The department received an inquiry as to the legal propriety of newspaper, broadcast and direct-mail advertisement of savings bank life insurance. Section 269 of the Banking Law provides that savings banks offering life insurance “shall not employ solicitors of insurance, and shall not employ persons to make house to house collections of premiums”.

The department responded that it saw no inherent illegality in the use of these techniques. It found that statutory and practical history supported a straightforward reading of the term “employ solicitors” as banning only the creation of an employer-employee relationship between the savings bank and one whose duties and basis of compensation are substantially those of an insurance salesman collecting commissions directly based on the number and amount of policies he sells. The statute does not ban the usage of all outside means of solicitation. The department would, of course, continue to monitor the nature, accuracy and cost of such outside means to assure that they remained consistent with the statutory purpose of affording quality protection at a cost kept low in large part by the ban discussed herein on commissions and excessive overhead.

DATED: May 15, 1973