The Office of General Counsel issued the following opinion on April 20, 2004, representing the position of the New York State Insurance Department.
RE: Commissions Paid to Appointed Agents
In order for a licensed New York insurance agent to receive commission payments, must such agent be appointed as agent by the insurer at the time that it places the business?
Yes. The insurance agent must be both licensed and appointed by the insurer at the time that it places the business to receive commission payments from the insurer or the agent of such insurer, pursuant to N.Y. Ins. Law §§ 2114 and 2115 (McKinney Supp. 2004), except in certain circumstances specified below.
None were presented.
Section 2114 prohibits the payment of commissions or other compensation by an insurer or its agent except to, among others, licensed life or accident and health insurance agents "of such insurer." Section 2115 likewise prohibits the payment of commissions by an insurer or agent except to, among others, licensed property/casualty insurance agents "of such insurer." Therefore, being appointed by an insurer at the time the business is placed is necessary in order to receive a payment of commissions. However, a licensed life insurance agent, who has been unable to sell some or all of the insurance to a client because his or her own insurer declined same, may sell such declined life insurance to another authorized life insurer, with the consent of the client, even though the agent has not been appointed by such insurer. The agent, in order to receive a commission, must be appointed as the agent of that insurer at the time the compensation is received, pursuant to § 2114(b).
N.Y. Ins. Law § 2112(b) (2003 N.Y. Ins. Law, ch. 687, § 37) provides that the appointing insurer must file with the Superintendent the notice of appointment within fifteen days after the agency contract is executed or the first insurance application is submitted.
For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.