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

RE: Payment of Renewal Commissions

Question Presented:

May a retired insurance agent whose license has expired, continue to receive renewal commissions for business he sold when he was a licensed agent?

Conclusion:

Yes. N.Y. Ins. Law § 2102(e)(2) permits an insurance agent who was licensed at the time the agent sold, solicited or negotiated insurance in this state to continue to receive renewal commissions on such business after the agent’s license has expired.

Facts:

A long time licensed insurance agent has retired and plans to let his insurance licenses expire. The insurance agency for which he worked and the agent have a contract that provides that the agent will continue to be paid renewal commissions for the rest of his life on business he wrote while licensed.

Analysis:

N.Y. Ins. Law § 2102(e) (West, WESTLAW through L.2003, c.687 legislation) provides in pertinent part:

(e) [Eff. Jan. 1, 2004.] (1) No person shall accept any commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this article and is not so licensed.

(2) Renewal or other deferred commissions may be paid to a person or other entity for selling, soliciting or negotiating insurance in this state if the person or other entity was required to be licensed under this article at the time of the sale, solicitation or negotiation and was so licensed at that time.

N.Y. Ins. Law § 2102 generally prohibits the receipt of commissions by unlicensed persons. However, the law provides an exception to this general prohibition for unlicensed persons who were licensed at the time they sold, solicited or negotiated insurance business. This amendment is consistent with, and codifies, long-held Department opinions. Under the facts provided, the agent was licensed at the time he sold the insurance for which he will continue to receive renewal commissions after his license expires. As long as the renewal commissions arise are from insurance he sold, solicited or negotiated when he was a licensed insurance agent, he may continue to receive renewal commissions after his license has expired.

For further information you may contact Special Counsel Athan Shinas at the Albany Office.