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 March 6, 2003, representing the position of the New York State Insurance Department.

RE: Need for Non-resident Agent’s License

Question Presented:

Does an insurance agency, which is licensed and domiciled in Ohio, need a New York non-resident insurance agent’s license in regard to coverage for a New York employee under a workers’ compensation policy issued and delivered outside New York and sold in Ohio to an Ohio employer?

Conclusion:

A New York license is not needed under the factual situation as presented.

Facts:

An insurance company ("ABC") requested its independent insurance agency, based in Ohio, to obtain a corporate non-resident insurance license in New York. The agency has no office in New York and does not solicit or sell insurance in this state.

The agency sold an ABC insurance policy package in Ohio to an Ohio company that had one employee in New York covered under the workers’ compensation coverage under the policy package. The policy was issued and delivered outside New York by ABC. The agency received commissions on the policy, which amounted to $39 allocable for the coverage on the New York employee. Having received a New York non-residence agent’s license, the agency has been subjected to numerous communications with, and forms from, the New York State Department of State. The New York State Department of Taxation and Finance has also notified the agency of relatively high minimum tax requirements.

Analysis:

N. Y. Ins. Law § 2101(a)(1) (McKinney 2000) defines an insurance agent as one "who acts as such in the solicitation of, negotiation for, or procurement or making of, an insurance . . . contract . . ."

N.Y. Ins. Law § 2102(a)(1) (McKinney 2000) prohibits a person or entity from acting as an insurance agent in this state without a license.

In selling an Ohio insurance package to an Ohio client, the agency did not act as an agent in New York, notwithstanding the fact that its client had one covered employee located in this state. The insured here is the employer in Ohio. All of the transactions occurred outside New York and no solicitation or sale occurred in New York. Since no activity requiring licensing in New York occurred in New York, the agency has not been acting as an insurance agent in this state in regard to such activity.

Furthermore, ABC is not prohibited under New York Law from paying a commission to the agency on this transaction without the agency being licensed in New York because there is no New York policy or transaction so New York Law would not apply.

Accordingly, it was unnecessary under the factual situation provided for the agency to obtain a New York non-resident agent’s license. The agency may surrender the license back to the Department or simply let the license expire, and notify the other state agencies that the agency is no longer licensed here and that it doesn’t do business here.

For further information you may contact Associate Attorney Jeffrey A. Stonehill, at the New York City Office.