New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on February 7, 2003, representing the position of the New York State Insurance Department.

Re: Commissions

Question Presented

Subsequent to September 10, 2003, will the current provisions regarding referrals contained in N.Y. Ins. Law § 2115 (McKinney Supp. 2003) and N.Y. Ins. Law § 2116 (McKinney Supp. 2003) continue to apply under a regulation, another statutory section, or will the exceptions listed in these sections be permanently removed?

Conclusion

The current N.Y. Ins. Law § 2115 and N.Y. Ins. Law §§ 2116 will expire on September 10, 2003 and revert back to the provisions in effect prior to September 8, 2000, unless they are extended by the state Legislature.

Facts

The inquirer provided no facts.

ANALYSIS

N.Y. Ins. Law § 2115 (McKinney Supp. 2003) states in the relevant part:

(a)(1) [Effective until Sept. 10, 2003, . . . See, also, par. (1) below.] No insurer doing business in this state, and no agent or other representative thereof, except as provided in subsection (b) hereof, 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 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.

(1) [Effective Sept. 10, 2003. . . . See, also, par. (1) above.] No insurer doing business in this state, and no agent or other representative thereof, except as provided in subsection (b) hereof, 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 one of this article or except as provided in subsection (c) of this section.

N.Y. Ins. Law § 2116 (McKinney Supp. 2003) states:

[Effective until Sept. 10, 2003, . . . See, also, Insurance Law § 2116 post]

No insurer authorized to do business in this state, and on 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 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 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 a specific insurance policy terms and conditions and where the compensation for referral is not based on the purchase of insurance by such person.

N.Y. Ins. Law § 2116 (McKinney Supp. 2003) states:

[Effective Sept. 10, 2003, . . . See, also, Insurance Law § 2116 ante]

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.

The 2000 amendment to these sections added an exception regarding certain referrals. Only the state Legislature has the power to amend these laws, and the Department cannot continue the exceptions by regulation. The current laws will expire and revert back to the prior versions unless they are extended by the state Legislature.

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