New York State Insurance Department officials have emphasized their opposition to the idea of agents and brokers even trying to explain what the Life Insurance Company Guaranty Corp. is.
States generally discourage references to insurance guaranty funds in marketing materials. New York has a law forbidding the making of a “statement which uses the existence of the corporation for the purpose of sales, solicitation or inducement to purchase any form of insurance covered,” officials in the New York department’s Office of General Counsel say in an opinion.
Someone asked the office:
1. Whether a licensed insurance agent or broker who solicits structured settlement annuities can speak or write about guaranty funds in general in connection with the solicitation of annuities to lawyers or their personal injury clients.
2. Whether a firm can discuss the guaranty fund in marketing materials if it also includes a disclaimer warning that the existence of guaranty funds is not a reason to buy insurance.
3. If there is an acceptable way for a licensed agent or broker to answer questions about guaranty funds.
Office officials take a strict approach to interpreting the “no statement” rules.
“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,” officials say in the opinion.
“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 Section 7718, will not render guaranty fund references in such marketing materials acceptable,” officials say.
If consumers or others do ask agents and brokers about guaranty fund protection, they should refer the questions to the New York State 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,” officials say.
The officials note that questions involved an entity that had posted a presentation discussing the guaranty fund on a Web profile page.
For purposes of the “no statements about the guaranty fund” statute, “the scope of the statute is such that any means of communication will qualify as an advertisement, announcement or statement under the statute,” officials say.