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 April 3, 2002, representing the position of the New York State Insurance Department.

Re: Doing business as a trade-name

Questions Presented:

1. May a licensed property/casualty agent or broker, who is licensed as an individual, do business under an unlicensed trade name?

2. May a person using an unlicensed trade name receive commissions from an insurer or its agent?

Conclusion:

1. No. The property/casualty agent or broker would be in violation of N.Y. Ins. Law § 2102(a) (McKinney 2000).

2. No. The insurer or its agent would be in violation of N.Y. Ins. Law §§ 2115 or 2116 (McKinney Supp. 2001-2002) by paying commissions to such a person.

Facts:

No facts were provided.

Analysis:

N.Y. Ins. Law § 2102(a)(1) (McKinney 2001), which controls the licensing of agents, brokers, reinsurance intermediaries and adjusters, states in the relevant part:

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.

After all the licensing requirements are met, the Department, pursuant to N.Y. Ins. Law, Article 21 (McKinney 2000 and Supp. 2001-2002), will issue a license to an applicant to operate under a specific name. The licensee must use that name when transacting business. If an individual conducts business under a name other than the one to which the license was issued, that person will be conducting an insurance business without a license in violation of N.Y. Ins. Law § 2102(a) (McKinney 2000), and the licensee may be considered to be acting in an untrustworthy manner. This may be a basis for the Superintendent to revoke such license pursuant to N.Y. Ins. Law §§ 2110(a)(3) and (4) (McKinney 2000).

A licensee may only transact business under another name if such licensee gets permission from the Department’s Licensing Bureau to do so, and properly files the required documents with the county clerk pursuant to N.Y. Gen. Bus. Law § 130 (McKinney 2000) which states in the relevant part:

(1) No person shall hereafter (i) carry on or conduct or transact business in this state under any name or designation other than his or its real name, . . . unless:

(a) Such person, . . . shall file in the office of the clerk of each county in which such business is conducted or transacted a certificate setting forth the name or designation under which and the address within the county at which such business is conducted or transacted, the full name or names of the person or persons conducting or transacting the same, including the names of all partners, with the residence address of each such person, and the age of any person less than eighteen years of age. Each certificate shall be executed and duly acknowledged by the person or, if there be more than one, by all of the persons conducting the business.

N.Y. Ins. Law §§ 2115 and 2116 (McKinney Supp. 2001-2002) prohibit payment of commissions by an insurer or its agent or other representative to an unlicensed insurance agent or broker. N.Y. Ins. Law § 2115(a) (McKinney Supp. 2001-2002) states in the relevant part:

No insurer doing business in this state, and no agent or other representative thereof, . . . shall pay any commission or other compensation to any person, firm, association or corporation for acting as insurance agent in this state, except to a licensed insurance agent of such insurer or to a person described in paragraph two or four of subsection (a) of section two thousand one hundred and one of this article or except as provided in subsection (c) of this section. For the purposes of this section, "acting as insurance agent" shall not include the referral of a person to a licensed insurance agent or broker that does not include a discussion of specific insurance policy terms and conditions and where the compensation for referral is not based upon the purchase of insurance by such person.

N.Y. Ins. Law §2116(a) (McKinney Supp. 2001-2002) states in the relevant part:

No insurer authorized to do business in this state, and no officer, agent or other representative thereof, shall pay any money or give any other thing of value to any person, firm, association or corporation for or because of his or its acting in this state as an insurance broker, unless such person, firm, association or corporation is authorized so to act by virtue of a license issued or renewed pursuant to the provisions of section two thousand one hundred four of this article. For the purposes of this section, "acting as insurance broker" shall not include the referral of a person to a licensed insurance agent or broker that does not include a discussion of specific insurance policy terms and conditions and where the compensation for referral is not based upon the purchase of insurance by such person.

Accordingly, if an individual, licensed under one name, transacts business as an agent or broker under an unlicensed trade name, such individual would be acting as an insurance agent or broker without a license. Accordingly, payment of commissions to such person operating under the unlicensed trade name would be a violation of N.Y. Ins. Law §§ 2115(a) or 2116(a) (McKinney Supp. 2001-2002).

For further information you may contact Senior Attorney Susan Dess at the New York City Office.