OGC Opinion No. 08-05-12

The Office of General Counsel issued the following opinion on May 30, 2008, representing the position of the New York State Insurance Department.

RE: Business Card/Office Consolidation

Question Presented:

May a property/casualty insurance agent employed by a property/casualty insurance agency market to the clients of a related life and health insurance agency, with whom the property/casualty insurance agency shares space, a business card identifying both agencies, with a “disclaimer” on the reverse side of the card that the agent is affiliated with the property/casualty insurance agency and that the two agencies are subsidiaries of one parent?

Conclusion:

The property/casualty insurance agent may solicit and sell insurance, within the authorization of the agent’s license, to any person having legal capacity, including those persons who are also clients of the life and health insurance agency on the premises. However, the property/casualty insurance agent’s business card must clearly state that the agent is not licensed as a life and health insurance agent. Further, the disclaimer must be located on the front of the card.

Facts:

The inquirer reports that it has two subsidiaries that are New York-licensed producers. The property/casualty insurance agency wants to jointly market its services to the life and health insurance agency’s clients. The life and health insurance agency will rent office space to a property/casualty insurance agent’s employed by the property/casualty insurance agency. The property/casualty insurance agent’s business card intends to identify his employer (the property/casualty insurance agency) at the top and identify the life and health insurance agency at the bottom. The reverse side of the agent’s business card will include a statement that the agent is affiliated with the property/casualty insurance agency, and that both agencies are owned by the named parent company. The issue is whether this arrangement is legally permissible.¹

Analysis:

As a preliminary matter, Insurance Law § 2129 requires that each insurance office of an agent or broker be under the supervision of an appropriate licensee licensed to do the kinds of business transacted in that office, and that the Department be notified of the location of, and identity of licensees responsible for, satellite offices. See also 11 NYCRR Part 34 (Reg. 125) (2003).²

One agency may rent space within the office of the other agency; however, the two agencies must retain their separate corporate identities, separate books of business, and separate premium bank accounts. See Office of General Counsel (“OGC”) Opinion No. 00-03-02 (March 6, 2000). They may share the same staff and manager, furniture, and may advertise both agencies on the same store sign, letterhead, and business cards. Id. No specific information need be printed on the letterhead or business cards, but any information must comply with the Insurance Law and regulations promulgated thereunder. A producer that provides misleading information to prospective clients or insureds could be found “untrustworthy” or “incompetent” within the meaning of Insurance Law § 2110. Such a finding would be a ground for suspension or revocation of the producer’s license or monetary penalties.

Here, the proposed language on the business card that “Joe Smith is affiliated with P&C Firm. P&C Firm and L&H Firm are owned by (or subsidiaries of) XYZ Parent Co” could be considered misleading. This “disclaimer” – which Black’s Law Dictionary, 8th ed. (2004) defines as a renunciation or repudiation of a connection with, or interest in, a legal right or claim - fails to renounce or repudiate any connection with the life and health insurance agency. To avoid any ambiguity, the business card should include an express statement that the agent is not licensed to sell life and health insurance, and does not work for, or represent, the life and health insurance agency. See OCG Opinion No. 05-11-06 (Nov. 4, 2005).

Furthermore, because it is not commonplace in New York to call attention to the reverse side of a professional business card, insureds are not likely to notice the disclaimer printed on that side of the card. Having the property/casualty insurance agent’s name above the name of a life and health insurance agency for which the agent is not employed or representing could, in the absence of clear and unequivocal wording on the front of the business card, mislead the public by implying that the agent has a life and health insurance license, when that is not in fact the case.

For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.

¹ As the inquiry does not refer to providing cross-referral fees between the agents of the two agencies, and since there is a common parent owner, this opinion does not touch upon N.Y. Ins. Law §§ 2114 and 2115 (McKinney Supp. 2008).

² Regulation 125 also provides, among other things, that at least one supervising person be present for most or all the business hours at the satellite office; and that no insurance business other than the kind the agent is authorized to transact may be done at the satellite office.