Further to the issue of whether a structured settlement broker or settlement planner may advertise contributions to charities and other non profit entities (such as associations of trial lawyers) in connection with the sale of structured settlement annuities and other insurance products, consider the March 12, 2007 opinion of the New York Insurance Department Office of General Counsel which I covered in Advertising Charitable Contributions-Is It Legal? on April 8, 2007
QUESTION POSED TO NEW YORK STATE INSURANCE DEPARTMENT: May an insurance agency advertise that it will donate a nominal sum to a charity every time the agency receives a call for an insurance quote?
IT'S CONCLUSION: No. While an insurance agency may make charitable donations, it may not advertise that it will donate a sum to the charity every time it receives a call for an insurance quote. Charitable donations in the circumstances described below constitute an unlawful inducement of the sort that the Insurance Law proscribes.
"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"