The Office of General Counsel issued the following informal opinion on January 5, 2004, representing the position of the New York State Insurance Department.
Re: Insurance sales in New Jersey
1. May a life insurance agent who is licensed in New Jersey and New York, and has offices in both states, and has a client who wants to buy a life insurance policy in New Jersey with an insurer not authorized in New York, write the application and have it signed by the client in New Jersey without violating New York Insurance Laws?
2. May an insurance agent or broker recommend that the client take a policy in which the premium would be higher than another policy?
1. Yes. The New York life insurance agent may conduct insurance business in New Jersey if it does not violate N.Y. Ins. Law § 2117 (McKinneys Supp. 2003) by soliciting, negotiating, or effectuating any insurance business in New York on behalf of an unlicensed or unauthorized insurer.
2. The Department offers no opinion about recommending one policy over another because the suitability of an insurance policy is a business decision for the insured to make based upon the insureds unique situation.
The inquirer represents a client who is a life insurance agent who is licensed, and has offices, in both New Jersey and New York. The life insurance agent obtained a quote from a New York authorized insurer and from its New Jersey licensed affiliate. The New York Companys premium is 20% higher than the New Jersey Companys premium. The New Jersey policy form is identical to the New York form. The insured is demanding that the agent purchase the New Jersey policy with the lower premium. The agent is prepared to have the application signed by the insured and the insureds spouse in the New Jersey office. The medical exams are to be conducted in New York and the policy will be mailed to the insured from the agents New Jerseys office.
The inquirers client wants to recommend the more expensive New York insurance policy to the insured, but is concerned that so doing would violate New York insurance law, and is also concerned about violating a New Jersey insurance law that purportedly restricts who is allowed to buy life insurance in New Jersey to those who have a business in New Jersey, even though the insured states that the insured has a business in New Jersey.
The New York life insurance agent may conduct insurance business in New Jersey if it does not violate N.Y. Ins. Law § 2117 (McKinneys Supp. 2003) by soliciting, negotiating, or effectuating any insurance business in New York on behalf of an unlicensed or unauthorized insurer. N.Y. Ins. Law § 2117(a) (McKinneys Supp. 2003) states in relevant part: "[n]o person, firm, association or corporation shall in this state act as agent for any insurer . . . which is not licensed or authorized to do an insurance . . . business in this state, in the doing of any insurance . . . business in this state or in soliciting, negotiating or effectuating any insurance, . . . " None of the exceptions to N.Y. Ins. Law § 2117(a) (McKinneys Supp. 2003) are relevant to this inquiry.
Regarding the agents fiduciary duty for recommending one policy over another, the Department offers no opinion about one policy over another because the suitability of an insurance policy is a business decision for the insured to make based upon the insureds unique situation. However, pursuant to N.Y. Ins. Law § 2110 (McKinneys 2000), the licensee must provide such advice in an honest, trustworthy and competent manner.
The New York Insurance Department offers no opinion on the application of, or the possible violations of New Jersey Insurance Law. For information regarding New Jersey Insurance Law, one should contact the New Jersey Insurance Department.
For further information one may contact Senior Attorney Susan A. Dess at the New York City Office.