New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT

25 BEAVER STREET
NEW YORK, NEW YORK 10004

Eliot Spitzer
Governor
Eric R. Dinallo
Acting Superintendent

The Office of General Counsel issued the following opinion on March 8, 2007, representing the position of the New York State Insurance Department.

Re: Acting as insurance consultant without a license

Question Presented:

May an unlicensed employee of a licensed insurance consulting firm advise and consult with clients about insurance coverages?

Conclusion:

No. It is impermissible for a person, firm, association or corporation to hold itself out as an insurance consultant, receive any fee for examining policies, or make recommendations with regard to insurance in New York without being licensed as an agent, broker or consultant, even though employed by a company that is itself licensed.

Facts:

The inquirer reported that unlicensed employees working for an insurance consulting firm have been acting as insurance consultants and advising his clients concerning their insurance coverages. The inquirer asked whether this is permitted under New York law when there is no indication that these employees either are noted in the firm’s license as sub-licensees, or otherwise licensed.

Analysis:

The activities that the inquirer describes are encompassed within those performed by an “insurance consultant” under New York law. The provisions governing the licensing and duties of an insurance consultant are addressed by New York Insurance Law § 2107 (McKinney 2007). NY Ins. Law § 2102(b)(1) (McKinney 2007) prohibits a person, firm association or corporation from identifying or holding himself or itself out as an insurance consultant in New York State without a proper license. Section 2102(b)(1) provides:

Unless licensed as an insurance agent, insurance broker or insurance consultant, no person, firm, association or corporation shall in this state identify or hold himself or itself out to be an insurance advisor, insurance consultant or insurance counselor.

Additionally, N.Y. Ins. Law § 2102(b)(3) (McKinney 2007) prohibits a person or firm from accepting compensation for examining, appraising, reviewing, evaluating, recommending or advising on an insurance policy in New York unless licensed as an agent, broker or consultant. Section 2102(b)(3) provides:

Unless licensed as an insurance agent, insurance broker or insurance consultant with respect to the relevant kinds of insurance, no person, firm, association or corporation shall receive any money, fee, commission or thing of value for examining, appraising, reviewing or evaluating any insurance policy, annuity or pension contract, plan or program or shall make recommendations or give advice with regard to any of the above.

Under the above-referenced statutes, it is unlawful for a person, firm, association or corporation to hold itself out as an insurance consultant, receive any fee for examining policies, or make recommendations with regard to insurance in New York without being licensed as an agent, broker or consultant, even though employed by a company that is itself licensed.

In addition, every firm, association, or corporation must have at least one licensed sub-licensee. N.Y. Ins. Law § 2107(a)(2) (McKinney 2007) states in pertinent part as follows:

(2) Any such license issued to a firm or association shall authorize only the members of such firm or association named in such license as sub-licensees to act individually as consultants thereunder, and any such license issued to a corporation shall authorize only the officers and directors thereof named in such license as sub-licensees to act individually as consultants thereunder. Each sub-licensee named in such license must be qualified to obtain a license as an insurance consultant, and for each such sub-licensee the fee specified in subsection (b) of this section must be paid. Every sub-licensee acting individually as a consultant pursuant to a license issued to a firm, association or corporation shall be authorized to act only in the name of such firm, association or corporation. (Emphasis added).

Therefore, unlicensed employees of an insurance consultant may not provide advice or consult with clients. Rather, such employees must qualify as sub-licensees of a licensed firm or association in order to act individually as consultants.

For further information you may contact Principal Attorney Paul Zuckerman at the New York City Office.