For those pondering the question concerning the issue of advertising or providing of free or discounted services (such as legal services, discounted mortgage services, pre settlement financing) for plaintiffs or attorneys, in connection with or tied to the placement of insurance products such as structured settlement annuities and life insurance, the following New York Insurance Department Circular issued March 3, 2009 and authored by Paul A. Zuckerman, Assistant Deputy Superintendent and Counsel, may be helpful.
The stated purpose of the Circular Letter was "to provide guidance and clarification to licensed insurance agents and brokers (collectively, “insurance producers”) as to what kinds of services (often referred to as “value-added” services) may be provided to insureds or potential insureds without running afoul of the rebating and inducement provisions set forth in the New York Insurance Law. In response to numerous inquiries regarding these services, the Insurance Department’s Office of General Counsel (“OGC”) has in recent years issued a number of opinions on the subject. The Department recognizes that the nature of services that an insurance producer may provide in connection with sale or service of insurance continue to evolve, but even in changing conditions, certain underlying principles can guide licensees in their conduct"
Germane to the structured settlement and settlement planning industry....
"However, because they are too attenuated to the provision of insurance or would otherwise violate the law because the services are not specified in the policy, the following services, if provided by an insurance producer to an insured or prospective insured for “free” or at a reduced fee, or otherwise offered in conjunction with insurance services, could, in the Department’s estimation, run afoul of the rebating and inducement provisions set forth in the Insurance Law. Thus, careful consideration should be given to:
• Flexible spending administration services;• Legal services;
• Referrals to third-party service providers through which an insured or prospective insured may receive a discounted rate while the producer is the producer of record;
• Advice regarding compliance with federal and state laws concerning human resource issues not relating to the insurance provided;
• Preparation of employee benefit statements listing all of the benefits provided to employees by the employer that are unrelated to the insurance purchased;
• Development of employee handbooks and training, which are unrelated to the insurance purchased; and..."