New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following opinion on April 5, 2001 representing the position of the New York State Insurance Department.

Re: Licensing of Non-resident Limited Liability Partnerships as Insurance Brokers in New York State.

Questions Presented:

1. May a non-resident partnership insurance brokerage application be submitted without a filing receipt from the New York State Department of State?

2. May a non-resident limited liability partnership be licensed as an insurance broker in New York State?

Conclusions:

1. No. The application requires that the non-resident partnership submit proof of filing the partnership with the New York State Department of State.

2. No. The New York Insurance Law authorizes the licensing of non-resident general partnerships and limited partnerships domiciled in reciprocal states as insurance brokers. However, non-resident limited liability partnerships may not be licensed as insurance brokers, since they are not considered professionals as defined by the New York Partnership Law.

Facts:

A law firm is in the process of preparing a non-resident partnership insurance broker application for one of its clients. The client is a limited liability partnership licensed as an insurance broker under Massachusetts law. The application form requires the applicant to check a box that indicates what type of partnership it is. One of the choices is "Limited Liability Partnership". An applicant who selects this choice is directed to submit a copy of a New York Department of State filing receipt and a certification from the state in which the business address is located. The Department of State informed the firm that to obtain a filing receipt, the applicant must register with the Department of State by means of a Notice of Registration. However, the Department of State also stated that it does not issue such registrations to insurance brokers because they are not considered professionals within the purview of the New York Partnership Law.

Analysis:

The Insurance Law

N.Y. Ins. Law § 2104 (McKinney 2000) provides as follows:

(a) (1) The superintendent may issue an insurance broker’s license to any individual, firm, association or corporation . . . who or which is deemed by him trustworthy and competent to act as a broker in such manner as to safeguard the interests of the insured, and who or which is otherwise qualified as herein required, and who or which has complied with the prerequisites herein prescribed. (emphasis added).

N.Y. Ins. Law § 2104 (e) (3) (E) (McKinney 2000) further authorizes the Superintendent to issue licenses to non-resident insurance brokers to conduct business in New York.

A non-resident partnership may obtain a license to do business in New York by filing a written application with the Licensing Bureau together with the requisite proof of filing of the partnership with the Department of State and a certification from the state in which the business address is located. See N.Y. Ins. Law § 2104 (d) (McKinney 2000) and the non-resident partnership insurance broker application.

The Partnership Law

N.Y. Partnership Law §121-1500 (a)(McKinney 2000) provides as follows:

(a)Notwithstanding the education law or any other provision of law, (i) a partnership without limited partners each of whose partners is a professional authorized by law to render a professional service within this state and who is or has been engaged in the practice of such profession in such partnership or a predecessor entity, or will engage in the practice of such profession in the registered limited liability partnership within thirty days of the date of the effectiveness of the registration provided for in this subdivision or a partnership without limited partners each of whose partners is a professional, at least one of whom is authorized by law to render a professional service within this state and who is or has been engaged in the practice of such profession in such partnership or a predecessor entity, or will engage in the practice of such profession in the registered limited liability partnership within thirty days of the date of the effectiveness of the registration provided for in this subdivsion, (ii) a partnership without limited partners authorized by, or holding a license, certificate, registration or permit issued by the licensing authority pursuant to the education law to render a professional service within this state, which renders or intends to render professional services within this state, or (iii) a related limited liability partnership may register as a registered limited liability partnership by filing with the department of state a registration . . .

Therefore, N.Y. Partnership Law §121-1500 (a) (McKinney 2000) restricts the availability of limited liability partnerships to professionals practicing in general partnership form.

N.Y. Partnership Law § 2 (McKinney 2000) defines a profession as including any practice as an attorney and counselor-at-law or as a licensed physician, and those professions designated in title eight of the Education Law. Insurance brokers are not included in the professions enumerated in title eight. N.Y. Partnership Law §121-1502 (a) (iv) (McKinney 2000) imposes identical restrictions upon non-resident limited liability partnerships. Consequently, non-resident limited liability partnerships may not be licensed as insurance brokers in New York since insurance brokers are not considered professionals as defined by the New York Partnership Law. Thus, the New York State Department of State is correct in refusing to issue Notices of Registration to non-resident limited liability partnerships that render non-professional services.

Reciprocity

The Insurance Law authorizes the licensing of non-resident general partnerships and limited partnerships, in reciprocal states, as insurance brokers in New York.

N.Y. Ins. Law §1112 (c)(McKinney 2000) prescribes the basis for reciprocity with other states and provides as follows:

(c) If, by the existing or future laws of any other state, any broker resident within this state and duly licensed as such under this chapter may not be licensed as a broker in such other state, then no broker resident in such other state shall be licensed as a broker within this state, anything in this chapter to the contrary notwithstanding.

Massachusetts does not license non-resident partnerships as insurance brokers. However, pursuant to Mass. Gen. Laws Ann. Ch. 175 §173 (2000), Massachusetts partnerships may include non-resident agents or brokers if:

[A] majority of [the] partners are residents of the commonwealth, and . . . the partnership agreement contains a statement which in substance states that such partnership agreement is a Massachusetts contract . . . governed by . . . the laws of the commonwealth, and . . . with respect to any legal action arising out of the transactions or activities of the partnership affairs, service of process made on any one of the partners [is] deemed valid and binding service upon all [the non-resident partners].

Accordingly, since Massachusetts imposes such restrictions on New York partnerships, New York will not license Massachusetts’ partnerships on a reciprocal basis.

For further information, you may contact Attorney Pascale Joasil at the New York City office.