The Office of General Counsel issued the following informal opinion on February 21, 2001, representing the position of the New York State Insurance Department.
RE: Limitation on commissions and rebating; limited liability corporation as sublicensee
May a limited liability company ("LLC") obtain an agent and/or broker license from the Department and name its corporate member as its sublicensee.
No. The statute contemplates a natural person as the sublicensee. N. Y. Ins. Law §§ 2103(c)-(f), 2104(b), (c) (McKinney 2000).
A limited liability company (the "LLC") intends to seek agent (both life and property/casualty) and broker licenses from the Insurance Department. One member of the LLC is a corporation that holds the foregoing licenses in its corporate capacity, and which it proposes will be the LLCs sublicensee. The other member of the LLC is an accounting firm organized as a partnership.
A review of both N. Y. Ins. Law §§ 2103 and 2104 (McKinney 2000) makes it clear that the statute contemplates the appointment of a natural person as a sublicensee. For example, N. Y. Ins. Law § 2103(d) (McKinney 2000) provides:
Every individual applicant for a license under this section and every proposed sub-licensee shall be eighteen years of age or over at the time of the issuance of such license.
Similarly, N. Y. Ins. Law § 2104 (c)(1) (McKinney 2000) provides:
Every individual applicant for such license and every proposed sub-licensee shall be of the age of eighteen years or over at the time of the issuance of such license. No individual shall be deemed qualified to obtain such license or to be names as sub-licensee therein unless he shall comply with the requirements of subparagraph (A), (B) or (C) following:
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(A) He shall have successfully completed a course or courses approved as to method and content by the superintendent, covering the principal branches of the insurance business and requiring not less than ninety hours of classroom work or the equivalent thereof in correspondence work .
(B) He shall have been regularly employed by an insurance company or an insurance agent or an insurance broker, for a period or periods aggregating not less than one year during the three years next preceding the date of application, in responsible insurance duties relating to the underwriting or adjusting of losses in any one or more of the following branches of insurance
(C) He shall have been regularly employed by an insurance company or an insurance agent or insurance broker, for a period or periods aggregating not less than one year
The statutory requirement of having a natural person as a sublicensee becomes evident when considering the necessity of being able to determine who is responsible for a licensees wrongdoing. In the case of a licensee that is an entity, there must be an individual who can be held accountable for such acts.
For further information you may contact Associate Attorney Joan Siegel at the New York City Office.