New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

Eliot Spitzer
Governor

Eric R. Dinallo
Superintendent

The Office of General Counsel issued the following opinion on March 4, 2008, representing the position of the New York State Insurance Department

Re: Insurance Department’s requirements for reporting administrative actions against insurance producers

Question Presented:

1. Which of the following scenarios would be deemed an “administrative action” that an insurance producer must report to the Superintendent pursuant to Insurance Law § 2110(i):

a. A complaint against an insurance producer is filed with another administrative agency, but the agency does not pursue the matter in a manner that would result in a fine or suspension.

b. A complaint against an insurance producer is filed with another administrative agency, which in turn commences an action against the producer. Although this action may result in a suspension or fine, the administrative agency has not yet rendered a final adverse disposition.

c. A complaint against an insurance producer is filed with another administrative agency. After an administrative proceeding, there is a finding in the insurance producer’s favor.

d. A complaint against an insurance producer is filed with another administrative agency. After an administrative proceeding, there is a finding against the insurance producer.

Conclusion:

1. Only in the fourth scenario set forth above would an insurance producer be required to notify the Insurance Department of an administrative action against the insurance producer. Insurance Law § 2110(i) requires a licensee to report to the Superintendent any administrative action taken against the licensee within 30 days of the final disposition of the action.

Facts:

The inquirer is an attorney preparing a nationwide survey of various insurance compliance laws. The inquirer asks how the Insurance Department interprets “administrative action” under Insurance Law § 2110 with respect to an insurance producer’s obligation to report a complaint filed against an insurance producer with an out-of-state administrative agency. More specifically, the inquirer seeks clarification about whether Insurance Law § 2110(i) applies in the scenarios described above.

The inquirer concludes that an insurance producer would be required to report an administrative action to the Superintendent under scenario (d), but the inquirer is uncertain as to the insurance producer’s obligation to do so in the first three hypotheticals.

Analysis:

Insurance Law § 2110 governs the revocation or suspension of the licenses of insurance producers,1 insurance consultants and insurance adjusters. Specifically, the statute requires that an insurance producer report any administrative action taken against him by an administrative agency in any jurisdiction. The provision reads as follows:

A licensee subject to this article shall report to the superintendent any administrative action taken against the licensee in another jurisdiction or by another governmental agency in this state within thirty days of the final disposition of the matter. This report shall include a copy of the order, consent to order or other relevant legal documents.

Thus, under Insurance Law § 2110(i), an insurance producer must report an administrative action against the producer only after an adverse final disposition has been rendered. If a complaint has been filed against the insurance producer with an administrative agency but the agency has not taken any action with respect to the complaint, or has rendered a disposition favorable to the producer, then the insurance producer has no reporting obligation to the Superintendent.

Note, however, that the reporting requirements differ with respect to applications for a new license and for renewals. In those circumstances, an applicant is required to report on the application any administrative action in which the applicant has ever been “involved.” On the application, “involved” is defined, in part, as “being named as a party to an administrative or arbitration proceeding which is related to a professional or occupational license.” Therefore, when seeking to obtain an insurance license in New York, a prospective licensee must report any administrative action that has commenced against the licensee, and not just after any adverse disposition.

In sum, in only scenario (d) above would an insurance producer be required to report an administrative action to the Superintendent in accordance with Insurance Law § 2110(i).

However, when applying for an insurance license or for renewal in New York, an applicant must report on the application any administrative action described in scenarios (a), (b), (c) and (d).

For further information you may contact Senior Attorney Camielle A. Campbell at the New York City Office.

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1 N.Y. Ins. Law § 2101(k) defines “insurance producer” as “an insurance agent, insurance broker, reinsurance intermediary, excess lines broker, or any other person required to be licensed under the laws of this state to sell, solicit or negotiate insurance. . . .”