The Office of General Counsel issued the following informal opinion on March 29, 2001, representing the position of New York State Insurance Department.
Re: Payment of a Referral Fee to a Non-Licensee for Referring Clients who may Purchase Life Insurance
May a licensed life insurance agent pay a referral fee to a non-insurance law licensed Certified Public Accountant ("CPA") for referring his client, who is interested in purchasing a life insurance policy?
Yes. A licensed life insurance agent may pay a fee to a non-insurance law licensed CPA for referring the CPAs client, who is a potential life insurance policy purchaser, provided that the non-licensee does not discuss the specific insurance policy terms and conditions with the person being referred, and the fee paid is not based upon the purchase of insurance by the client.
A licensed life insurance agent wishes to enter into an arrangement with a CPA where the CPA will refer clients to the life insurance agent which could result in a life insurance policy sale. The non-licensee CPA wishes to be paid for the referral, the amount of the advisory fee that he would normally charge a client while working on an estate planning case.
Chapter 418 of the Laws of New York (2000), which became effective September 8, 2000, amends, among other things, N.Y. Ins. Law §§ 2114, 2115 and 2116 (McKinney 2000). The amendments permit the payment of a fee by an authorized insurer, its agent, or licensed insurance broker, to a non-licensee for referring a person to a licensed insurance agent or broker provided that the non-licensee does not discuss the specific insurance policy terms and conditions with the person being referred, and the fee paid is not based upon the purchase of insurance by the person referred.
Thus, a licensed life insurance agent may pay a referral fee to the non-licensee CPA for referring a client, a potential life insurance policy purchaser, in the amount of the CPAs estate planning fee, provided the CPA does not discuss the policy terms and conditions with the person being referred and the fee paid is not based upon the purchase of insurance by the CPAs client. The foregoing opinion does not consider or evaluate whether the proposed actions are in compliance with laws other than the Insurance Law.
For further information you may contact Associate Counsel, Sidney B. Glaser at the New York City Office.