Tue May 03, 2016 7:26 pm
I'm not sure if this is the correct forum for this post. If not, I hope the moderator will move it to the proper forum.
The purpose of this post is a "heads up" for all my fellow travel site owners. It's especially important for those who are here in Massachusetts, but it might apply to website owners who reside in other jurisdictions, too.
For some time now, I've been meaning to add a page to my site encouraging my visitors to consider purchasing trip cancellation insurance. It's another monetizing opportunity for me. It's also great advice for my visitors, since Cape Cod lodgings have strict cancellation policies and they do enforce them.
When I finally got around to writing the page yesterday, there was something niggling in the back of my mind about the legalities of me promoting travel insurance and accepting affiliate/referral payments from travel insurance companies. (After decades practicing law, worrying about potential legal landmines is in my DNA. )
MA has more laws and regulations about insurance sales than you can imagine, including a licensing requirement for sellers of travel insurance. I'm not licensed to sell insurance in MA or anywhere else. So, I wondered, would I be running afoul of any laws if I promoted travel insurance on my site?
After researching the issue and coming to no firm conclusion one way or the other, I finally picked up the phone, called the MA Department of Insurance, and ran my question by an attorney in the Commissioner's office. He was hesitant to give me an answer off the top of his head, so he agreed to look into it and get back to me.
I just received the following email from him:
As I understood your question, you asked whether, by adding a hypertext link [on your website] to a travel insurer (or insurance producer) so that consumers could purchase travel insurance, an unlicensed website owner would require a license to sell travel insurance.
A link posted on a non-licensee’s website is deemed an “advertisement” where the wording of the link and that which frames it, does not include recommendations, endorsements or promotions from the non-licensee concerning the insurance products sold by the travel insurer. An example of the type of link that would be considered advertisement is one that just contains the name of the insurer, or states "Insurance?" or "Interested in Insurance?" I.e. a passive link. MGL c. 175, §162J (b) (5) provides an exemption from the producer licensing requirement where a person’s activities are “limited to advertising without the intent to solicit insurance…” Therefore, if a link qualifies as an “advertisement”, the compensation to the non-licensee can be based on per lead or per sale of an insurance policy.
Conversely, if the unlicensed website discusses terms and conditions of travel insurance policies, then the website owner would be soliciting insurance and acting as an insurance producer and a license would be required. The license requirement would also be triggered if the website includes recommendations, endorsements or promotions of travel insurance products offered by the licensed insurer or producer.
I hope this information is helpful. Let me know if you have any questions.
Yep, it's pretty much as I expected. Since I'm not licensed to sell insurance, I must be very careful of how I deal with the trip cancellation insurance stuff on my site. If I want to comply with the law (which I do!), then I can't write anything that could be considered pre-selling. All I can do is post a link to a travel insurance company and hope that the link results in some sales.
Otherwise, I have to spend a couple hundred bucks to get licensed. Then I can pre-sell to my heart's content.
Anyway, as I said above, this is what I've learned about Massachusetts law. For those of you in other jurisdictions, I have no idea what's allowed and what isn't for you. But I urge you to find out the legalities in your jurisdiction before you sign on as an affiliate with a travel insurance company.
I know it's tempting to just go ahead and do it, even if a license is required and you don't have one. Realistically, what are the chances of getting caught "selling" insurance on your website? Probably infinitesimal. But ... it only takes one disgruntled customer to open a potentially nasty can of worms. IMHO, that's not worth the risk, particularly for a measly $10 affiliate payment.