The Office of General Counsel issued the following informal opinion on May 1, 2002, representing the position of the New York State Insurance Department.

Credit Unions – Income from Joint Marketing Agreements


May a New York domiciled credit union receive compensation from a joint marketing agreement with a licensed nonaffiliated third party insurance company?


The Department would not prohibit an arrangement of the type proposed herein.


The joint marketing agreement contemplated herein would entail an arrangement between a credit union and an unaffiliated licensed insurer. The arrangement would essentially operate as follows:

1. The credit union, which does not possess an insurance license of any type, will not perform any activities for which such a license is required. To the extent any solicitation occurs on the premises of the credit union, it will be conducted by a New York licensed representative of the nonaffiliated third party.

2. The credit union’s compensation would be calculated as a percentage of the premium generated by the insurance company. There may also be additional compensation for referrals of potential customers, but any such compensation would not be related to or contingent upon the purchase of insurance by the referred individual.

3. There may be several insurance related programs such as:

(a) office space rental arrangements whereby an insurance professional could conduct business on the credit union’s premises;

(b) floor space lease arrangements to provide third party advertising materials;

(c) website advertising;

(d) clerical and office administrative services; or

(e) direct marketing mailing and administrative services.

4. All insurance activities conducted at the credit union would comply with all applicable state and federal consumer disclosure, sales practices and licensing laws.


The type of program contemplated herein closely resembles arrangements that are currently permissible in the context of banks. The rationale permitting such activities is equally valid in the context of credit unions. Office of General Counsel Opinion 01-06-38 (June 19, 2001) dealt with an arrangement by which a bank would lease space to an insurance agency. In addition, the bank’s employees would refer customers to the agency. The bank was to be compensated by both rental income and referral fees.

In concluding that these activities were permissible as described, Opinion 01-06-38 relied on precedent approving of an arrangement where an insurance agency leased space from a bank, the rental amount being calculated as a percentage of agency’s gross revenue at the location. That Opinion also noted that N.Y. Ins. Law § 2114 (McKinney Interim Supp. 2001-2002), as amended by Ch. 418, L. 2000, liberalized the rules on compensation for referrals, allowing the payment of referral fees to unlicensed persons. Under either a rental or referral fee arrangement, however, compensation may not be calculated as a percentage of (or be based in any way) on the amount of sales generated by the referrals. In addition, N.Y. Ins. Law § 2114(a)(4) provides that the permissibility of a referral compensation arrangement is contingent upon the condition that the person making the referral does not discuss specific policy terms and conditions with the person referred.

The arrangements proposed herein appear to fall within these limitations. To the extent that this is the case, the proposals are allowable under the N.Y. Ins. Law. The Department notes further that the fact that the credit union will earn fees stemming from the sales of insurance to its members (which such fee income will ultimately inure to the benefit of these members) will not be considered a violation of the anti-rebating provisions of N.Y. Ins. Law § 2324. See, Office of General Counsel Opinion 01-02-16 (February 26, 2001), which discussed at length the implications of insurance sales by a credit union subsidiary organization.

For further information you may contact Supervising Attorney Michael Campanelli at the New York City Office.