The Office of General Counsel issued the following opinion on March 11, 2002, representing the position of the New York State Insurance Department.
Re: Licensing of Unauthorized Insurers as Independent Adjusters in New York.
Questions Presented:
1. May an unauthorized insurer be licensed as an independent adjuster in New York?
2. If so, must it be licensed as an independent adjuster under a fictitious name?
Conclusions:
1. Yes, an unauthorized insurer may be licensed as an independent adjuster in New York.
2. Yes, an unauthorized insurer must be licensed as an independent adjuster under a fictitious name. N.Y. Ins. Law § 2122(a)(2) (McKinney 2000) prohibits any person from calling attention to an unauthorized insurer by advertisement or public announcement in this state.
Facts:
The inquirer states that ABC Life Insurance Corp. of New York (ABC) is a New York domestic life insurer engaged in the business of life insurance, group dental and eye care insurance. ABC is a wholly owned subsidiary of XYZ Life Insurance Corp. (XYZ), a Nebraska domestic life insurer. XYZ administers ABCs group dental and eye care insurance claims pursuant to a service agreement on file with the Insurance Department. Additionally, XYZ administers group dental and eye care insurance for other New York domestic insurers pursuant to service agreements on file with the Department. XYZ does not administer claims for the general public. XYZ is a New York accredited reinsurer, but is not licensed as an insurer or independent adjuster in New York.
On April 11, 2000, the inquirer sent a letter to the New York Insurance Department requesting an opinion and clarification regarding the independent adjuster license requirement provided for in the New York Insurance Law Section 2108 and Regulation 25 (11 NYCRR 26) and referenced in Circular Letter No. 5 (2000). The Department issued an opinion letter, dated May 5, 2000, stating that XYZ would have to be licensed as an independent adjuster in New York, but did not directly address XYZs unlicensed status as an insurer.
In the process of applying for a name approval for XYZ, the inquirer was informed by the Licensing Bureau that as an unauthorized insurer in New York, XYZ would not be able to obtain this license. The inquirer is now requesting an opinion and clarification regarding whether XYZ may obtain the independent adjusters license under a fictitious name.
Analysis:
N.Y. Ins. Law § 2108(a)(3) (McKinney 2000) provides that no adjuster may act on behalf of an insurer unless licensed as an independent adjuster.
N.Y. Ins. Law § 2101(g)(1) (McKinney 2000) broadly defines the term "independent adjuster" as follows:
(g)(1) [A]ny person, firm, association or corporation who, or which, for money, commission or any other thing of value, acts in this state on behalf of an insurer in the work of investigating and adjusting claims arising under insurance contracts issued by such insurer and who performs such duties required by such insurer as are incidental to such claims and also includes any person who for compensation or anything of value investigates and adjusts claims on behalf of any independent adjuster . . .
The Department has opined that the "investigating and adjusting" of claims encompasses any sort of negotiation with the insured or claims resolution that involves the exercise of discretion. Therefore, if an unauthorized insurer, or its representative engages in activities, which would constitute the investigating and adjusting of claims, it would have to be licensed in New York as an independent adjuster pursuant to N.Y. Ins. Law § 2108 (McKinney 2000).
N.Y. Ins. Law § 2122(a)(2) (McKinney 2000), however, prohibits any person from calling attention to an unauthorized insurer by advertisement or public announcement in this state. This includes listing the name of the unauthorized insurer in New York telephone listings, on building directories or on letterheads with a New York address. Thus, the insurer would be prohibited from being licensed as an independent adjuster under its actual corporate name. However, Bus. Corp. Law § 1301(d) (McKinney 1986 and Supp. 2002) provides as follows:
(d) A foreign corporation whose corporate name is not acceptable for authorization pursuant to section 301 and 302 of this chapter, may submit in its application for authority pursuant to section 1304 of this chapter, a fictitious name under which it shall do business in this state. A fictitious name submitted pursuant to this section, shall be subject to the provisions of subparagraphs (2) through (9) of paragraph (a) of section 301 and 302 of this chapter. A foreign corporation authorized to do business in this state under a fictitious name pursuant to this section, shall use such fictitious name in all of its dealings with the secretary of state and in the conduct of its business in this state. The provisions of section one hundred thirty of the general business law shall not apply to any fictitious name filed by a foreign corporation pursuant to this section, and a filing under section one hundred thirty of the general business law shall not constitute the adoption of a fictitious name.
Additionally, Bus. Corp. Law § 301(a)(2) (McKinney 1986 and Supp. 2002) provides that the corporate name of a foreign corporation must be such as to distinguish it from the names of corporations of any type or kind or the fictitious names of authorized foreign corporations.1
It should also be noted that N.Y. Ins. Law § 108(e) (McKinney 2000) provides that Bus. Corp. Law §§1301 and 1304 (McKinney 1986 and Supp. 2002) are inapplicable to incorporated foreign insurers. The purpose of this provision is to require foreign insurers seeking to an insurance business in New York to obtain a license to do so pursuant to § 1106 of the Insurance Law. However, where the insurer will not be doing an insurance business in New York, §§1301 and 1304 apply, to the extent that the Insurance Law is not inconsistent.
Accordingly, an unauthorized insurer that is not doing an insurance business in New York is permitted to be licensed as an independent adjuster in New York under a fictitious name where its actual name is not acceptable for use in this state.
For further information, you may contact Attorney Pascale Joasil at the New York City office.
1 Bus. Corp. Law § 301 (McKinney 1986 and Supp. 2002) prohibits corporations from using certain insurance terms in its name, including the word "insurance", without the approval of the Superintendent. The purpose of this provision is to protect the public and to prevent deception and confusion.