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 opinion on March 25, 2002, representing the position of the New York State Insurance Department.

RE: Receipt of Insurance Broker’s Future Commissions by Unlicensed Executor.

Question Presented:

Pursuant to the Insurance Law, may the unlicensed executor of an insurance broker’s estate receive future commissions based on placements made by the deceased broker?

Conclusion:

Nothing in the Insurance Law prohibits the unlicensed executor of an insurance broker’s estate from receiving future commissions earned by a deceased broker prior to the broker’s death.

Facts:

A licensed insurance broker had an agreement with an insurance agency that he would receive a percentage of the commissions for referring clients to the agency. Subsequently, the broker died leaving a will with beneficiaries. The inquirer was told that since the deceased broker’s license is due to expire on October 31, 2002, the unlicensed executor of the estate would not be entitled to receive such commissions.

Analysis:

N.Y. Ins. Law § 2101(c) McKinney 2000) defines the term "insurance broker", in pertinent part, as follows:

[A]ny 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 a licensed insurance broker . . .

New York courts have generally held that absent an agreement to the contrary, a broker earns its commission when it brings about the relationship of insurer and insured. See Hamond v. Risk Specialists, 210 A.D.2d 202, 619 N.Y.S.2d 744 (1994); Western Nat. Ins. Co. v. Haph Brokerage, 277 A.D. 6, 97 N.Y.S.2d 47 (1st Dept. 1950), aff’d. 302 N.Y. 678 (1951).

In the present case, based on the facts as provided, the executor would not be acting as an insurance broker within the meaning of Section 2101(c), provided that it is merely receiving future commissions earned by the deceased broker on business placed prior to his death, including the renewals thereof, and not servicing the broker’s accounts.1

This opinion is general in nature and is limited to an interpretation of the Insurance Law. We express no opinion on any other laws.

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


1 If the executor is seeking to service the decedent’s existing insurance business, it must obtain a temporary license pursuant to N.Y. Ins. Law § 2109 (McKinney 2000). Such license does not authorize the executor to solicit or sell new policies of insurance.