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 April 9, 2004 representing the position of the New York State Insurance Department.

RE: Life or Long-Term Care Insurance Referral by Non-Licensee

Question Presented:

May a licensed life insurance and accident and health insurance agent provide a current life or long-term care insurance policyholder with a $100 gift certificate to a restaurant of the policyholder's choice if the policyholder's referral of a potential life or long-term care insurance customer results in the sale of a new life or long-term care insurance policy to the potential customer?

Conclusion:

No. N.Y. Ins. Law § 2114(a)(4) (McKinney Supp. 2004) provides, in pertinent part, that compensation from a licensed life insurance and accident and health insurance agent to a non-licensed person for a referral of a potential customer is not permitted when the compensation to the non-licensed person for the referral is based upon the sale of the insurance policy to the potential customer.

Facts:

There were no additional facts provided.

Analysis:

N.Y. Ins. Law § 2114(a)(2) (McKinney Supp. 2004) and N.Y. Ins. Law § 2114(a)(3), as amended by 2003 N.Y. Laws 687, in pertinent part, prohibits a licensed life or accident and health insurance agent from paying compensation to an agent's current policyholder for its services in obtaining in New York State the sale of a new life or long-term care insurance policy to a potential customer of the insurance agent. However, N.Y. Ins. Law § 2114(a)(4) (McKinney Supp. 2004) allows compensation for referrals where there is no discussion of specific policy terms and conditions and where the compensation for a referral is not based upon the purchase of insurance by the person referred:

Services of the kind specified in this subsection 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.

In the present situation, a licensed life insurance and accident and health insurance agent seeks to give a $100 gift certificate to a current policyholder for the referral of a life insurance and long-term care insurance potential customer that results in the sale of a new life or long-term care insurance policy to the potential customer. Therefore, the licensed life insurance and accident and health insurance agent may not provide the proposed compensation for the referral.

For further information you may contact Senior Attorney Robert Freedman at the New York City Office.