New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel has issued the following informal opinion on January 10, 2000, representing the position of the New York State Insurance Department.

Entitlement to Renewal Commissions during lapse in agents’ license.

Question presented:

Is an agent, who sold a policy while licensed as a life, accident and health agent (N.Y. Ins. Law § 2103(a)(McKinney 1999)), entitled to receive commission payments during the period from the date the license expired through the date when the license was subsequently renewed?

Conclusion:

It depends on the agent’s contract.

Facts:

An agent sold a policy while licensed as a life, accident and health agent (N.Y. Insurance Law § 2103(a) (McKinney 1999)). His license expired three months later and remained lapsed until it was renewed four months after that.

Analysis:

The Department has previously stated that when an agent is no longer licensed and does not perform any service functions requiring a license, such former agent who previously placed the policy is generally entitled to receive a commission, notwithstanding the termination of licensing status, provided the employment contract allows for same. Payment of a commission following expiration of a license is not a subject specifically treated by the Insurance Law or Regulations so there is no statutory prohibition against the payment of renewal commissions on previous policies to a former licensee. "Renewal rights are strictly determined by the agent's contract... There is no inherent right to renewals, even though the business remains on the insurer's books. The contract controls." Bertram Harnett, Responsibilities of Insurance Agents and Brokers, Section 8.07(2) in Vol. 2, (1996). Accordingly, one should review the agent's contract to determine whether such an agent would still qualify for renewal commissions when his/her license lapsed.

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