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: Insurance Broker Employees as Sub-licensees of a Limited Liability Company.

Questions Presented:

1. Pursuant to the New York Insurance Law, where a limited liability company has been issued a license as an insurance broker, are all of the brokers employed by the limited liability company ("LLC") required to be named as sub-licensees?

2. May the LLC name a non-member insurance broker as a sub-licensee?

Conclusions:

1. No, there is no requirement that all of the employee brokers be named as sub-licensees, so long as at least one natural person (who meets all of the requirements necessary to become a sub-licensee) is named as a sub-licensee and each of the employee brokers is supervised by a sub-licensee who is responsible for the activities of the employee broker.

2. Yes, provided that the non-member insurance broker is a manager of the LLC and meets all requirements necessary to become a sub-licensee under the New York Insurance Law.

Facts:

No specific facts were provided.

Analysis:

The inquirer asked whether all of the brokers employed by a limited liability company ("LLC") are required to be named as sub-licensees, where a limited liability company has been issued a license as an insurance broker. N.Y. Ins. Law § 2104 (McKinney 2000 and Supp. 2006) provides, in relevant part, as follows:

(b)(1) Such license shall confer upon the licensee authority to act in this state as insurance broker, and upon every natural person named as sub-licensee in such license authority to act in this state as insurance broker in the name of and on behalf of such licensee . . .

Thus, where the license is issued to an entity, rather than an individual, there must be at least one sub-licensee who is a natural person and who must meet the same requirements that a person seeking to become licensed as an individual for the same kind of license would be required to meet. All of the employee brokers need not be named as sub-licensees, so long as at least one natural person (who meets all of the requirements necessary to become a sub-licensee) is named as a sub-licensee. See also N.Y. Ins. Law § 2104(h) (McKinney 2000 and Supp. 2005). Further, each such employee broker must be supervised by a sub-licensee who is responsible for the activities of the employee. Where there is more than one sub-licensee, there should be clear lines of responsibility for each employee broker.

The inquirer also asked whether an LLC may name an insurance broker who is not a member of the LLC as a sub-licensee. N.Y. Ins. Law § 2104(b)(2) (McKinney 2000 and Supp. 2006) provides:

(b)(2) A license issued to a corporation may name as sub-licensees only the officers and directors of such corporation, and a license issued to a firm or association may name as sub-licensees only the individual members of such firm or association. Each sub-licensee named in such license must be qualified to obtain a license as an insurance broker, and for each such sub-licensee a fee must be paid at the times and at the rates hereinafter specified.

Although Section 2104 has not been amended to deal with the licensing of the LLC form of business organization, this Department has taken the position that non-member managers of an LLC are deemed equivalent to non-shareholder officers or directors of a corporation. Thus, an LLC may name a non-member individual as a sub-licensee, provided that the individual is a manager of the LLC and meets all requirements necessary to become a sub-licensee under the New York Insurance Law.

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