The Office of General Counsel issued the following opinion on January 7, 2005, representing the position of the New York State Insurance Department.
Re: Insurance Consulting
May a risk manager (consultant) licensed as such in his home state (but not licensed as an insurance agent, broker or consultant by New York) review insurance policies of a New York insured for a fee (and provide advice regarding the same) if the consultant conducts such work by telephone and mail and never physically enters New York State?
A consultant that reviews insurance policies of a New York insured for a fee and provides advice regarding same would require a New York insurance agent, broker or consultants license.
The inquirer has stated that he is a licensed risk manager in another state and that he has performed insurance consulting services for New York resident insureds. The inquirer has described1 his activities as follows:
My review of insurance involves asking the insured to mail me complete copies of all property-casualty insurance policies currently in effect. I then look at all coverages, exclusions, limits and premiums in relation to what I consider the norm for that particular business activity. My comments are prepared in written form and forward by e-mail or fax to the insured. I discuss the written report with the insured via telephone. I also review renewal proposals and make suggestions with regard to carriers, coverages and deductibles. I work on an hourly basis, charging for time actually spent on behalf of the insured.
The inquirer asks whether he is required to have a New York license to engage in those activities.
The activities described are consistent with those performed by an "insurance consultant" under New York law.2 The provisions governing the licensing and duties of an insurance consultant are addressed by N.Y. Ins. Law § 2107 (McKinney 2000). N.Y. Ins. Law § 2102(b)(1) (McKinney 2000) prohibits a person, firm association or corporation from identifying or holding himself or itself out as an insurance consultant in New York State without a proper license. Section 2102(b)(1) provides:
Unless licensed as an insurance agent, insurance broker or insurance consultant, no person, firm, association or corporation shall in this state identify or hold himself or itself out to be an insurance advisor, insurance consultant or insurance counselor.
Additionally, N.Y. Ins. Law § 2102(b)(3) (McKinney 2000) prohibits a person or firm from accepting compensation for examining, appraising, reviewing, evaluating, recommending or advising on an insurance policy in New York unless licensed as an agent, broker or consultant. Section 2102(b)(3) provides:
Unless licensed as an insurance agent, insurance broker or insurance consultant with respect to the relevant kinds of insurance, no person, firm, association or corporation shall receive any money, fee, commission or thing of value for examining, appraising, reviewing or evaluating any insurance policy, annuity or pension contract, plan or program or shall make recommendations or give advice with regard to any of the above.
Under the above-referenced statutes, it is impermissible for any individual to conduct the business of insurance consulting in New York without being licensed to do so. This inquiry centers on what constitutes the conduct of business in New York. The inquirer notes that he does not physically perform any work in New York, but rather provide services to his New York clients via phone, fax and e-mail.
Although the inquirer does not physically enter New York during the conduct of his consulting activities, his contacts with New York are regarded by the Department as sufficient to require a New York license. The inquirers services are being provided to New York insureds and require contact by mail, fax, e-mail or telephone with New York. Contact by mail with New York is regarded as "doing an insurance business in this state" under the New York Insurance Law. See N.Y. Ins. Law § 1101(b)(1) (McKinney Supp. 2005), which refers to making or proposing to make insurance contracts, warranties, guarantees or sureties or the collecting of premiums or fees in consideration of same. Although that section addresses the activities of an insurer, as pointed out in an earlier opinion of this Office, the law would be inconsistent if it allowed certain types of insurance professionals to function as such in New York from out of state through the mails without a license while prohibiting an insurer from doing the same. See, Office of General Counsel Opinion (June 11, 1984).3
This position was reiterated in a subsequent Office of General Counsel Opinion dated December 19, 1984. That Opinion addressed an inquiry by an individual who proposed to offer by mail policy analysis recommendations to those responding to advertisements placed in national publications. The inquirer stated that he had no intention of entering New York or selling any policy of insurance. The Opinion, citing N.Y. Ins. Law § 2102(b), concluded that the inquirer would require a New York consultants license to engage in the activities described.
Accordingly, if the inquirer wishes to continue providing services to New York insureds, he would be required to obtain a New York insurance consultants license as provided under N.Y. Ins. Law § 2107 (McKinney 2000).4
For further information you may contact Supervising Attorney Michael Campanelli at the New York City office.
1 E-mail to Senior Attorney Robert Freedman dated November 5, 2004.
2 The New York Insurance Law does not define risk manager, nor does it provide for their licensing.
3 That opinion addressed the situation of an organization that wished to function as a managing general agent. Although the entity had no office in New York and was said to be conducting its activities by mail and by telephone, this Office concluded that this degree of contact with New York was sufficient to require that it obtain a license.
4 In the alternative, the inquirer could obtain a New York non-resident agents or brokers license. See OGC Opinion No. 03-01-19 (January 7, 2003) (Illinois insurance producer who would perform consulting services in New York could obtain a nonresident agents license in order to perform such services).