OGC”) previously has opined that an insurer may use a service mark or trade name in its advertisements, provided that the full name of the authorized insurer is set forth in the advertisement and the use of the service mark or trade name is not misleading to the public.1 See OGC Opinion No. 00-02-14 (Feb. 28, 2000); see also New York Codes Rules and Regulations (“NYCRR”) tit. 11 § 215.13 (Regulation 34) (requiring accident and health insurers to specify the full name of the actual insurer in any advertisement).
The Superintendent of Insurance promulgated Regulation 34 to prevent misleading and deceptive advertising, and to ensure that insurers provide the public with an accurate description of the insurance being offered in advertisements. 11 NYCRR § 215.13(a) provides:
The name of the actual insurer and the form number or numbers advertised shall be identified and made clear in all of its advertisements. An advertisement shall not use a trade name, any insurance group designation, name of the parent company of the insurer, name of a particular division of the insurer, service mark, slogan, symbol or other device which without disclosing the name of the actual insurer would have the capacity and tendency to mislead or deceive as to the true identity of the insurer.
A similar provision is found in 11 NYCRR § 219.4(p) (Regulation 34-A), which governs advertisements of life insurance and annuity contracts. That provision also requires that the name of the city, town or village of the insurance company’s home office be included in any advertisements.
Although there is no regulation for property/casualty and other insurance companies not governed by Regulations 34 or 34-A, the principles enunciated in Regulations 34 and 34-A can by analogy provide guidance to all insurance companies authorized in New York State.2 Regulations 34 and 34-A apply to all forms of advertisements; they set forth no exceptions with respect to radio, television or small print advertisements. Pursuant to 11 NYCRR § 215.3(a), an “advertisement” includes:
(1) printed and published material, audio-visual material, and descriptive literature of an insurer used in direct mail, newspapers, magazines, radio scripts, TV scripts, billboards and similar displays; . . . (Emphasis added.)
11 NYCRR § 219.3(a)(1) contains a similar definition of “advertisement”.
Thus, the use of an unauthorized trade name in any advertisement, without indicating the company or companies that the trade name represents, violates Regulations 34 and 34-A. Moreover, the use of a phrase such as “& Affiliates” can be found by the Superintendent to be misleading, because it does not specify the true identity of the authorized insurer.
Further, the use of a trade name in advertisements, without setting forth the authorized insurers that the name represents, also could run afoul of Insurance Law § 1102(a), which prohibits any person or entity from conducting any insurance business within the state unless the person or entity obtains a license to do so (or is exempted from licensing requirements). That statute reads as follows:
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. Any person, firm, association, corporation or joint-stock company which transacts any insurance business in this state while not authorized to do so by a license issued and in force pursuant to this chapter, or exempted by this chapter from the requirement of having such license, shall, in addition to any other penalty provided by law, forfeit to the people of this state the sum of one thousand dollars for the first violation and two thousand five hundred dollars for each subsequent violation.
The Department has long considered the use of an unauthorized trade name to constitute doing business by an unlicensed person. See OGC Opinion No. 01-03-19 (Mar. 29, 2001).
In addition, Insurance Law § 2122(a)(2) prohibits the use of any advertisement or other public announcement by an insurance broker or other person in New York State that “calls attention to any unauthorized insurer or insurers.” Not only could the use of an unauthorized trade name violate Insurance Law § 2122(a)(2), but it also could constitute an unfair or deceptive trade practice in violation of Article 24 of the Insurance Law.
In sum, an insurance company may use a trade name to represent the company and its affiliates in any advertisement, as long as the full name of the insurance company and its affiliates also are set forth in the advertisement, and the trade name is not misleading or deceptive as to the true identity of the insurer. The inquiry references advertisements of insurers that may have violated the Insurance Law and regulations promulgated thereunder. If the names of such insurers are provided, the Department’s Consumer Services Bureau can consider whether to undertake an appropriate investigation.
For further information you may contact Senior Attorney Camielle A. Campbell at the New York City office.
1 See generally N. Y. Gen. Bus. Law § 130(1-a)(c) (stating that “[t]he use by a corporation, limited partnership or limited liability company of a divisional, departmental or trade name or designation, in conjunction with the real name of the corporation, limited partnership or limited liability company, shall be deemed to be the use of the real name of the corporation, limited partnership or limited liability company, for purposes of this section.”) (Emphasis added).
2 The Department currently is drafting a regulation governing advertisements of property/casualty insurance.