David A. Paterson
Kermitt J. Brooks
The Office of General Counsel issued the following opinion on August 4, 2009, representing the position of the New York State Insurance Department.
Re: Insurer In-House Counsel
Do the New York Insurance Law and regulations promulgated thereunder require Insurance Department approval for the creation of an insurer in-house law firm?
No. Neither the Insurance Law nor the regulations promulgated thereunder require Insurance Department approval for the creation of an insurer in-house law firm.
The inquirer reports that ABC Insurance Company (“ABC”) intends to create an in-house law firm consisting of employees of ABC to: 1) represent ABC in no-fault and uninsured motorist (“UM”) litigation and arbitration, and 2) represent ABC’s insureds when named as defendants in third-party liability insurance claims. The inquirer asks whether the creation of such a firm requires Insurance Department approval.
Neither the Insurance Law nor regulations promulgated thereunder specifically address the establishment of insurer in-house law firms. However, N.Y. Ins. Law
…In addition to any power specifically conferred by this chapter to engage in any other kind of insurance business than an insurance business, any insurer authorized to do business in this state may engage in other kinds of business to the extent necessarily or properly incidental to the kinds of insurance business it is authorized to do in this state.
An in-house law firm qualifies as an “other” kind of business “necessarily or properly incidental to the kinds of insurance business” an insurer is authorized to do. Therefore, neither the Insurance Law nor regulations promulgated thereunder preclude an insurer from creating an in-house law firm for its own business-related reasons.
The Department offers no opinion as to whether the establishment of an in-house law firm is governed by any New York State or federal laws other than the Insurance Law.
For further information you may contact Associate Counsel Alexander Tisch at the New York City Office.