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 30, 2001, representing the position of the New York State Insurance Department.

Re: Insurance Operations of Subsidiaries of Out-of-State Banks

Questions Presented:

1. Do the New York Insurance Law or regulations promulgated thereunder specifically address the conduct of insurance agency and brokerage activities by subsidiary corporations of banks that are chartered in states other than New York?

2. Does New York have reciprocal agreements with other states that allow both banks chartered in other states to operate insurance agency and brokerage subsidiaries in New York and New York chartered banks to operate insurance agency and brokerage subsidiaries in other states?

Conclusion:

1. No. The Insurance Law and regulations promulgated thereunder do not specifically address the conduct of insurance activities by subsidiary corporations of banks that are chartered in states other than New York.

2. No. New York does not have reciprocal agreements concerning the operation of insurance agency and brokerage subsidiaries of banks chartered in other states.

Facts:

The subsidiary corporation would be a wholly-owned subsidiary of an Illinois chartered bank and an Illinois corporation. The subsidiary would like to engage in insurance activities as an agent and broker.

Analysis:

The Insurance Law and regulations do not specifically address agency and brokerage activity of subsidiary corporations of banks that are chartered in states other than New York. In addition, New York does not have reciprocal agreements with any other state that allows both banks chartered in other states to operate insurance agency and brokerage subsidiaries in New York, and New York chartered banks to operate such insurance subsidiaries in other states. However, the subsidiary would have to become licensed in New York the same as for any other person that seeks to act as an agent or broker in New York, and must otherwise comply with New York Insurance Law and regulations.

In addition, N.Y. Ins. Law § 1112 (McKinney 2000), may be relevant. Section 1112 addresses reciprocity concerning agents, brokers and insurers. The intent of section 1112 was to protect New York insurers and brokers from jurisdictions which either denied or made more costly their access to that state’s insurance markets. The purpose of section 1112 is to institute reciprocal restrictions upon the discriminating state’s domiciliary licensees which do business in New York.

N.Y. Ins. Law § 1112 (McKinney 2000) provides, in part, as follows:

(a) (1) If, by the laws, or the action of any public official, of any other state, any insurer organized or domiciled in this state, or its duly authorized agents, shall be, required to deposit securities in such other state to protect policyholders or for any other purpose, or shall be required to pay taxes, fines, penalties, fees for licenses or certificates of authority or any other sum for the privilege of doing business in such other state, or shall be subjected to any restrictions, obligations, conditions or penalties, imposed for such privilege, and such requirements are greater than those required of similar insurers organized or domiciled in such other state by the laws of this state for the privilege of doing business herein, then all similar insurers organized or domiciled in such other state and their duly authorized agents in this state shall make like deposits for like purposes with the superintendent, and pay him for taxes, fines, penalties, fees for licenses or certificates of authority or for any other requirement for the privilege of doing business in this state, an amount determined in the manner prescribed by such other state, and shall be subjected to such greater requirements imposed by such other state upon similar insurers of this state and their duly authorized agents. . . .

(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. . . .

Questions concerning the operation of the New York State Banking Law should be addressed to the New York State Banking Department, Two Rector Street, New York, New York 10006.

For further information, you may contact Senior Attorney Meredith S. Kaufer at the New York City Office.