New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
ONE COMMERCE PLAZA
ALBANY, NEW YORK 12257

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following opinion on August 12, 2005 representing the position of the New York State Insurance Department.

RE: Licensing requirements of a United States manager of a U.S. Branch of an alien insurer

Question Presented

1) Does N.Y. Ins. Law § 2101(a) (McKinney Supp. 2005) exempt from the requirement of an agent’s license a United States Manager of a United States Branch and its directors, officers and employees?

2) Does N.Y. Ins. Law § 2101(g)(1)(A) (McKinney Supp. 2005) exempt from the requirement of an independent adjuster’s license a United States Manager of a United States Branch and its directors, officers and employees?

Conclusion

1) Yes, N.Y. Ins. Law § 2101(a) (McKinney Supp. 2005) exempts from the requirement of an insurance agent license, the United States Manager of a United States Branch of an alien insurer; and its regularly salaried officers and employees provided that such officers and employees do not solicit or accept from the public outside of an office of the United States branch, applications or orders for insurance and provided that the United States Manager and its officers and employees do not receive a commission or other compensation which is based directly upon the amount of business done. The directors of the United States Manager of a United States Branch of an alien insurer are not exempt from the requirement of an insurance agent license and thus may not act as insurance agents without a license.

2) Yes, N.Y. Ins. Law § 2101(g)(1)(A) (McKinney Supp. 2005) exempts from the requirement of an adjuster’s license, the U.S. Manager and its directors, officers and employees.

Facts

The inquirer’s client is the United States Branch of an alien insurer ("the United States Branch") whose port of entry is New York. The United States Branch is licensed as a property/casualty insurer and is managed by an unaffiliated United States Manager.

The United States Branch is in the process of replacing the current United States Manager with an affiliated corporation. Representatives of the affiliate have posed the question presented above. Neither the new United States manager nor its officers or employees will receive any commission or other compensation that is directly dependent upon the amount of insurance business done.

Analysis

The New York Insurance Law defines an "alien insurer" as ". . . any insurer incorporated or organized under the laws of any foreign nation, or of any province or territory not included under the definition of foreign insurer." N.Y. Ins. Law § 107(a)(5) (McKinney Supp. 2005).

Alien insurers that become licensed to do business in New York State must enter this country and conduct their business through a "United States branch" which is defined by N.Y. Ins. Law § 107(a)(44) (McKinney Supp. 2005) as follows:

"United States branch" means, as the context may require, the business unit through which business is transacted within the United States by an alien insurer, or the assets and liabilities of such insurer within the United States pertaining to such business or the management powers pertaining to such business and to such assets and liabilities or any combination of these three. (emphasis added)

N.Y. Ins. Law § 107 which provides definitions applicable to the terms used in the Insurance Law, unless the context otherwise requires, defines the term "officer" to include, in relevant part, "the manager, attorney-in-fact, or other person appointed or elected by the board of directors to exercise similar powers, of a United States branch of an alien insurer . . . and in case such manager or attorney-in-fact is a corporation . . . the officers of such corporation." N.Y. Ins. Law § 107 (a)(34) (McKinney Supp. 2005). Therefore, for purposes of interpreting the Insurance Law unless the context otherwise requires, the United States Manager and its officers are officers of the United States branch of an alien insurer, and officers of an insurer. In addition, although the Insurance Law does not define the terms director and employee, it is reasonable, with regard to interpreting N.Y. Ins. Law §§ 2101 (a) and (g)(1) (McKinney Supp. 2005), to conclude that the directors and employees of a United States Manager are directors and employees of an insurer.

N.Y. Ins. Law § 2101(a) (McKinney Supp. 2005) provides, in relevant part, as follows:

(a) In this article, "insurance agent" means any authorized or acknowledged agent of an insurer, fraternal benefit society or health maintenance organization issued a certificate of authority pursuant to article forty-four of the public health law, and any sub-agent or other representative of such an agent, who acts as such in the solicitation of, negotiation for, or sale of, an insurance, health maintenance organization or annuity contract, other than as a licensed insurance broker, except that such term shall not include:


(1) any regular salaried officer or employee of a licensed insurer, fraternal benefit society or health maintenance organization or of a licensed insurance agent, who does not solicit or accept from the public, outside of an office of such insurer, health maintenance organization or agent, applications or orders for any such contract, if such officer or employee does not receive a commission or other compensation for his services which commission or other compensation is directly dependent upon the amount of business done;

(2) employees of insurers, fraternal benefit societies or health maintenance organizations or organizations employed by insurers, fraternal benefit societies or health maintenance organizations who are engaging in the inspection, rating or classification of risks, or in the supervision of the training of licensed insurance producers and who are not individually engaged in the sale, solicitation or negotiation of insurance;

Therefore, the United States Manager and its regularly salaried officers and employees are exempt from the requirement of an insurance agent’s license pursuant to N.Y. Ins. Law § 2101(a)(1) provided that such officers and employees do not solicit or accept from the public outside of an office of the United States branch, applications or orders for insurance and provided the United States manager and its officers and employees do not receive a commission or other compensation which is based directly upon the amount of business done. However, like directors of domestic and foreign insurers, directors of the U.S. Manager are not exempt from the licensing requirement and thus may not act as insurance agents without a license.

N.Y. Ins. Law § 2101(g)(1) (McKinney Supp. 2005) provides, in relevant part, as follows:

(g) In this article, "adjuster" means any "independent adjuster" or "public adjuster" as defined below:


(1) The term "independent adjuster" means any person, firm, association or corporation who, or which, for money, commission or any other thing of value, acts in this state on behalf of an insurer in the work of investigating and adjusting claims arising under insurance contracts issued by such insurer and who performs such duties required by such insurer as are incidental to such claims and also includes any person who for compensation or anything of value investigates and adjusts claims on behalf of any independent adjuster, except that such term shall not include:


(A) any officer, director or regular salaried employee of an authorized insurer or entity licensed pursuant to article forty-four of the public health law providing comprehensive health service plans (as used in this paragraph, a "health maintenance organization"), or any manager thereof, individual or corporate, or the manager, agent or general agent of any department thereof, individual or corporate, or attorney in fact of any reciprocal insurer or Lloyds underwriter, or marine underwriting office, unless acting as an auto body repair estimator as defined in subsection (j) of this section;

Thus, the United States Manager of a United States Branch of an alien insurer and the directors, officers, and employees of the United States Manager are exempt from the requirement of an independent adjuster’s license pursuant to N.Y. Ins. Law § 2101(g)(1)(A) (McKinney Supp. 2005).

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