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 informal opinion on October 21, 2004, representing the position of the New York State Insurance Department.

Re: Insurance Consultation Contracts

Question Presented

May a licensed insurance agent enter into a contract with a licensed insurance consultant?

Conclusion

Yes. As long as such contracts conform to N.Y. Ins. Law § 2119 (McKinney’s 2000), they are permitted.

Facts

The inquirer is an insurance agent who wants to hire an insurance consultant. The contract would be between the inquirer and the consultant, and the inquirer would pay the consultant directly. The inquirer wants to know if this arrangement would be in compliance with New York Insurance Laws.

Analysis

N.Y. Ins. Law § 2119(a)(1) (McKinney’s 2000), states:

No person licensed as an insurance agent, broker or consultant may receive any fee, commission or thing of value for examining, appraising, reviewing or evaluating any insurance policy, bond, annuity or pension or profit-sharing contract, plan or program or for making recommendations or giving advice with regard to any of the above, unless such compensation is based upon a written memorandum signed by the party to be charged and specifying or clearly defining the amount or extent of such compensation.

Pursuant to N.Y. Ins. Law § 2119(a)(1) (McKinney’s 2000), a licensed insurance consultant may receive compensation for consulting services provided to a licensed insurance agent who directly pays the licensed insurance consultant for such services, if a written memorandum that conforms to N.Y. Ins. Law § 2119(a)(1) (McKinney’s 2000) memorializes the details of the agreement.

For further information one may contact Senior Attorney Susan A. Dess at the New York City Office.