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 opinion on July 21, 2005, representing the position of the New York State Insurance Department.

Re: Receipt of Insurance Broker’s Future Commissions by Spouse of Deceased Broker

Question Presented:

Pursuant to the Insurance Law, may the unlicensed spouse of a deceased broker receive future commissions based on placements made by the deceased broker?

Conclusion:

Nothing in the Insurance Law prohibits the spouse of a deceased broker from receiving future commissions earned by a deceased broker prior to the broker’s death.

Facts:

No additional facts were provided.

Analysis:

N.Y. Ins. Law § 2101(c) (McKinney Supp. 2005) defines the term "insurance broker", in pertinent part, as follows:

[A]ny person, firm, association or corporation who or which for any compensation, commission or other thing of value acts or aids in any manner in soliciting, negotiating or selling, any insurance or annuity contract or in placing risks or taking out insurance, on behalf of an insured other than himself, herself or itself or on behalf of any licensed insurance broker . . .

New York courts have generally held that absent an agreement to the contrary, an insurance broker earns its commission when it brings about the relationship of insurer and insured. See Hamond & Co., Inc. v. Risk Specialists Co. of New York, Inc., 210 A.D.2d 202, 619 N.Y.S.2d 744 (2d Dept.1994); Western Nat. Ins. Co. v. Haph Brokerage, 277 A.D. 6, 97 N.Y.S.2d 447 (1st Dept. 1950), aff’d. 302 N.Y. 678 (1951). In accordance with this principle, absent an agreement to the contrary, the deceased broker earned his commission, including the renewals thereof, at the time that the service was rendered.

Based on the facts as provided, the spouse of the deceased broker would not be acting as an insurance broker within the meaning of Section 2101(c), provided that she is merely receiving future commissions earned by the deceased broker on business placed prior to his death, including the renewals thereof, and not servicing the broker’s accounts. If the spouse is seeking to service the decedent’s existing insurance business, she must obtain a temporary license pursuant to N.Y. Ins. Law § 2109 (McKinney Supp. 2005). However, such license does not authorize the spouse to solicit or sell new policies of insurance.

The inquirer also questioned how long he would have to continue paying the spouse future commissions on policies placed by the deceased broker. The inquirer would have to pay the spouse future commissions, including the renewals, for however long he would have had to pay the deceased broker on policies that the deceased broker placed.

This opinion is general in nature and is limited to an interpretation of the Insurance Law. We express no opinion on any other laws.

For further information you may contact Associate Attorney Pascale Jean-Baptiste at the New York City Office.