The Office of General Counsel issued the following informal opinion on June 26, 2002, representing the position of the New York State Insurance Department.

Re: Licensing a Federally Chartered Production Credit Association as a Non-Resident Insurance Agency

Question Presented:

May a federally chartered production credit association ("PCA") (12 U.S.C.A. 2071) be licensed by the Department as a non-resident insurance agency under N.Y. Ins. Law § 2103(b) (McKinney 2000)?


Yes. A PCA is authorized under the regulations of the federal Farm Credit Administration ("FCA") to sell certain insurance products and such an association may be licensed as a non-resident agent under N.Y. Ins. Law § 2103(b) (McKinney 2000).


A PCA subsidiary of an agricultural credit association ("ACA") chartered under the FCA wants to apply for a non-resident insurance agency license. The PCA is organized pursuant to the Farm Credit Act of 1971 (12 U.S.C.A. § 2001 et seq.). The PCA will use a New York resident insurance agent licensed on February 11, 2002, as its sublicensee. The PCA became licensed by the State of Connecticut Insurance Department as a resident property and casualty insurance agent on March 8, 2002.

The FCA is responsible for the regulation and examination of banks, associations including PCAs, and related entities of the farm credit system.

Federal law and regulation permit a PCA to perform certain activities including insurance services such as the sale of varieties of crop insurance, which is why the PCA desires to be licensed by this Department.


12 U.S.C.A. § 2218 (West 2001) authorizes the promulgation of regulations so that a regulated association such as a PCA may be able to sell crop insurance, among other activities, to related members or certain borrowing entities.

The Regulations expressly authorizing PCAs to sell crop insurance and related insurance services are contained in 12 CFR Part 618, Subparts A & B (1995).

12 U.S.C. § 2073 (FCA Handbook 2002) indicates the status of a PCA within the farm credit system as "a body corporate and, subject to supervision by the Farm Credit Bank for the district and regulation by the Farm Credit Administration, shall have the power to - . . . ," spelling out its general corporate powers.

12 CFR Part 618, Subpart B (§ 618.8040(b)(4)(i)(B) (1995)) authorizes an association such as a PCA within the federally chartered Farm Credit system to sell certain types of insurance, including crop insurance, to other members of the system, provided the insurance program is issued by an insurer licensed in the state in which the insurance is sold.

Subpart A of 12 CFR Part 618, a FCA regulation, consists of a related services list, among which are found insurance services. PCAs, among other institutions, are listed therein as an authorized institution to sell multiple-peril crop insurance, crop hail insurance, hay or other crop fire insurance, etc.

PCAs must be licensed under state law to sell insurance and N.Y. Ins. Law § 2102(a)(1) (McKinney 2000) also requires that an association shall not "act as an insurance agent. . . without having authority to do so by virtue of a license issued and in force. . . "

N.Y. Ins. Law § 2103(b) (McKinney 2000) provides: "The superintendent may issue a license to any. . . association. . . which has complied with the requirements of this chapter, authorizing the licensee to act as agent of any authorized insurer. . . "

Assuming that the PCA complies with the licensing requirements, the Insurance Law permits it to become licensed as a non-resident agent with its sublicensee.

For further information, you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.