The Office of General Counsel issued the following opinion on January 4, 2006, representing the position of the New York State Insurance Department.
Re: Sale of Insurance to Residents of New York
May an insurance agent licensed in Ohio, but not in New York, act on behalf of an insurer not authorized in New York to sell long-term care insurance to a New York resident while the New York resident is visiting Ohio where the employer is located?
Yes. An agent for an insurer not authorized in New York may sell long-term care insurance to a New York resident, while outside of New York under the circumstances that you described, without the agent becoming licensed in New York, when there is no solicitation or other contact in New York with the potential insured and the policy is principally negotiated, issued, and delivered outside New York.
An insurance agent is licensed to sell insurance in Ohio but not in New York. A New York resident works for an Ohio employer and often visits Ohio. The insurer is authorized to sell insurance in Ohio but not in New York. The policy that would be sold to the insured would be issued and delivered in Ohio while the insured was physically located in Ohio. There would not be any solicitation or other negotiation with the resident in New York.
Generally, New York law does not preclude an insured from obtaining insurance outside of New York from a non-New York licensed agent or an unauthorized insurer, but it regulates the activities of the unauthorized insurer in New York, whether performed by mail or otherwise from outside New York, and the activities of those acting on behalf of the unauthorized insurer.
N.Y. Ins. Law § 1102(a) (McKinney Supp. 2006) prohibits any person, firm, association, corporation or joint-stock company from doing an insurance business in this state, unless licensed as a producer or as an insurer or exempted from licensing.
N.Y. Ins. Law § 1101(b)(1) (McKinney Supp. 2006) defines the term "doing an insurance business" in pertinent part as:
(A) making, or proposing to make, as insurer, any insurance contract, including either issuance or delivery of a policy or contract of insurance to a resident of this state or to any firm, association, or corporation authorized to do business herein, or solicitation of applications for any such policies or contracts; . . .
(C) collecting any premium or other consideration for any policy or contract of insurance; . . .
(E) doing or proposing to do any business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of this chapter.
N.Y. Ins. Law § 1101(b)(2) (McKinney Supp. 2006) provides an exemption for transactions performed by an unauthorized foreign or alien insurer if effected by mail from outside of New York, provided that the insurer is licensed by its place of domicile to transact an insurance business. N.Y. Ins. Law §1101(b)(2) (McKinney Supp. 2006) provides, in pertinent part, as follows:
(b)(2) Notwithstanding the foregoing, the following acts or transactions, if effected by mail from outside this state by an unauthorized foreign or alien insurer duly licensed to transact
the business of insurance in and by the laws of its domicile, shall not constitute doing an
insurance business in this state, but section one thousand two hundred thirteen of this chapter shall nevertheless be applicable to such insurers: . . .
(E) transactions with respect to policies of insurance on risks located or resident within or without this state (except master policies or contracts of group insurance which are subject to the requirements of subparagraph (B) hereof), which policies are principally negotiated, issued and delivered without this state in a jurisdiction in which the insurer is authorized to do an insurance business . . .
The exemption in Section 1101(b)(2)(E) applies to subsequent transactions effected by mail after the policy has been principally negotiated, issued and delivered outside of New York. In the instant case, assuming that there is no solicitation or other contact in New York with the potential insured, the policies are principally negotiated, issued and delivered outside of New York and the insurer is duly licensed in its state of domicile and authorized to do an insurance business in the jurisdiction in which the policy is placed, it would not have to be licensed in New York to perform subsequent transactions by mail with regard to that policy.
For further information please contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.