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 informal opinion on July 27, 2001, representing the position of the New York State Insurance Department

Re: Out-of-Office Solicitation by Unlicensed Employees of Licensed Insurance Broker

Question Presented:

Is an unlicensed employee of a licensed insurance broker permitted, under New York Insurance Law, to engage in solicitation outside the office of the broker?

Conclusion:

No. N. Y. Ins. Law § 2101(c)(2) (McKinney 2000) prohibits a broker from delegating non-administrative or non-clerical duties to its unlicensed employees inside the office. Outside the office of the broker, unlicensed employees may not engage in any insurance-related activity.

Facts:

A licensed insurance brokerage has two (2) salaried employees who are not officers. The brokerage would like to have those employees act as sales people and engage in solicitation of insurance on its behalf outside of its office. A sub-licensee or a licensed broker would be responsible for signing off on any paperwork generated by the employee and submitted to a carrier for coverage.

Anasysis:

N. Y. Ins. Law § 2102(a)(1)(McKinney 2000) prohibits a person, firm, association or corporation from acting as an insurance broker or agent without a license. That section states:

(a)(1) No person, firm, association or corporation shall act as an insurance agent, insurance broker, reinsurance intermediary or insurance adjuster in this state without having authority to do so by virtue of a license issued and in force pursuant to the provisions of this chapter.

N. Y. Ins. Law § 2101(c)(McKinney 2000) defines an insurance broker as:

(c) In this article, "insurance broker" means any person, firm, association or corporation who or which for any compensation, commission or other thing of value acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance or annuity contract or in placing risks or taking out insurance, on behalf of an insured other than himself or itself or on behalf of any licensed insurance broker, except that such term shall not include:

any regular salaried employee of a licensed insurance broker who is engaged in the performance of clerical or administrative duties in the office of such broker, if such employee does not receive for his services a commission or other compensation directly dependent upon the amount of business done.(emphasis added).

N. Y. Ins. Law § 2101(c)(2) (McKinney 2000) permits a licensed insurance broker to delegate to its regularly salaried employees certain "clerical or administrative duties in the office of such broker, if such employee does not receive for his services a commission or other compensation" that is directly connected to the amount of business done. In essence, a broker is prohibited from delegating any non-clerical or non-administrative duties to an unlicensed employee in the office. Outside the broker’s office, an unlicensed employee may not engage in any insurance-related activity. It should also be noted that an "office" of the broker means either the main office or a satellite office, established in accordance with N.Y. Ins. Law § 2129 (McKinney 2000) and N.Y. Comp. Codes R. & Regs. tit. 11, § 34 (1995) (Regulation 125). Therefore, the brokerage may not have its unlicensed employees engage in solicitation inside or outside its office.

For further information you may contact Attorney, D. Monica Marsh, at the New York City Office.