The Office of General Counsel issued the following opinion on May 16, 2001, representing the position of the New York State Insurance Department.
Re: Sales Representatives and Insurance Agents License
Does the New York Insurance Law require an insurance company sales representative, whose function is to market insurance products, as group sales, only to insurance brokers, and not to consumers, to be licensed as an insurance agent?
The New York Insurance Law does not require an insurance company sales representative, whose function is to market insurance products, as group sales, only to insurance brokers, and not to consumers, to be licensed as an insurance agent.
A sales representative of a life insurance company, who maintains an individual life, accident and health insurance agents license, inquired whether he was required under the Insurance Law to maintain such license based on his description of his employment activities. The sales representative stated that he does not write any insurance policies under his own name but rather markets his employers products, as group sales, to brokers, who then may sell the products under the brokers own name and license.
N.Y. Ins. Law § 2101(a) (McKinney 2000) states in relevant part:
(a) In this article, "insurance agent" means any authorized or acknowledged agent of an insurer who acts as such in the solicitation of, negotiation for, or procurement or making of, an insurance or annuity contract, other than as a licensed insurance broker .
Thus, an insurance agent is one that, in part, acts in the solicitation of an insurance contract. The statute is concerned with the solicitation of insurance, whether such solicitation is conducted by dealing directly with a potential insured, or by soliciting a potential insureds insurance broker, which acts on behalf, and as the representative, of the potential insured. However, a sales representative that is not licensed as an insurance agent and that markets his employers products to insurance brokers in a general manner does not violate the Insurance Law because such marketing is not geared toward a particular potential insured and, thus, does not constitute solicitation of insurance.
The sales representative provided an attachment to his inquiry, which provided further detail regarding his employment activities. The attachment states, in part: "a sales representative should be the resource of choice for brokers and their clients. These clients should view them as the benefits expert for all products that the representative is expected to sell in the given territory." (emphasis added). If such wording meant that the sales representative speaks, or otherwise communicates, with an insurance brokers client, either directly with the client or through the insurance broker, the sales representative would be soliciting potential insureds. In that case, the sales representative would need to be licensed as an insurance agent.
Additionally, the attachment listed "Personal sales production" as part of the sales representatives major employment responsibilities, which this Office understands to be an insurance industry term that refers to the selling of insurance to potential insureds. If the sales representative is soliciting, negotiating with, or procuring or making an insurance contract with potential insureds, then the sales representative must be licensed as an insurance agent.
Notwithstanding the above, the sales representative may be exempt from the definition of insurance agent pursuant to N.Y. Ins. Law § 2101(a)(1) and (2), which state that the term "insurance agent" shall not include:
(1) any regular salaried officer or employee of a licensed insurer, fraternal benefit society or health maintenance organization or of a licensed insurance agent, who does not solicit or accept from the public, outside of an office of such insurer, health maintenance organization or agent, applications or orders for any such contract, if such officer or employee does not receive a commission or other compensation for his services which commission or other compensation is directly dependent upon the amount of business done;
(2) any regular salaried officer or employee of any insurer or health maintenance organization, who devotes substantially all of his services to activities other than the solicitation of insurance business and health maintenance organization contracts from the insuring public and who receives for the solicitation of such insurance and health maintenance organization contracts no commission or other compensation directly dependent upon the amount of business obtained;
For further information you may contact Attorney Sally Geisel at the New York City Office.