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 14, 2004, representing the position of the New York State Insurance Department.

RE: Licensing Requirements

Question Presented:

Do the services that ABC Corporation ("ABC") provides constitute the kinds of activities that require licensing by the New York State Insurance Department as an insurance agent, insurance broker or adjuster?

Conclusion:

Based on the information provided by ABC, the services that ABC provides do not constitute the kinds of activities that require licensing by the New York State Insurance Department as an insurance agent, insurance broker or adjuster.

Facts:

Based on information provided by ABC, the services that ABC provides are the administration of employee flexible spending accounts, COBRA "reconciliation" and ERISA benefit plan administration.

A flexible spending account is one in which an employee sets aside funds from his or her wages on a pre-tax basis that are used to pay qualified daycare and out-of-pocket health care expenses. ABC states that while ABC requires an employee to submit service provider documentation regarding services provided to the employee, it does so only to ensure that funds it releases to an employee are qualified for distribution to the employee pursuant to federal guidelines.

ABC described COBRA "reconciliation" as the collection of COBRA payments by employees and the depositing of received funds into employers’ accounts, or forwarding payments received to the employers.

ABC described the administration of ERISA benefit plans as follows:

[ABC] obtains a payroll file from its employer-client, sends informational materials to employees, employees enroll in benefit programs, and [ABC] transmits payroll deduction information back to the employer-client and transmits eligibility information to carriers. [ABC] reconciles bills and provides reports to employer-clients regarding amounts the employer must pay . . . .

Analysis:

N.Y. Ins. Law § 2102(a)(1) (McKinney 2000) states:

No person, firm, association or corporation shall act as an insurance agent, insurance broker, reinsurance intermediary or insurance adjuster in this state without having authority to do so by virtue of a license issued and in force pursuant to the provisions of this chapter.

N.Y. Ins. Law § 2101 (McKinney 2000) defines insurance agent, insurance broker and insurance adjuster, in relevant part, as follows:

(a) In this article, "insurance agent" means any authorized or acknowledged agent of an insurer, fraternal benefit society or health maintenance organization issued a certificate of authority pursuant to article forty-four of the public health law, and any sub-agent or other representative of such an agent, who acts as such in the solicitation of, negotiation for, or procurement or making of, an insurance, health maintenance organization or annuity contract, other than as a licensed insurance broker . . . .

* * * * * *

(c) In this article, "insurance broker" means any person, firm, association or corporation who or which for any compensation, commission or other thing of value acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance or annuity contract or in placing risks or taking out insurance, on behalf of an insured other than himself or itself or on behalf of any licensed insurance broker . . . .

* * * * * *

(g) In this article, "adjuster" means any "independent adjuster" or "public adjuster" as defined below:

(1) The term "independent adjuster" means any person, firm, association or corporation who, or which, for money, commission or any other thing of value, acts in this state on behalf of an insurer in the work of investigating and adjusting claims arising under insurance contracts issued by such insurer and who performs such duties required by such insurer as are incidental to such claims and also includes any person who for compensation or anything of value investigates and adjusts claims on behalf of any independent adjuster . . .

* * * * * *

(2) "Public adjuster" means any person, firm, association or corporation who, or which, for money, commission or any other thing of value, acts or aids in any manner on behalf of an insured in negotiating for, or effecting, the settlement of a claim or claims for loss or damage to property of the insured in this state caused by, or resulting from, any of the risks as enumerated in paragraphs four, five, six, seven, eight, nine and ten and subparagraphs (B) and (C) of paragraph twenty of subsection (a) of section one thousand one hundred thirteen of this chapter, not including loss or damage to persons under subparagraph (B) of paragraph twenty of subsection (a) of such section or who, or which, advertises for, or solicits employment as an adjuster of such claims, and shall also include any person who, for money, commission or any other thing of value, solicits, investigates, or adjusts such claims on behalf of any such public adjuster[.]

Based on the description ABC provided, the services that ABC provides do not constitute the kinds of activities that require licensing as an insurance agent, insurance broker or adjuster because the activities are not those described in N.Y. Ins. Law § 2101(a), (c) and (g).

For further information you may contact Associate Attorney Sally Geisel at the New York City Office.