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

Office of General Counsel issued the following informal opinion on December 27, 2004, representing the position of the New York State Insurance Department.

RE: Public official placing municipal insurance

Question Presented

Does N.Y. Insurance Law, or the regulations promulgated thereunder, prohibit an elected public official from placing the municipal insurance for the town he or she is an elected board member of?

Conclusion

No. Neither the N.Y. Insurance Law, nor the regulations promulgated thereunder, expressly addresses whether an elected public official who is a licensee of the Insurance Department may place the municipal insurance for the town he or she is an elected board member of. However, there may be other laws in the State of New York that do prohibit such conduct. The Department, in this instance, will limit its opinion to Insurance Law and will not render an opinion on other statutes or cases.

Facts

The inquirer’s inquiry is of a general nature

Analysis

N.Y. Ins. Law § 2128 (McKinney 2000) provides:

(a) Notwithstanding the provisions of sections two thousand three hundred twenty-four and four thousand two hundred twenty-four of this chapter, no insurance agent, insurance broker, insurance consultant, excess line broker, reinsurance intermediary or insurance adjuster shall receive any commissions or fees or shares thereof in connection with insurance coverages placed for or insurance services rendered to the state, its agencies and departments, public benefit corporations, municipalities and other governmental subdivisions in this state, unless such insurance agent, insurance broker, insurance consultant, excess line broker, reinsurance intermediary or insurance adjuster actually placed insurance coverages on behalf of or rendered insurance services to the state, its agencies and departments, public benefit corporations, municipalities and other governmental subdivisions in this state.

(b) The superintendent shall, by regulation, require insurance agents, insurance brokers, insurance consultants, excess line brokers, reinsurance intermediaries and insurance adjusters to file disclosure statements with the insurance department and the most senior official of the governmental unit involved, with respect to any insurance coverages placed for or insurance services rendered to the state, its agencies and departments, public benefit corporations, municipalities and other governmental subdivisions in this state.

N.Y. Comp. Codes R & Regs. tit. 11, § 29.4 (2002) (Regulation 87), which implements N.Y. Ins. Law § 2128 (McKinney 2000) provides in relevant part:

No licensee shall share in or receive any fee or commission in connection with any insurance service rendered to, or insurance coverage placed on behalf of, a governmental unit unless such licensee actually rendered insurance services to, or placed or serviced insurance coverages on behalf of, such governmental unit, for which said fees and/or commissions were paid.

§ 29.5 further provides that:

(a) Any licensee who receives any fees and/or commissions, or shares thereof, in connection with any insurance services rendered to, or insurance coverages placed or serviced on behalf of, a governmental unit, shall file, with the Insurance Department and the most senior official of the governmental unit which ordered such insurance services or coverages, a completed Governmental Insurance Disclosure Statement, affirmed by the licensee as true under penalties of perjury, on the prescribed form attached hereto as Exhibit B, which statement after filing shall be a public record.

N.Y. Ins. Law § 2128 provides that no licensee described therein shall receive any commissions or fees or shares thereof in connection with insurance coverages placed for or insurance services rendered to the state or other governmental subdivisions described therein unless the licensee actually placed coverage or rendered services to the government. Regulation 87 implements N.Y. Ins. Law § 2128 and requires the filing of a disclosure statement. Neither the statute nor regulation, however, address whether an elected town board member, who is a licensee of the Insurance Department, may place insurance. The inquirer would be advised to consult the New York State Office of the State Comptroller, the Department of State or the Department of Law for opinions on local government officials’ conflict of interest in particular transactions, including insurance.

For further information one may contact Principal Attorney Donald Carroll at the New York City Office.