The Office of General Counsel issued the following opinion on March 21, 2001 representing the position of the New York State Insurance Department.
Re: Compensation for Customer Lists
May an authorized insurer or a licensed insurance agent or broker enter into an agreement with an unlicensed person in which a list of the unlicensed persons customers is provided to the licensee and a fee is based upon the actual number of policies written?
The N.Y. Ins. Law (McKinney 2000 & Supp. 2000) does not prohibit licensees from purchasing lists of customer names from non-licensees for the purpose of the licensee soliciting insurance. The compensation payable to non-licensees for such lists may be made contingent upon the successful placement of insurance by the licensee and may constitute a percentage of the commission earned by the licensee for placing the business.
An unlicensed person agreed to give leads to an insurer or its agent for the use of the insurer or agent in soliciting insurance business. We assume that the non-licensee would not engage in any discussions with insureds regarding insurance. Two OGC opinions dated April 4, 1985 and May 1, 1995 would appear to allow this situation, but the question is whether these opinions reflect current Departmental policy.
Although the inquiry characterized the sale of a customer list as a referral, such activity is not a referral as such term is used in recent amendments to the Insurance Law.
N.Y. Ins. Law § 2114 (McKinney 2000), as amended by Section 4 of Ch. 418 of the Laws of 2000) applies to life, accident and health insurance agents and provides as follows:
(a)(1) No insurer . . . doing business in this state shall pay any commission or other compensation to any person . . . for any services in obtaining in this state any new contract of life insurance or any new annuity contract, except to a licensed life insurance agent of such insurer . . . and except to a person described in paragraph two or three of subsection (a) of section two thousand one hundred one of this article.
(2) No agent or other representative of any such life insurer . . . shall pay any commission or other compensation to any person for any services of the kind specified in paragraph one hereof, except to a licensed life insurance agent of such insurer . . .
(4) Services of the kind specified in this subsection shall not include the referral of a person to a licensed insurance agent or broker that does not include a discussion of specific insurance policy terms and conditions and where the compensation for referral is not based upon the purchase of insurance by such person. (new language underscored).
N.Y. Ins. Law § 2115 (McKinney 2000), as amended by Section 5 of Ch. 418 of the Laws of 2000, in regard to property/casualty insurance agents and Section 2116 (McKinney 2000), as amended by Section 6 of Ch. 418 of the Laws of 2000, in regard to insurance brokers contain identical provisions.
Thus, pursuant to the recent amendments to N.Y. Ins. Law Sections 2114, 2115 and 2116 (McKinney 2001), unlicensed persons may receive fees for referrals to licensed insurance agents or brokers where there is no discussion of specific insurance policy terms and the fee is not based on whether a sale is made. Accordingly, an unlicensed person may not receive a fee for a referral that is contingent upon the purchase of insurance.
However, this Department has opined that these recent amendments to the New York Insurance Law do not prohibit licensees from purchasing lists of customer names from non-licensees that will be used by the licensee for soliciting insurance, because such conduct does not constitute a referral or solicitation. Therefore, the compensation payable to non-licensees for providing such lists may be made contingent upon the successful placement of insurance by the licensee and may be a percentage of the insurance commission earned by the licensee. See Circular Letter No. 5 of 2001.
For further information, you may contact Attorney Pascale Joasil at the New York City Office.