STATE OF NEW YORK
25 BEAVER STREET
NEW YORK, NEW YORK 10004
The Office of General Counsel issued the following opinion on May 24, 2007 representing the position of the New York State Insurance Department.
Re: Administration of New York Life Insurance Policies within New York.
Pursuant to the New York Insurance Law, is a New York authorized life insurer required to bill and collect premiums on its New York insurance policies from a New York location?
No. A New York authorized life insurer is not required to bill and collect premiums on its New York insurance policies from a New York location.
The inquirer reports that many years ago the company for which he worked had to set up a separate lock box in New York for New York collections, and that all bills and correspondence had to be mailed out of New York. He ask swhether the New York Insurance Law still requires such an arrangement.
The New York Insurance Law does not set forth any requirement that a New York authorized life insurer must bill and collect premiums on its New York insurance policies from a New York location. The insurer may establish its own internal procedures for administering its New York insurance policies.
The lock box requirement to which the inquirer refers may relate to a situation where a domestic life insurer utilizes an affiliate to collect premiums on its behalf. In such a case, the Insurance Department, pursuant to its authority under N.Y. Ins. Law § 1505(d)(3) (McKinney 2006), typically requires that the service agreement either provide for the use of a lock box, or provide that the premium is collected by the affiliate in a fiduciary capacity and must be immediately deposited into the domestic insurer’s bank account.
For further information you may contact Principal Attorney Paul A. Zuckerman at the New York City office.