The Office of General Counsel issued the following informal opinion on August 10, 2001, representing the position of the New York State Insurance Department.

Re: License and Service Agreement

Questions Presented:

1.) May a mutual life insurance company enter into a license and service agreement with a mortgage company pursuant to which it will secure the right to use the mortgage company’s customer list in connection with the sale of individual mortgage life insurance and other products, excluding credit life insurance?

2.) May a mortgage company provide premium billing and premium collection services for those mortgage customers who also purchase insurance?

3.) May the life insurer compensate the mortgage company for the customer list and billing and collection service by permitting the company to retain a percentage of each premium collected?


1.) Yes.

2.) Yes.

3.) Yes.


A New York mutual life insurance company desires to enter a License and Service Agreement with a mortgage company pursuant to which it will secure the right to use the mortgage company’s customer list in connection with the sale of mortgage life insurance and other products. The proposal does not involve credit life insurance. The insurance company would prepare all marketing solicitation materials and, subject to the mortgage company’s approval of the timing of solicitations, conduct all sales and marketing activity. The mortgage company would thereafter provide premium billing and collection services for all its customers who had agreed to purchase the offered insurance. The mortgage company, however, would serve no insurance function. It would not sell, underwrite or communicate with the insureds regarding their insurance in any way. Its duties will be limited to billing and collection. The mortgage company is not licensed to sell insurance or to act in any other insurance capacity. To ensure that it pays only for the names of customers who actually purchase insurance and maintain their policies in force, the insurance company proposes to compensate the mortgage company by permitting the mortgage company to retain a service fee equal to a percentage of each premium.


1.) The Insurance Law does not preclude a life insurer from purchasing a customer list of a mortgage company for the purpose of soliciting new insurance customers.

2.) The Insurance Law does not prohibit the mortgage company from acting on the insurer's behalf in billing and collecting premium from mortgage customers with their monthly mortgage bill since, as your relate, the mortgage company will not be selling or underwriting insurance communicating with the insureds regarding their insurance in any way or engaging in any conduct requiring licensing under New York Insurance Law Articles 11 or 21 (McKinney 2000).

3.) Under the circumstances described, the Insurance Law does not preclude the insurer from compensating the mortgage company for its service based on a percentage of each premium collected.

4.) The billing and collection of premium implicates Department Regulation 169 (Privacy of Consumer Financial and Health Information, N.Y. Comp. Codes R. & Regs. tit. 11, Part 420 (2001)) since the insurer would be disclosing nonpublic personal financial information to the mortgage company consisting of the identity of insurance customers and their premiums. The regulation at N.Y. Comp. Codes R. & Regs. tit. 11, §420.14(a)(2) (2001), however, provides in part that::

(a) Exceptions for processing transactions at consumer’s request. The requirements for initial notice to the consumer in section 420.4(a)(2) of this Part, and the opt out provisions in sections 420.7 and 420.10 of this Part, do not apply if the licensee discloses nonpublic personal financial information as necessary to effect, administer, or enforce a transaction that a consumer requests or authorizes, or in connection with:…

(2) Maintaining or servicing the consumer’s account with the licensee, or with another entity as part of a private label credit card program or other extension of credit on behalf of such entity;…

Thus, in this instance, disclosure of the non-public personal financial information would be permissible. Redisclosure and reuse of such information by the mortgage company, however, is restricted as described in N.Y. Comp. Codes R. & Regs. tit. 11, §420.11 (c) (2001).

This response is limited to the application of the New York Insurance Law and does not address the question of whether the mortgage company is precluded by federal or other state law from selling a customer list or entering into any other aspect of the transaction described.

For further information you may contact Principal Attorney Donald Carroll at the New York City Office.