The Office of General Counsel issued the following opinion on October 20, 2005, representing the position of the New York State Insurance Department.
Re: Out of State Call Centers
Are enrollers that are engaged in selling insurance to residents of New York State from a call center that is located outside the state required to obtain a non-resident license even if their compensation is not based on the sale of insurance?
Yes. If the enrollers are located outside of New York and are engaged in any activity that constitutes acting as an insurance agent, then they will need to obtain a non-resident insurance agent's license even if their compensation is not based on the sale of insurance.
The inquirers company sells accident, health and life insurance from several insurers to residents of New York from a call center located in another state. Each insurer is licensed to sell such insurance in New York. The employees of the call center, "enrollers", solicit and sell insurance to residents of New York. In addition, the enrollers receive calls from insureds to explain the coverage and rates available to them and complete the enrollment form online for those interested in purchasing insurance. The enrollers are salaried employees of the enrollment company and are not paid a commission based on the sale of insurance. The inquirer asks whether the enrollers are required to hold non-resident insurance licenses to sell insurance in the State of New York.
New York Insurance Law § 2102(a)(1) (McKinney 2005) provides that: "no person, firm, association or corporation shall act as an insurance producer or insurance adjuster 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." N.Y. Ins. Law § 2101(k) (McKinney 2005) defines an insurance producer as, inter alia, an insurance agent or insurance broker.
N.Y. Ins. Law § 2101(a) (McKinney 2005), in pertinent parts, defines an "insurance agent" as:
(a) . . . any authorized or acknowledged agent of an insurer, . . . who acts as such in the solicitation of, negotiation for, or procurement or making of, an insurance, health maintenance organization or annuity contract, other than as a licensed insurance broker . . . .
Moreover, § 2101(d) of the N.Y. Ins. Law defines "non-resident insurance agent" as:
(d) . . . an individual who is a non-resident of this state and who is licensed or authorized to act as an insurance agent in the state in which he resides, or in which he or the firm or association of which he is a member or employee, or the corporation of which he is an officer, director, or employee maintains an office as an insurance agent.
The enrollers, from the call centers located out of state, solicit and sell insurance to residents of New York. They are, therefore, acting in the capacity of an insurance agent. If a person at any time, directly or indirectly, engages in any activity in New York that constitutes acting as an insurance agent, such person would need to be licensed as an insurance agent. A person located outside of New York State may be licensed as a non-resident insurance agent in New York and conduct insurance business in this State provided that the person is licensed or authorized to act as an insurance agent in the persons resident state. Accordingly, both the enrolling company and its employees who solicit and sell insurance to the residents of New York must be licensed as insurance agents or be in violation of § 2102 of the New York Insurance Law (McKinney 2005). The fact that the compensation of the enrollers is not based on the sale of insurance does not alter the requirement for licensing.
For further information please contact Associate Attorney D. Monica Marsh at the New York City Office.