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 August 18, 2004, representing the position of the New York State Insurance Department.

Re: Nonresident Excess Line Broker License

Question Presented:

May New York license an Illinois corporate non-resident excess line broker that maintains no office in this state when Illinois, the broker’s home state, does not license corporations as excess line brokers but would permit a New York corporate excess line broker to operate in Illinois through a licensed employee of the corporation acting in the name of the corporation?

Conclusion:

Yes, New York may license an Illinois corporate non-resident excess line broker that does not maintain an office in this state although Illinois, the broker’s home state, does not license corporations as excess line brokers because Illinois permits a New York corporate excess line broker to operate in that state through a licensed employee of the corporation acting in the name of the corporation.

Facts:

The inquirer is employed by a corporate insurance broker that is incorporated under Illinois law. The corporation maintains no office in New York. It is licensed as an insurance broker in New York as well as Illinois. The corporation wishes to become licensed as an excess line broker in New York. The Department has advised the inquirer that New York will not issue an excess line broker license to an Illinois corporation because Illinois does not license corporations as excess line brokers, only individuals. The inquirer states that he was also advised that if an Illinois resident individual is licensed in New York, it would be illegal to pay commissions to the corporation. The individual would be totally responsible for the license and could not act on behalf of the corporation. Illinois does license corporations as brokers so there is no issue presented with respect the corporation becoming licensed as an insurance broker.

The inquirer states that Illinois will license New York residents and, therefore, New York excess line brokers would be able to write Illinois surplus lines business. However, since Illinois producers will not be able to write New York excess line business for their corporations, the inquirer questions whether New York is providing reciprocity with Illinois.

Analysis:

Licensing of excess line brokers is governed by N.Y. Ins. Law § 2105 (McKinney Supp. 2004 as amended by Ch. 687 of the Laws of 2003). Subsection (s) provides, in pertinent part:

(a) The superintendent may issue an excess line broker's license to any person, firm, association or corporation who or which is domiciled or maintains an office in this state and is licensed as an insurance broker under section two thousand one hundred four of this article, or who or which is licensed as an excess line broker in the licensee's home state, provided, however, that the applicant's home state grants non-resident licenses to residents of this state on the same basis, except that reciprocity is not required in regard to the placement of liability insurance on behalf of a purchasing group or any of its members;…

Pursuant to § 2105, an excess line broker must be either domiciled or maintain an office in this state. There are only two exceptions. The first exception pertains to placement of purchasing group policies, which is not relevant herein. The other is where the licensee’s home state grants non-resident licenses to residents of this state on the same basis as it grants licenses to residents of the home state.1 In this case, Illinois will not grant non-resident corporations a license because it does not license corporations as excess line brokers. However, Illinois has advised the Department that a New York corporate excess line broker may operate in Illinois through a licensed employee of the corporation acting in the name of the corporation.

Upon reconsideration, because residents and non-residents are treated alike in Illinois, the Department would issue an excess line broker license to an Illinois corporation under these circumstances and not require it to maintain an office in New York. The corporation, however, must be licensed as an insurance broker and have at least one sublicensee licensed as an excess line broker. An unlicensed employee of the corporation may not engage in any activity that would require a license.

For further information you may contact Principal Attorney Paul A. Zuckerman at the New York City Office.


1  "Home state", as defined in N.Y. Ins. Law § 2101(l) (Added by Ch. 687 of the Laws of 2003), means "…the District of Columbia or any state or territory of the United States in which an insurance producer maintains his, her or its principal place of residence or principal place of business and is licensed to act as an insurance producer." As defined in N.Y. Ins. Law § 2101(k) (Added by Ch. 687 of the Laws of 2003), "insurance producer" includes an excess line broker.