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 24, 2004, representing the position of the New York State Insurance Department.

Re: Book of Business Ownership & Independent Insurance Agent

Question Presented:

After a New York authorized insurer terminates its agency agreement with a New York licensed independent insurance agent, may the insurer send the agent’s life insurance clients (i.e., those to whom the insurer issued life insurance policies through the agent) letters to inform them that the agent is no longer affiliated with the insurer and to provide them with the telephone number of someone other than the agent for their future customer service needs; and instruct some of its other agents to contact the agent’s clients to solicit new insurance business?

Conclusion:

There is no Insurance Law or regulation that governs such circumstances. The agreement between the agent and the insurer would control.

Facts:

After a New York authorized insurer terminated its agent’s contract with a New York licensed insurance agent, who the agent’s contract states is not an employee of the insurer but an independent contractor, the insurer sent letters to the agent’s life insurance clients to inform them that the agent was no longer affiliated with the insurer, and to provide them with the telephone number of someone other than the agent for their future customer service needs. The insurer is currently dividing the agent’s "book of business" among some of its other agents with the intention of soliciting new insurance business. The agent has never signed an anticompetitive covenant with the insurer.

Analysis:

The New York Insurance Law does not define the term "independent contractor," but defines an "independent insurance agent," in pertinent part, as:

an "insurance agent" who is not owned or controlled by any insurer, fraternal benefit society or health maintenance organization or group of such insurers and whose agency agreement does not prohibit the representation of other insurers or groups of insurers and which provides that upon termination of the agreement the agent's records and use and control of expirations remain the property of the agent.1

Under the facts presented here, the determination of whether the insurer may send letters to the agent’s clients to inform them that the agent is no longer affiliated with the insurer and to provide them with the telephone number of someone other than the agent for their future customer service needs; and instruct some of its other agents to contact the clients to solicit new insurance business is dependent upon the agent’s contract with the insurer. There is no section of the Insurance Law or regulations that governs these circumstances. It may be appropriate for a court of competent jurisdiction to resolve these issues.

For further information you may contact Senior Attorney Kristian Earl Lynch at the New York City Office.


1  N.Y. Ins. Law § 2101(b) (McKinney 2000).