In a complaint filed today, AIG seeks to enjoin the New York State Department of Financial Services from any enforcement action arising from the Department’s investigation into a former AIG subsidiary called ALICO. The Department has allegedly threatened to fine AIG based on the allegation that ALICO was conducting an unlicensed insurance business in New York. AIG’s complaint argues it would be unconstitutional to apply the statute at issue, New York Ins. Law § 1101(b) (defining “insurance business”), to ALICO because ALICO marketed insurance products only to out-of-state customers:
First, imposing upon AIG (as ALICO’s former owner) New York’s current interpretation of the New York Insurance Law violates the Due Process Clause of the Fourteenth Amendment. Due Process requires that a statute or regulation have sufficient clarity to give the ordinary person fair notice of what is and is not prohibited. As applied here, the New York Insurance Law violates these protections and is void for vagueness because no reasonably prudent person, familiar with the insurance industry and regulation, would understand the statutory scheme to require a New York insurance license for marketing insurance products that exclusively cover out-of-state (in fact, out-of-country) employees of multinational companies . . . . Second, penalizing AIG (as ALICO’s former owner) under the Insurance Law for activity consisting solely of the marketing of contracts of insurance to and with foreign insureds violates the First Amendment protection of freedom of speech as applied to the States through the Due Process Clause of the Fourteenth Amendment. Imposing a penalty for violating New York’s insurance licensing requirements for such pure marketing activities, particularly in the absence of any allegation that the speech at issue was false, misleading or anything other than entirely truthful and accurate, would constitute a content-based restriction on commercial speech that is unjustified by any legitimate or important state interest. Third, the statutory and regulatory scheme that New York officials propose to apply here also unconstitutionally discriminates against out-of-state and foreign commerce in violation of the dormant Commerce Clause, U.S. Const. art. I, § 8.
The case is before Judge Nathan.