by Structured Settlement Watchdog
In the context of soliciting prospects and clients for structured settlement annuities, the following appears in an advertisement by a New York City settlement planning company at time of posting, that is affiliated with one of the largest contributors to New York State Trial Lawyers Association (NYSTLA).
"Default risk, meaning the life insurance company that is selected becomes unable to make the payments. However, this risk is small due to the well-capitalized life insurance companies that are used for structured settlement annuities. Additionally, there are state insurance guaranty associations for every state that guarantee annuities up to a certain value (this excludes workers’ compensation reinsurance). Finally, settlement proceeds can be spread among several different life insurance companies to lessen default risk."
Does the settlement planner's statement on its website violate New York State Law?
New York insurance law is quite clear and this on point unequivocal opinion and analysis OGC Op. No.10-11-07, was published by the Office of General Counsel of the New York State Insurance Department (Now New York Department of Financial Services) in response to questions that I posed, which conclusively lays waste to what this affiliate top NYSTLA contributor is doing.
Here are the questions I posed in 2010
1. Does the use of a Linked-In profile page for the promotion of insurance, insurers, or insurance agents or brokers constitute an advertisement, announcement, or statement under the New York Insurance Law?
2. May a licensed insurance agent or broker who solicits structured settlement annuities speak or write about guaranty funds in general in connection with the solicitation of annuities to lawyers or their personal injury clients?
3. Is an express disclaimer in marketing materials, such as a statement to the effect that the existence of guaranty funds is not a reason to buy insurance, or a direct reference therein to the provisions of New York Insurance Law § 7718 (McKinney Supp. 2010), sufficient to allow guaranty fund references to be made in such marketing materials?
4. Is there an acceptable way under the Insurance Law for a licensed agent or broker to respond to inquiries on the subject of guaranty funds?
Conclusions of the Office of General Counsel:
1. Yes, the use of a Linked-In profile page or a similar website for the promotion of insurance*, insurers, or insurance agents or brokers constitutes an advertisement, announcement, or statement under the New York Insurance Law. [*a structured settlement annuity is indisputably an insurance product]
2. No, a licensed insurance agent or broker who solicits structured settlement annuities may not properly speak or write about guaranty funds, even in general terms, in connection with the solicitation of annuities to lawyers or their personal injury clients.
3. No, the inclusion of an express disclaimer in marketing materials, such as a statement to the effect that the existence of guaranty funds is not a reason to buy insurance, or a direct reference to the provisions of Insurance Law § 7718, will not render guaranty fund references in such marketing materials acceptable.
4. Agents and brokers are advised to refer any questions about guaranty fund protection to the Insurance Department or to a licensed insurer, which may, upon a written request, provide information about the guaranty fund to policyholders by means of a form prepared by the guaranty fund and approved by the Superintendent of Insurance.
Note: In its analysis, which readers can access by clicking here, the OGC referred to a January 26, 2009 opinion letter which I also sought and received in connect with the question of whether a life insurance agents or broker could lawfully use a brochure published by a trade association referencing the same protections. Same answer. Download Opinion About Use of LIGCNY in Solicitation of Structured Settlement Annuities 1-26-2009
How Often Has The NYSTLA Partner Affiliate Been At Sixes and Sevens With Article 7718?
Given that the above statement made by them appeared in the FAQ (frequently asked questions) section of its website, it seems reasonable to assume that the question has come up multiple times and a raises "The $100,000 Question" of how many times the principals of the subject affiliate of NYSTLA Partner company have used the subject statement while soliciting insurance, including structured settlement annuities, during the course of their existence?
Poor Optics for NYSTLA When You Connect The Dots
What is shocking is that the NYSTLA contributor affiliates also happen to be practicing lawyers and licensed insurance agents. Thus they are presumed to know the law. There is no escaping that a website is an advertisement and there is no escaping the New York statute prohibiting such advertising and the above unequivocal opinions of the OGC. The subject company also appears to be violation of dozens of other states' statutes concerning the prohibitions on advertising guaranty associations.
That a trial lawyer organization patronizes a company that includes members of the New York State Bar, includes members of NYSTLA, that appears to violate the insurance laws of New York and the contributions being made to NYSTLA, are so clearly tied to solicitation of insurance related business (e.g.structured settlement annuities) and that NYSTLA so clearly solicits the support of such company by its members because of the financial contributions they make, is astounding.