OGC Op. No. 07-07-15

The Office of General Counsel issued the following opinion on July 20, 2007, representing the position of the New York State Insurance Department.

RE: Broker of Record Authorization

Question Presented:

Does the New York Insurance Law or regulations promulgated thereunder establish rules that require an insurer to use one wholesale broker as opposed to a different wholesale broker pursuant to a change of broker of record filed with the insurer?


No. Neither the New York Insurance Law nor regulations promulgated thereunder establish such rules. The agreements, if any, between the brokerage company and the insurer and between the broker and the insured should be reviewed.


The inquirer reports that he is an appointed so-called “wholesale” broker for an insurer, meaning that he has access to obtain insurance from the insurer but he does not issue coverage or represent the insurer and does not directly deal with the insured. When he acts as a so-called “retail” broker, he acts directly with the insured as any other broker would. In the case in question, an insured with the insurer utilized the services of a retail broker who obtained access to the insurer through another appointed wholesale broker. The brokerage submitted a change of broker of record letter to the insurer. The insurer agreed to let him act as the new retail broker for the insured, but requires that he continue to deal through the insured’s original wholesale broker. He asks whether this practice is permissible under New York Law.


A broker of record letter is a written statement signed by an insured advising an insurer that a particular broker or agent shall act as the insured’s representative. A broker of record letter is not a creation of statute or regulation; it was developed by the insurance industry as a means of conducting business.

There are no laws or regulations governing broker of record letters. Whether notification must be given to the former broker that a broker of record letter was filed naming a new broker is dependent upon the terms of agreements between the broker and the insured, and the broker and the insurer. Such contractual matters are not regulated by the Department.

Similarly, it is a contractual matter as to whether the insurer requires the continued use of the originally appointed and commissioned wholesale broker vis-à-vis the placement of coverage with its insured, notwithstanding the replacement of the retail broker who deals directly with the insured pursuant to a broker of record letter. Therefore, the insurer may require, subject to any contractual limitations, that the inquirer place business through its wholesale broker, rather than allow his brokerage to act in both capacities.

For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.