OGC Op. No. 06-04-14
The Office of General Counsel issued the following opinion on April 18, 2006, representing the position of the New York State Insurance Department.
Re: License status of property/casualty agency employees
If a property/casualty insurance producer is appointed by an insurer to act as its agent, may the employees of the producer be licensed as insurance brokers?
Yes, the employees of a property/casualty insurance producer may be licensed as brokers as long as the producer also has a broker's license and the employees do not act in the capacity of an agent on behalf of an insurer for which the producer is appointed as an agent.
The inquirer owns a property/casualty insurance producer, which has both an agent's and broker's license. The employees, who are not sub-licensees of the producer, are licensed as brokers and not agents.
Property/casualty insurance agent licenses are issued pursuant to N.Y. Ins. Law § 2103(b) (McKinney Supp. 2006).1 Agents represent only the insurers from which they received certificates of appointment pursuant to N.Y. Ins. Law § 2112 (McKinney Supp. 2006). Under N.Y. Ins. Law § 2104 (McKinney Supp. 2006), property/casualty insurance brokers act on behalf of insureds.2 Brokers may place business with any insurer authorized in New York State that will accept business from the broker.
A licensed employee must be licensed in the same capacity as the producer. If an employee is acting in his/her capacity as an agent, then the employee must be licensed as an agent and appointed by the insurer. If an employee is acting in his/her capacity as a broker, then the employee must be licensed as a broker.
To properly characterize the individual and the relationship, one must observe what the parties do and say, not what names they call themselves. An employee cannot call himself/herself a broker, but actually act as an agent and represent the insurer.
In this case, the company is licensed as an agent and broker. The employees who are licensed as brokers may not act as such with respect to the business for which the company acts in the capacity of an agent, but may act as a broker with respect to business for which the company acts in the capacity of a broker.
It is a violation of N.Y. Ins. Law. § 2102 for any person to act as an insurance agent or broker without being licensed unless that person falls under any of the exceptions contained in Section 2102(b). For example, Section 2102(b)(4)(C) exempts:
regular salaried officers or employees of an insurer who devote substantially all of their services to activities other that the rendering of consulting services to the insuring public while acting in their capacity as such in discharging the duties of their employment.
For further information you may contact Senior Attorney Elizabeth Barrett at the New York City Office.
1 Agents are licensed with respect to the lines of life, variable annuities, accident and health insurance pursuant to Section 2103(a).
2 Brokers are licensed with respect to property/casualty insurance under Section 2104(b)(1)(B), and with respect to the lines of life, variable annuities and accident and health pursuant to Section 2104(b)(1)(A).