On July 2, 2015, New York Governor Andrew Cuomo signed into law Assembly Bill 7789 (“AB 7789”), which amended Sections 1101 and 2117 of the New York Insurance Law to create a limited “safe harbor” allowing insurance brokers that are licensed in New York for life and annuities or accident and/or health insurance (“licensed brokers”) to perform certain marketing activities on behalf of non-New York-licensed, non-US insurers and HMOs (“non-US insurers”) with respect to coverage provided to multinational entities.
The approach taken by AB 7789 was to amend Section 2117 of the New York Insurance Law, which generally prohibits persons from acting in New York on behalf of unlicensed insurers, by adding a new subsection (k), which will allow licensed brokers to provide information to multinational entities regarding group life, group annuity or group accident and health insurance policies (“qualifying policies”) offered by non-US insurers to cover the multinational entities’ employees who either reside outside the United States or are temporarily inside the United States (as well as dependents of those employees).
Section 2117(k) of the New York Insurance Law now permits a licensed broker to engage in the following activities in New York on behalf of an unlicensed non-US insurer:
- provide information about a qualifying policy to be issued or delivered by the non-US insurer;
- meet and discuss insurance needs with the multinational entity, including providing information directly to the entity qualifying policies offered by the non-US insurer, and facilitating introductions with the multinational entity's human resources and benefits manager in each country in which the multinational entity has employee benefit needs;
- refer the multinational entity to the non-US insurer and provide information to the multinational entity about the non-US insurer;
- respond to requests for information by representatives of the multinational entity concerning quotes and any other specific terms and conditions of a qualifying policy being negotiated in the jurisdiction where the policy will be issued or delivered by the non-US insurer;
- provide information concerning renewals of existing qualifying policies issued by the non-US insurer; and
- manage the employee benefits program of the multinational entity, including aggregating and reporting employee benefits and financial information about the program.
For purposes of the statute, “multinational entity” means an institution that is a member of a multinational group of institutions operating globally where: (i) at least one institution in the group is formed under the laws of the United States or has significant operations in the United States; and (ii) at least one institution in the group has offices outside the United States. A “group of institutions” means a parent corporation and its subsidiaries.
The following activities on behalf of the non-US insurer are expressly prohibited:
- The qualifying policy cannot be underwritten, negotiated, issued or delivered in New York;
- The non-US insurer cannot have an office in New York; and
- The licensed broker cannot call attention to the non-US insurer by any advertisement or public announcement in New York.
Section 2117(k) also requires the licensed broker to notify multinational entities in writing that the non-US insurer is not licensed to do business in New York, and thus the qualifying policies are not protected by the New York State Guaranty Funds or approved by the New York Superintendent of Financial Services, and may not be subject to all the laws of New York.
Significantly, Section 2117(k) also provides that a licensed broker’s activities on behalf of a non-US insurer have the effect of appointing the New York Superintendent of Financial Services as the non-US insurer’s agent for service of process in any proceeding instituted by or on behalf of an insured or beneficiary arising out of the qualifying policies issued by the non-US insurer.
Finally, AB 7789 amended Section 1101 of the New York Insurance Law to allow the non-US insurer itself to conduct transactions with persons in New York by postal mail or email (sent from outside of New York) with respect to qualifying policies negotiated or placed by a licensed broker in compliance with the above provisions.