The Office of General Counsel issued the following opinion on July 27, 2005, representing the position of the New York State Insurance Department.

Re: Referrals of Potential Insureds by Non-Licensees to an Insurance Agency.

Question Presented

May an insurance agency compensate a non-licensee for a referral of a potential insured if such compensation is contingent upon the purchase of insurance by the referred party?


No. Pursuant to New York Insurance Law §§ 2114, 2115, and 2116 (McKinney Supp. 2005) a non-licensee may not be compensated for referrals contingent upon sale of insurance to the persons referred.


There are no presented facts.


N.Y. Ins. Law § 2115(a)(1) (McKinney Supp. 2005), in regard to property/ casualty insurance agents, states in relevant part:

No insurer doing business in this state, and no agent or other representative thereof, except as provided in subsection (b) hereof, shall pay any commission or other compensation to any person, firm, association or corporation for acting as insurance agent in this state, except to a licensed insurance agent of such insurer or to a person described in paragraph two or four of subsection (a) of section two thousand one hundred one of this article or except as provided in subsection (c) of this section. For the purposes of this section, "acting as insurance agent" shall not include the referral of a person to a licensed insurance agent or broker that does not include a discussion of specific insurance policy terms and conditions and where the compensation for referral is not based upon the purchase of insurance by such person. (Emphasis added.)

N.Y. Ins. Law § 2116 (McKinney Supp. 2005), as to insurance brokers, and N.Y. Ins. Law § 2114 (McKinney Supp. 2005), as to life, accident and health insurance agents and brokers, contain similar provisions.

Accordingly, as stated above, compensation for referrals is only permitted where it is not based on the purchase of insurance by the referred person.

For further information you may contact Senior Attorney Robert Freedman at the New York City Office.