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 November 13, 2001, representing the position of the New York State Insurance Department.

RE: Regulation 125 and Place of Business.

Question Presented:

Does a remote two-way radio and video connection to an agency office, which is to be used solely for the purpose of answering billing inquiries, responding to requests for copies of insurance certificates and collecting insurance premiums via a locked premium drop box, constitute a place of business as defined by N.Y. Comp. Codes R. & Regs. tit. 11, § 34.1(c) (2001) (Regulation 125), requiring the physical presence of a designated person to supervise the location?

Conclusion:

No. Such activities do not constitute having a place of business as defined by N.Y. Comp. Codes R. & Regs. tit. 11, § 34.1(c) (2001) (Regulation 125), requiring the physical presence of a designated person to supervise the location. Such designated person shall be a licensed insurance agent or broker, including a sublicensee or licensed partner.

Facts:

An insurance agency is located in Hornell, New York, a rural area, and has many clients in Canisteo, New York. For the convenience of its existing clients in Canisteo, it wishes to set up a remote two-way audio and video connection to the agency’s office to facilitate communication, and it wishes to maintain a locked drop box for the collection of premiums. The communications between the agency and its clients would be limited to answering billing inquiries and responding to requests for copies of insurance certificates, and would not involve the sale of insurance. The agency intends to share a small office space with a separate computer networking company that would be responsible for setting up the video equipment and providing the clients with access to the office. There would be no agency employees or client files in the place where the remote two-way audio and video equipment would be located. The pivitol question is whether this constitutes having a "place of business" as defined by Regulation 125, requiring the physical presence of a designated person.

 

Analysis:

N.Y. Ins. Law § 2129(a)(McKinney 2000) provides in pertinent part as follows:

(a) Each place of business established by the holder of an agent and/or broker license shall be under the supervision of one or more persons licensed to do the kinds of business transacted in that office. The headquarters location must be supervised by one or more persons licensed to do all the kinds of business for which the licensee is authorized. Any satellite office established by a licensee must be supervised by one or more persons licensed to do the kinds of business to be transacted in that office.

N.Y. Comp. Codes R. & Regs. tit. 11, § 34.1(c) (2001) (Regulation 125) defines the term "place of business" as "any location in this State used by an agent or broker to conduct an insurance business." N.Y. Comp. Codes R. & Regs. tit. 11, § 34.1(e) (2001) defines the term "satellite office" as "any place of business other than the headquarters location."

N.Y. Comp. Codes R. & Regs. tit. 11, § 34.2(a) (2001) further provides that "[e]ach place of business established by any agent or broker shall be in the charge of at least one designated person. Where a agent or broker maintains only one place of business, then said agent or broker, if an individual, or any sublicensee or licensed partner, as appropriate, shall be deemed to be designated persons."

N.Y. Comp. Codes R. & Regs. tit. 11, § 34.1(f) (2001) provides that the term "designated person" means "any natural person who is a licensed agent or broker and who has been designated to be responsible for and in charge of a headquarters location or satellite office. A sublicensee or a licensed partner may be so designated."

Thus, the question becomes whether the remote location constitutes a separate place of business, for purposes of N.Y. Ins. Law § 2129 (McKinney 2000) and Regulation 125, requiring a designated person on the premises.

In the present case, there is no live person at the remote location, engaged in insurance-related activities, other than the client. The mere use of the video conferencing equipment to answer billing inquiries, respond to requests for insurance certificates and collect insurance premiums via a locked drop box would not convert the remote location into a place of business for purposes of N.Y. Ins. Law § 2129 (McKinney 2000) and Regulation 125. Thus, the remote location in Canisteo would not be a place of business requiring the physical presence of a licensed agent or broker on the actual premises.

Note that if the communications between the agency and its clients at the remote location involved activities that require licensing, such communication would have to be with an appropriately licensed person at the agency. However, the remote location would not be considered a place of business for purposes of N.Y. Ins. Law § 2129 (McKinney 2000) and Regulation 125, so long as there was no live person at the remote location engaged in insurance-related activities, other than the client.

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