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 January 11, 2006, representing the position of the New York State Insurance Department.

Re: Broker Estate

Question Presented:

Upon an insurance broker’s death what is the agency, with which the broker had placed business, obligated to pay to the broker’s estate?

Conclusion:

The estate of the insurance broker may receive all of his contractually agreed upon earned commissions as well as all future commissions based on automatic renewals of an insureds policy.

Facts:

The inquirer states that a broker who worked in the inquirer’s insurance producer office for many years has recently passed away. The inquirer did not specify whether the broker was employed by the agency or if he just placed insurance business with the inquirer’s company. The inquirer maintained a broker agreement with him but had no agreement as to the transfer of business upon his death. The inquirer now wishes to know what, if anything, he is obligated to pay to his estate.

Analysis:

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. Therefore his estate would be entitled to the earned commissions under the Insurance Law.

However, these commissions are based on the contractual relationship between the broker and the inquirer’s company, the specifics of which the Department is not aware of nor will opine on. The opinion is limited to the Insurance Law and does not express an opinion on any other law.

For further information please contact Principal Attorney Paul A. Zuckerman at the New York City Office.