The Office of General Counsel issued the following informal opinion on February 11, 2002, representing the position of the New York State Insurance Department.
Re: Activities of bail bond supervisor regarding licensing
Must an employee of an insurer or of the insurers wholly owned subsidiary be licensed as a bail bond agent in supervising the placement of bail bonds by the agents of the insurer, when the employee has no discretion in determining which bonds are to be accepted or rejected?
No, under the circumstances presented, the employee does not need to be licensed as a bail bond agent under N.Y. Ins. Law Article 68 (McKinney 2000).
This inquiry concerns whether a supervisor employed by an authorized insurer or its wholly owned subsidiary would have to be licensed as a bail bond agent under the following circumstances:
The supervisor would audit New York bail bond agents accounts and monitor underwriting compliance for all bail bonds written by the insurers New York bail bond agents. The supervisor would not grant affirmative approval of proposed bail bonds submitted by the bail bond agents. Rather, the supervisors primary objective would be to ensure that the agents have properly followed the underwriting rules. If a proposed bail bond did not meet the underwriting rules, the supervisor would be required to reject it. The supervisor would have no discretion to reject a proposed bail bond except on the grounds that it does not comply with the underwriting rules.
Article 68 of the Insurance Law governs bail bonds. N.Y. Ins. Law § 6802 (McKinney 2000) provides, in relevant part:
(a) No person, firm or corporation or any officer or employee thereof shall act in this state as an agent or solicitor of an insurer doing a bail bond business in soliciting, negotiating or effectuating any such deposit or bail bond by such insurer unless licensed by the superintendent as an agent pursuant to the provisions of this section. Any person, firm or corporation so acting without being duly licensed shall be guilty of a misdemeanor.
(b) Every corporation engaging as an insurer in the business of giving bail shall procure a license pursuant to the provisions of this section for each of its employees, officers and agents acting for it in soliciting, negotiating or effectuating any such deposit or bail bond.
(c) The superintendent may, in his discretion, issue to any person, firm or corporation a license to act as an agent of an authorized insurer, in soliciting, negotiating or effectuating any such deposit or bail bond by such insurer.
Under § 6802, any employee, officer, or agent of an insurer that acts for the insurer in soliciting, negotiating or effectuating any bail bond must be licensed as a bail bond agent. Inasmuch as there is no contact directly or indirectly with potential insureds and there is no negotiation of the terms and conditions of the bonds with the bail bond agents, the employee would not be soliciting or negotiating the bond. Nor would the employee be effectuating the bond since the employees role is limited strictly to rejecting bonds that do not comply with the underwriting rules. Should the employee exercise discretion in performing the review, licensing would be required. Under the circumstances, it does not matter whether the employee is employed directly by the insurer or a subsidiary that is acting on behalf of the insurer.
For further information, you may contact Principal Attorney Paul A. Zuckerman at the New York City Office.