The Office of General Counsel for the New York State Insurance Department issued an opinion on March 12, 2007 which should be helpful to structured settlement brokers, structured settlement brokerage and settlement planners earning commission based compensation. The opinion letter answers the question of "whether an insurance agency may advertise that it will donate a nominal sum to charity each time the agency receives a call for an insurance quote?".
The Office of General Counsel stated:
"To advertise charitable contributions as an incentive for new insurance business constitutes an offer of an intangible benefit or inducement that violates Insurance Law §§ 2324 or 4224 (which pertains to life, accident and health insurance, and annuities). See General Counsel Opinion 11-03-12, dated March 17, 2000. However, since 2004, the Department’s Office of General Counsel on at least three occasions has opined that a licensed insurance agent or broker may donate to a charitable organization a portion of commissions earned from the sale of insurance policies if: (1) prospective clients and insureds have no direct or indirect influence over which charities receive donations; (2) no donations are made in the name of an insured or prospective client or are otherwise made on behalf of an insured or prospective client; and (3) no applicable tax deductions for such charitable contributions, or any other benefits – whether tangible or intangible, direct or indirect – stemming from such donations, inure to an insured or prospective client. See General Counsel Opinions 04-03-02, dated March 3, 2004; 04-11-12, dated November 16, 2004; and 06-06-11, dated June 28, 2006. However, upon further reflection, even that reasoning is suspect, because the very nature of the proposal confers on a prospective insured an “indirect,” “intangible” benefit.** Because the governing statutes do not provide for a charitable donation exception, those opinions of the Department’s Office of General Counsel that are contrary to the analysis set forth herein are hereby overruled and should not be followed. Of course, nothing precludes the agent or broker from making charitable contributions so long as the advertising of a charitable contribution as an incentive for new insurance business does not constitute an improper inducement in violation of Insurance Law § 2324. "
Stuctured settlement brokers, structured settlement brokerage and settlement planners earning commission based compensation should exercise caution in oral, written and Internet soliciations to avoid violating the law. In short, the message is that while expressions of largesse are OK, just don't rub people's nose in it as an inducement to do business with you.
If you are lawyer or trial lawyer association, and you received a written solicitation from an insurance agency or a representative of an insurance agency (life insurance, annuities, structured settlements) which either
- continually lays out all of the amounts of money he/it has contributed to charity or your bar/trial lawyer association(s) as a reason to do business with it over a competitor; and/or
- states that he/it will contribute to charity or your bar/trial lawyer association(s) if you will do business with it over a competitor; and/or
- made such a promise contribute to a charity or your bar/trial lawyer association(s), if you will do business with it, and has at any time reneged on such promise because the business was not sufficient in the eyes of the insurance agency or its representative, this author would like to know.
Responses need not be limited to New York.
** underlined for emphasis