STATE OF NEW YORK
25 BEAVER STREET
NEW YORK, NEW YORK 10004
|George E. Pataki
Gregory V. Serio
The Office of General Counsel issued the following opinion on August 17, 2004 representing the position of the New York State Insurance Department.
RE: Outsourcing of Business Operations by Authorized Insurers
May New York authorized insurance companies outsource or contract out business operations such as actuarial units, back office clerical work, and claims adjusting or processing units to Third Party Administrators ("TPA"), for example, that may be located in different states or countries?
Yes. The Insurance Law does not prohibit insurers from outsourcing business operations to third party administrators in different states or countries.
The Insurance Law does not prohibit insurers from outsourcing to third party administrators in different states or countries. Clerical work, for example, does not require licensing. However, if any work done by subcontractors falls within activity requiring licensing, then such outside offices must be appropriately licensed. Thus, an individual meeting the definition of independent adjuster in N.Y. Ins. Law § 2101(g) (McKinney 2000 and not coming within an exception in that section must be licensed as an independent adjuster pursuant to N.Y. Ins. Law § 2108 (McKinney Supp. 2004). Once licensed in this state, such an adjuster may perform his or her work from outside New York.
For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.