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 May 20, 2003, representing the position of the New York State Insurance Department.

RE: Right to Receive Commissions and Place Business Following Change of Employment and Relocation to Another State.

Questions Presented:

1. Pursuant to the New York Insurance Law, may an insurer pay commissions to a New York licensed insurance agent on insurance placed while employed with a New York broker-dealer after such insurance agent becomes employed with a North Carolina broker-dealer that does not currently have a New York office?

2. Pursuant to the New York Insurance Law, may a New York licensed insurance agent place new insurance business with New York insurers and receive commissions following the change of employment to a North Carolina broker-dealer that does not have a New York office and relocation to North Carolina?

Conclusions:

1. Nothing in the New York Insurance Law would prevent an insurer from paying commissions to a New York licensed insurance agent on insurance placed while employed with a New York broker-dealer after such insurance agent becomes employed with a North Carolina broker-dealer that does not currently have a New York office.

2. Nothing in the New York Insurance Law would prevent a New York licensed insurance agent from placing new insurance business with New York insurers and receiving commissions following the change of employment to a North Carolina broker-dealer that does not have a New York office and relocation to North Carolina.

Facts:

The inquirer is a New York licensed insurance agent, with an insurance agent’s license that will expire in June of 2005. He also has Series 6 and Series 63 Securities licenses. He recently resigned from his job with a New York broker-dealer, effective April 16, 2003, and joined a North Carolina broker-dealer on April 17, 2003. Although the North Carolina broker-dealer is licensed for securities in New York, it no longer has a New York office. The inquirer plans to relocate to North Carolina on June 30, 2003, and would like to place new business with New York insurers following his relocation. He also plans to become licensed as an insurance agent in North Carolina.

While employed with his previous employer, he worked on a whole life to variable annuity case pursuant to Section 1035 of the Internal Revenue Code for nearly two years. The commission check from this case was issued shortly after he resigned from the New York broker-dealer. The inquirer did not specify in his inquiry whether the New York broker-dealer is licensed as an insurance agent in New York. Therefore, for purposes of this opinion, we will assume that he was conducting insurance business in his individual name and that he received all commission checks directly from the insurer.

The inquirer would like to know whether it is permissible for an insurer to pay him commissions in light of the change in his employment to a North Carolina broker-dealer that does not currently have a New York office. He would also like to know whether he may place new business and receive commissions from New York insurers, following his relocation.

Analysis:

New York courts have generally held that absent an agreement to the contrary, a licensed insurance agent or 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 (2nd Dept. 1994); Western Nat. Ins. Co. v. Haph Brokerage, 277 A.D. 6, 97 N.Y.S. 2d 447 (1st Dept. 1950), aff’d. 302 N.Y. 678 (1951). In accordance with this principle, absent an agreement to the contrary, the inquirer earned his commission, including the renewals thereof, at the time that the service was rendered. Therefore, the change in his employment from a New York to a North Carolina broker-dealer does not affect his right to receive these commissions and the renewals thereof. Nor does the fact that the North Carolina broker-dealer does not currently have an office located in New York.

Moreover, inasmuch as the inquirer remains licensed as an insurance agent in New York, he may continue to use his New York license to place new business with New York insurers following his relocation to North Carolina. Please note that the inquirer may only do business in his individual name and not under the name of the North Carolina broker-dealer, unless it is licensed as an insurance agent in New York. The inquirer was directed to contact our Licensing Bureau at (518) 474-6630 for further details regarding licensing in New York.

This opinion is limited to an interpretation of the New York Insurance Law. Although we note that the inquirer plans to become licensed as an insurance agent in North Carolina, we offer no opinion regarding the North Carolina Insurance Law.

For further information you may contact Senior Attorney Pascale Joasil at the New York City Office.