The Office of General Counsel issued the following opinion on August 20, 2004 representing the position of the New York State Insurance Department.
Re: Title Insurance Agency Licensing
1. May a Colorado licensed and based title insurance agency that is registered with the New York Secretary of State as a foreign corporation sell title insurance in New York as an agent of a New York authorized title insurance corporation?
2. Is a Colorado licensed and based title insurance agency that is registered with the New York Secretary of State as a foreign corporation, licensed to sell title insurance in New York?
3. Does the New York State Insurance Department license other commercial business insurance agencies?
4. Is title insurance the exception to the general rule that insurance agents must be licensed to sell insurance?
2. Since the New York State Insurance Department does not license title insurance agents, the Colorado licensed and based title insurance agency would not be licensed. However, the agency may sell title insurance in New York for a New York authorized title insurance corporation.
4. N.Y. Ins. Law § 2101(a)(4) (McKinney 2000) provides an exception for "any agent or other representative of any title insurance company" from the definition of "insurance agent."
No specific facts were provided.
N.Y. Ins. Law § 2101(a)(4) (McKinney 2000) states in pertinent part:
(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 sale of, an insurance, health maintenance organization or annuity contract, other than as a licensed insurance broker, except that such term shall not include:
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(4) any agent or other representative of any title insurance company;
Thus, such a representative selling title insurance issued by a New York authorized title insurance corporation would not need to be licensed as an insurance agent and would not be considered acting "as an insurance agent" without a license under N. Y. Ins. Law § 2102(a)(1) (McKinney 2000).
Further, N.Y. Ins. Law § 2115(a) (McKinney Supp. 2004), which prohibits an insurer or its agent doing business in New York from paying a commission or compensation to anyone acting as an insurance agent except to a licensed insurance agent of such insurer or certain qualified person is specifically inapplicable to a title insurance corporation or its agent or representative pursuant to N.Y. Ins. Law § 2115(b) (McKinney Supp. 2004).
Title insurance is defined in N.Y. Ins. Law § 1113(a)(18) (McKinney Supp. 2004) as:
insuring owners of, and other persons lawfully interested in, real property and chattels real against loss by reason of defective titles and encumbrances and insuring the correctness of searches for all instruments, liens or charges affecting title to such property, including power to procure and furnish information relative thereto, and such other incidental powers as specifically granted in this chapter.
N.Y. Ins. Law Article 64 (McKinney 2000) sets forth the definition, organization, powers, and other legal provisions relating to title insurance corporations.
N.Y. Ins. Law § 6401(b) (McKinney 2000) states, "Title insurance policy means any policy or contract insuring or guaranteeing the owners of real property and chattels real and other persons interested therein, or having liens thereon, against loss by reason of encumbrances thereon and defective titles."
Among the powers of a title insurance corporation is "[t]o make and to guarantee the correctness of searches for all instruments affecting titles to real property, chattels real, and cooperative units and proprietary leases, and for all liens or charges affecting the same." N.Y. Ins. Law § 6403(b)(1) (McKinney 2000). It is the title insurer that guarantees the correctness of a search.
Therefore, if an employee or representative of a title insurance corporation were to guarantee the correctness of the search, such person would be exercising a power of a title insurance corporation which would be subject to the licensing requirements for a title insurance corporation under the Insurance Law. However, there is no prohibition against such person making, issuing, or furnishing an abstract, search, examination, survey, or certificate of title without guarantee or insurance thereof. N.Y. Ins. Law § 6408(a) (McKinney 2000).
In conclusion, a Colorado licensed and based title insurance agent is not required to be licensed in New York as an insurance agent in order to sell title insurance in New York for a New York authorized title insurance corporation.
For further information you may contact Special Counsel Athan M. Shinas at the Albany Office.