The Office of General Counsel issued the following informal opinion on May 18, 2000 representing the position of the New York State Insurance Department.
Consequence of Ban on Insurance License
Does a person holding an insurance license issued by the New York State Insurance Department, who is subsequently banned from a self regulatory agency such as the NASD or NYSE, automatically get his/her insurance license suspended or revoked by the Department as a consequence of the ban?
The answer depends on the underlying acts giving rise to the original ban. If the facts demonstrate incompetence or untrustworthiness, then the insurance license may be suspended or revoked by this Department.
An individual facing a ban from a self-regulatory agency is also a licensee of the New York State Insurance Department and wishes to learn the impact, if any, that such a ban may have on this persons ability to maintain his/her insurance license.
N.Y. Ins. Law § 2110(a) states in relevant part:
The superintendent may refuse to renew, revoke, or may suspend for a period he determines the license of any insurance agent, insurance broker, reinsurance intermediary, insurance consultant or adjuster, or, in the case of an insurance broker, may refuse to renew the license of such broker, if, after notice and hearing, he determines that the licensee or, in the case of an insurance broker or adjuster, any sub-licensee has:
violated any provision of this chapter, or has violated any law in the course of his dealings in such capacity;
made a material misstatement in the application for such license;
been guilty of fraudulent or dishonest practices; or
demonstrated his incompetency or untrustworthiness to act in such capacity. (emphasis added)
The standard is whether or not the acts underlying the original ban imposed by the self-regulatory body demonstrate incompetence or untrustworthiness. If either can be shown, then the individuals license may be suspended or revoked by this Department after notice and a hearing.
For further information, contact Attorney Meredith Katz at the Departments New York Office.