The Office of General Counsel issued the following opinion on August 30, 2005, representing the position of the New York State Insurance Department.
RE: Insurers Obligation to Use Insurance Producers.
Pursuant to the New York State Insurance Law, are insurers obligated to sell insurance only through insurance producers?
No. The New York State Insurance Law does not require insurers to sell insurance only through insurance producers. See analysis below.
The inquirer stated that the law in Puerto Rico requires insurers to use insurance producers when selling insurance. The inquirer would like to know if there is a similar requirement under the New York State Insurance Law.
N.Y. Ins. Law § 2102(a)(1) (McKinney Supp. 2005) provides that "[n]o person, firm, association or corporation shall act as an insurance producer in this state without having authority to do so by virtue of a license issued and in force pursuant to the provisions of this chapter." An "insurance producer" is defined under N.Y. Ins. Law § 2101(k) (McKinney Supp. 2005) as "an insurance agent, insurance broker, reinsurance intermediary, excess lines broker, or any other person required to be licensed under the laws of this state to sell, solicit or negotiate insurance."
Section 2101(k) provides a number of exemptions to this requirement, including an exemption for:
[A]n officer, director or employee of a licensed insurer, fraternal benefit society or health maintenance organization or of a licensed insurance producer, provided that the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state
N.Y. Ins. Law § 2101(k) (1) (McKinney Supp. 2005).
Thus, an insurer may use an insurance producer to sell insurance or a person who is exempt from licensing under § 2101(k).
For further information you may contact Associate Attorney Pascale Jean-Baptiste at the New York City Office.