|George E. Pataki
Gregory V. Serio
The Office of General Counsel issued the following opinion on January 7, 2003, representing the position of the New York State Insurance Department.
Re: License For Non-Resident Insurance Consultant
This is in response to your inquiry regarding the captioned subject.
May an insurance consultant, licensed pursuant to the Illinois Insurance Code as an insurance producer, obtain a non-resident insurance agents license from this Department in order to act as an insurance consultant in New York?
Yes. A licensed insurance producer in Illinois may obtain a New York non-resident insurance agents license in order to act as an insurance consultant in New York.
The inquirer states in the inquiry that the inquirer is a property/casualty insurance consultant in the state of Illinois, and that the inquirer is licensed as an insurance producer in that state. Illinois does not have a separate insurance consultants license. The inquirer plans to be compensated on either an hourly fee basis or a fixed project fee basis for the inquirers insurance consulting in New York.
N.Y. Ins. Law § 2102(b)(1) (McKinney 2000) prohibits a person, firm association or corporation from identifying or holding himself or itself out as an insurance consultant in New York State without a proper license. Section 2102(b)(1) provides:
Unless licensed as an insurance agent, insurance broker or insurance consultant, no person, firm, association or corporation shall in this state identify or hold himself or itself out to be an insurance advisor, insurance consultant or insurance counselor.
Additionally, N.Y. Ins. Law § 2102(b)(3) (McKinney 2000) prohibits a person or firm from accepting compensation for examining, appraising, reviewing, evaluating, recommending or advising on an insurance policy in New York unless licensed as an agent, broker or consultant. Section 2102(b)(3) provides:
Unless licensed as an insurance agent, insurance broker or insurance consultant with respect to the relevant kinds of insurance, no person, firm, association or corporation shall receive any money, fee, commission or thing of value for examining, appraising, reviewing or evaluating any insurance policy, annuity or pension contract, plan or program or shall make recommendations or give advice with regard to any of the above.
Theinquirer proposes a plan in which the inquirer would obtain a non-resident insurance agents license from this Department so that the inquirer may perform consulting services within New York State. The Licensing Bureau of this Department will issue a license to a licensed, out-of-state producer as either a non-resident agent or broker, according to the kinds of insurance the producer is licensed to conduct business under in the state of residence. A property/ casualty producer, licensed in a state other than New York, may be licensed as a property and casualty non-resident agent or broker in New York upon its application to and review by the Licensing Bureau to ascertain that all requirements have been met.
Should this Department issue theinquirer a non-resident agents license, the inquirer would be prohibited from acting as an insurance agent from a New York address. N.Y. Ins. Law § 2101(d) (McKinney 2000) defines a non-resident insurance agent as an individual who resides outside of New York State and who is licensed or otherwise authorized to act as an insurance agent in his resident state, provided the individual or firm maintains an office in the resident state, but not in New York. Section 2101(d) provides:
An individual who is a non-resident of this state and who is licensed or authorized to act as an insurance agent in the state in which he resides, and in which he or the firm or association of which he is a member or employee, or the corporation of which he is an officer, director, or employee maintains an office as an insurance agent; provided, however, that such term shall not include any non-resident of this state who maintains an office as an insurance agent in this state or who is a member or an employee of a firm or association, or an officer, director or employee of a corporation which maintains an office as an insurance agent in this state.
Along with theinquirers application for a non-resident agent and/or brokers license, the inquirer must submit a letter of certification from Illinois that states that the inquirer is licensed in that state as a property/casualty producer.
With reference to compensation for theinquirers consulting services, pursuant to N.Y. Ins. Law § 2119 (McKinney 2000) compensation must be based on a written memorandum, signed by the party to be charged and specifying or clearly defining the amount/extent of compensation. Section 2119 provides in pertinent part:
(a)(1) No person licensed as an insurance agent, broker or consultant may receive any fee, commission or thing of value for examining, appraising, reviewing or evaluating any insurance policy, bond, annuity or pension or profit-sharing contract, plan or program or for making recommendations or giving advice with regard to any of the above, unless such compensation is based upon a written memorandum signed by the party to be charged and specifying or clearly defining the amount or extent of such compensation.
(a)(2) A copy of every such memorandum or contract shall be retained by the licensee for not less than three years after such services have been fully performed.
(b)(1) No person licensed as an insurance agent, broker or a consultant may receive any compensation, direct or indirect, as a result of the sale of insurance or annuities to, or the use of securities or trusts in connection with pensions for, any person to whom any such licensee has performed any related consulting service for which he has received a fee or contracted to receive a fee within the preceding twelve months unless such compensation is provided for in the memorandum or contract required pursuant to subsection (a) hereof.
(b)(2) This chapter shall not prohibit the offset, in whole or in part, of compensation payable under subsection (a) hereof by compensation otherwise payable to such consultant as agent or broker as a result of such sale of insurance or annuities or the use of securities or trusts in connection with pensions, if any such offset is provided for in the written memorandum or contract required under subsection (a) hereof.
One may want to visit the Departments web site at www. ins.state.ny.us for further information and guidance.
For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.