New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following informal opinion on May 11, 2005 representing the position of the New York State Insurance Department.

RE: Agent/Broker Licensing and Commission Sharing

An inquiry was received posing a follow-up question to our earlier letter dated February 23, 2005, Opinion of General Counsel No. 05-02-27.

In our letter, the facts as the inquirer proposed provided that the "[i]nsurer would select a licensed life insurance agent to counsel it regarding the structured settlement." The inquirer has asked whether our conclusion would change if "[t]he defendant rather than the insurer were to select a licensed life insurance agent to counsel it regarding the structured settlement."

The conclusion in Opinion of General Counsel No. 05-02-27 stated, in relevant part, as follows:

[A]n insurance broker licensed under N.Y. Ins. Law § 2104(b)(1)(A) and an insurance agent may not share commissions for services rendered in placing an annuity contract unless both are licensed and the insurance agent is a licensed agent of the insurer who wrote the policy at the time of the solicitation, negotiation and/or sale of such annuity contracts. Pursuant to N.Y. Ins. Law § 2114 (McKinney Supp. 2005), no insurer may pay commission or other compensation to an insurance agent that the insurer has not appointed pursuant to N.Y. Ins. Law § 2112(b) (McKinney Supp. 2005). A broker licensed under N.Y. Ins. Law § 2104(b)(1)(A) sharing a commission with such an agent who has not been appointed could be found by the Superintendent to be acting in an untrustworthy manner pursuant to N.Y. Ins. Law § 2110 (McKinney Supp. 2005).

The change in facts as the inquirer presents would not change the conclusion we reached in the opinion.

For further information you may contact Assistant Counsel Brenda M. Gibbs at the Albany Office.