The New York State Insurance Department says insurers should file ratings reports with the department before using the reports in sales presentations.
Officials in the general counsel’s office at the department have come to that conclusion in an opinion responding to question about whether agents of “ABC Insurance Company” can show prospects a Medicare supplement insurer ratings report if the insurer has not filed the ratings report with the department.
Department investigators found that the authors of the ratings report gave a B plus rating to ABC Insurance, and a D plus rating to another Medigap seller, officials write in the opinion.
Some ABC Insurance agents kept the report in plastic and showed it to customers, officials write.
“In one instance,” officials write, “an agent testified that the report was used whenever ‘necessary, appropriate … to combat somebody who has used them against me.’”
ABC Insurance contended that agents’ use of the ratings report has been “tangential at best.”
But the New York department has concluded that “use of a ratings report during the sales process to compare and convince insureds to replace their … Medicare supplement policies with [ABC Insurance] Medicare supplement policies constitutes advertising material that must be provided to the superintendent,” officials write in the opinion.
New York insurance advertising law provisions apply to “descriptive literature and sales aids of all kinds” and “prepared sales talks” as well as to conventional advertisements, officials write.
New York requires advertisements referring to an insurer’s financial condition to describe the carrier’s admitted assets, liabilities, reserves and policyholder surplus.
The department believes that an agent’s use of a ratings report that concerns a carrier’s financial condition may be misleading if the agent does not provide the required financial condition summary information, officials write.