The Office of General Counsel issued the following informal opinion on June 7, 2002, representing the position of the New York State Insurance Department.
Re: Premium Acceptance by PA Insurer and PA Agent
Question Presented:
Does New York State Insurance Law obligate a Pennsylvania insurer and its Pennsylvania agent to accept a premium directly remitted by a Pennsylvania premium finance agency on behalf of a Pennsylvania insured when: (a) the risk is outside of New York; and (b) there are brokers, one of whom is a New York excess line broker, through which the Pennsylvania insurer issued the policy, to whom the premium finance agency may make payment?
Conclusion:
No. New York State Insurance Law does not require the acceptance of premium under the facts presented.
Facts:
A Pennsylvania insurer (the "Insurer"); and its Pennsylvania agent (the "Agent") are not licensed in any capacity in New York State. Insurer issued a policy, through several brokers, one of whom is a New York excess line broker, to a Pennsylvania insured (the "Insured"), on a risk outside of New York. A Pennsylvania premium finance agency (the "Finance Agency"), financed the premium for Insured, and attempted to remit the premium directly to Insurer and Agent; but they refused to accept the premium directly.
Finance Agency wants to make payment directly to Insurer, or Agent, to oblige Insurer to honor Finance Agencys power of attorney to cancel Insureds policy, and return the unearned premiums to Finance Agency in the event that Insured fails to make its installments.
Analysis:
Given the circumstances involving transactions initiated outside the state on non-New York risks and unlicensed entities, there exists no New York State Insurance Law which requires Insurer, or Agent, to accept the premiums directly.
However, regarding the obligation of an insurer when payment is made to a licensed New York insurance broker, please note that any insurer, which:
delivers in this state to any insurance broker or any insured represented by such broker a contract of insurance pursuant to the application or request of such broker, acting for an insured other than himself, shall be deemed to have authorized such broker to receive on its behalf payment of any premium which is due on such contract at the time of its issuance or delivery or payment of any installment of such premium or any additional premium which becomes due or payable thereafter on such contract, provided such payment is received by such broker within ninety days after the due date of such premium or installment thereof or after the date of delivery of a statement by the insurer of such additional premium.
N.Y. Ins. Law § 2121(a) (McKinney 2000).
Finally, contact with the Pennsylvania Insurance Department for its assessment is advised.
The above opinion is informal and not binding on any court. For further information you may contact Attorney Kristian Earl Lynch at the New York City Office.