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 September 12, 2005, representing the position of the New York State Insurance Department.

Re: Unauthorized Health Insurer & Sales in New York for Risks outside New York.

Question Presented:

Under what circumstances, if any, may a New York company solicit, sell or issue the health insurance policies of an unauthorized insurer in New York State when such policies insure persons residing in the Dominican Republic?

Conclusion:

Notwithstanding the fact that all insured risks are located in the Dominican Republic, even if it becomes licensed as an insurance producer, the company may not solicit, sell or issue health insurance on behalf of the unauthorized health insurer in New York because such activities would violate N.Y. Ins. Law §2117 (McKinney Supp. 2005).

Facts:

ABC Corp. is a corporation incorporated under the laws of New York State. ABC Corp. would like to sell health insurance policies in New York State that would insure people living in the Dominican Republic. For example, ABC Corp. would sell a health insurance policy to a New York resident that would insure the individual’s father who resides in the Dominican Republic.

ABC Corp. would sell the health insurance policies of an insurer that is duly incorporated under the laws of the Dominican Republic, but not authorized as an insurer in New York State.

Analysis:

N.Y. Ins. Law § 2102(a)(1) (McKinney Supp. 2005) provides that: "[n]o person, firm, association or corporation shall act as an insurance producer or insurance adjuster in this state without having authority to do so by virtue of a license issued and in force pursuant to the provisions of this chapter." N.Y. Ins. Law § 2101(k) (McKinney Supp. 2005) defines an insurance producer as, among other things, an insurance agent or insurance broker.

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

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 . . . .

N.Y. Ins. Law § 2101(c) (McKinney Supp. 2005) defines an insurance broker, in relevant part, as follows:

In this article, "insurance broker" means any 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 . . . .

However, even if the ABC Corp. were to become licensed as an insurance agent or broker, N.Y. Ins. Law § 2117 (McKinney Supp. 2005) prohibits, among other things, any person from soliciting or in any way effectuating any insurance for an unlicensed or unauthorized insurer. § 2117(a) (McKinney Supp. 2005) provides:

(a) No person, firm, association or corporation shall in this state act as agent for any insurer or health maintenance organization which is not licensed or authorized to do an insurance or health maintenance organization business in this state, in the doing of any insurance or health maintenance organization business in this state or in soliciting, negotiating or effectuating any insurance, health maintenance organization or annuity contract or shall in this state act as insurance broker in soliciting, negotiating or in any way effectuating any insurance, health maintenance organization or annuity contract of, or in placing risks with, any such insurer or health maintenance organization, or shall in this state in any way or manner aid any such insurer or health maintenance organization in effecting any insurance, health maintenance organization or annuity contract.

N.Y. Ins. Law § 2117 (McKinney Supp. 2005) also provides several exceptions to the general prohibition against aiding an unlicensed or unauthorized insurer, but such exceptions are not applicable here.

Therefore, notwithstanding the fact that all insured risks are located in the Dominican Republic, the company may not solicit health insurance on behalf of the unauthorized health insurer in New York because such solicitation would violate N.Y. Ins. Law §2117(a) (McKinney Supp. 2005).

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