The Office of General Counsel issued the following opinion on December 8, 2005, representing the position of the New York State Insurance Department.
Re: Non-Resident Managing General Agent License
Is a managing general agent (MGA) licensed in Florida required to obtain a non-resident MGA license in New York if it plans to underwrite and issue insurance policies on behalf of an insurance company from Florida and distribute those policies in New York through licensed insurance brokers?
No. New York does not have a license requirement for a company to act as an MGA, however, the company would have to be licensed as an insurance agent and registered as an MGA pursuant to 11 NYCRR § 33 (Regulation 120).
The inquirer represents ABC Insurance Company whose new subsidiary is in the final stages of securing its license to act as an MGA in its home state of Florida. The subsidiary, from its office in Tampa, Florida, plans to underwrite and issue professional liability insurance policies on behalf of DEF Insurance Company and distribute those policies in New York through licensed insurance brokers. DEF Insurance Company is an authorized insurer in New York and is not under common control with ABC Insurance Company. The subsidiary is licensed as an insurance agent in New York.
There is no license requirement for a company to act as an MGA in the state of New York. However, if the company meets the requirements as provided in 11 NYCRR § 33 (2005) (Regulation 120), it must register as an MGA with this State.
Regulation 120 sets forth the definition and requirements of MGAs. Section 33.2(c) defines an MGA to mean any person, firm, association or corporation that:
manages all or part of the insurance business of an insurer (including the management of a separate division, department or underwriting office);
acts as an insurance agent as defined in section 2101(a) of the Insurance Law for such insurer, whether known as a managing general agent, manager, or other similar term, or acts as an insurance broker as defined in section 2101(c) of the Insurance Law; and
with or without the authority, either separately or together with affiliates, produces, directly or indirectly, and accept or reject risks on behalf of the insurer (underwriter) an amount of gross direct written premium equal to or more than five percent of the policyholder surplus as reported in the last annual statement of the insurer in any one quarter or year together with one or more of the following activities related to the business produced:
Adjusts or pays claims in excess of $25,000, or
Negotiates reinsurance on behalf of the insurer.
Further, 11 NYCRR § 33.3 sets out requirements and in pertinent part states:
No insurer shall appoint or continue to use the services of an MGA to act for it in this State, either directly or indirectly through subagents of the MGA, unless the MGA has an insurance agents license issued by this State to represent said insurer for the appropriate kinds of insurance.
Section 33.3(a) prohibits an insurer from appointing or continuing to use the services of an MGA in this State if the MGA does not have an insurance agents license issued by this State. Under the circumstances that the inquirer describes, the subsidiary will be acting on behalf of DEF Insurance Company in its contracts with brokers in New York. The subsidiary must be licensed as an insurance agent and is so licensed.
However, although the subsidiary is licensed as an insurance agent in the State of New York, the inquirer does not provide the Department with enough information as to whether the subsidiary would be acting as an MGA within the meaning of Regulation 120. If the subsidiary were to act as an MGA it must register as such with the Department. The inquirer is directed to Regulation 120 for additional requirements that would apply.
For further information one may contact Principal Attorney Paul A. Zuckerman at the New York City Office.