The Office of General Counsel has issued the following informal opinion on March 6, 2000, representing the position of the New York State Insurance Department.
Delivery of certificates by product or system group policyholder
Is an insurance agent or broker license required for a group policyholder of a product or system group policy, its employee, or a person acting on behalf of the group policyholder, who delivers a certificate to a group member under a product or system group policy?
No, mere delivery of a certificate under a product or system group policy does not require licensing as an agent or broker.
It was proposed that a company serve as the group policyholder of a product or system group policy. The policy would cover purchasers (group members) of their anti-theft product or system in accordance with N.Y. Ins. Law § 3446 (McKinney Supp. 1999-2000) and N.Y. Comp. Codes R. & Regs. tit. 11 § 310 (Regulation 167). The requester wrote:
Vehicle dealer personnel sell a product or system to a purchaser of a vehicle as part of the vehicle purchase. The vehicle dealer reports the purchaser information to the policyholder, and the product or system certificate is delivered to the group member.
N.Y. Ins. Law § 2101(a) (McKinney 1985 & Supp. 1999-2000) defines "insurance agent" to mean:
any authorized or acknowledged agent of an insurer, fraternal benefit society or health maintenance organization issued a certificate of authority pursuant to article forty-four of the public health law, and any sub-agent or other representative of such an agent, 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
N.Y. Ins. Law § 2101(c) (McKinney 1985 & Supp. 1999-2000) defines "insurance broker" to mean:
any person, firm, association or corporation who or which for any compensation, commission or other thing of value acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance or annuity contract or in placing risks or taking out insurance, on behalf of an insured other than himself or itself or on behalf of any licensed insurance broker
The exclusions from both provisions are omitted because they are not relevant to this inquiry.
Section 3446 authorized the issuance of a group policy insuring purchasers or owners of a product or system, where the manufacturer, distributor, or installer has represented that the product or system is designed to prevent loss or damage to property from a specific cause (other than loss or damage resulting from defect in materials or workmanship, or wear and tear). The law was structured so that insurance coverage could not be sold to these purchasers or owners, but rather would only be provided in conjunction with the sale of the product or system. The law also provides that the premium for the group policy, including certificates thereunder, shall be paid by the group policyholder from funds contributed wholly by the group policyholder.
As is the case with other kinds of group insurance, the law envisioned that the group policyholder, its employee, or some other person acting on behalf of the group policyholder would engage in the ministerial task of supplying a certificate on behalf of the insurer to the group member.
Accordingly, the mere delivery by a company, its employee, or any other person acting on behalf of the company, of a certificate to a group member under the circumstances described would not constitute acting as an insurance agent or broker within the meaning of Section 2101 and no such license is required.
For further information, you may contact Supervising Attorney Paul A. Zuckerman at the New York City office.