OGC Op. No. 10-09-13
The Office of General Counsel issued the following opinion on September 29, 2010 representing the position of the New York State Insurance Department.
Under the facts presented, may a broker pay any part of his insurance commissions to an employer client?
No. The broker may not pay any part of his insurance commissions to the employer. To do so would constitute unlawful rebating pursuant to N.Y. Ins. Law
Broker presented quotes to Employer for health insurance for Employer’s employees, from which Employer selected the least expensive policy. Employer subsequently claimed that Employer’s decision was based upon information from the respective insurer that was “incorrect and/or didn’t fully explain some plan details.” Thereafter, employer changed its selection to a more expensive insurance policy. Employer asked Broker to pay Employer some or all of Broker’s commissions from the sale of the insurance for the purpose of offsetting Employer’s increased cost of insurance as between the original policy the Employer selected and the policy upon which Employer finally settled. At issue here is a community rated health insurance policy.
No such life insurance company and no such savings and insurance bank and no officer, agent, solicitor or representative thereof and no such insurer doing in this state the business of accident and health insurance and no officer, agent, solicitor or representative thereof, and no licensed insurance broker and no employee or other representative of any such insurer, agent or broker, shall pay, allow or give, or offer to pay, allow or give, directly or indirectly, as an inducement to any person to insure, or shall give, sell or purchase, or offer to give, sell or purchase, as such inducement, or interdependent with any policy of life insurance or annuity contract or policy of accident and health insurance, any stocks, bonds, or other securities, or any dividends or profits accruing or to accrue thereon, or any valuable consideration or inducement whatever not specified in such policy or contract; nor shall any person in this state knowingly receive as such inducement, any rebate of premium or policy fee or any special favor or advantage in the dividends or other benefits to accrue on any such policy or contract, or knowingly receive any paid employment or contract for services of any kind, or any valuable consideration or inducement whatever which is not specified in such policy or contract.
For further information you may contact Senior Attorney Brenda M. Gibbs at the Albany Office.
1 To be sure, the Department would not approve a policy form allowing an insurance agent or broker to pay any part of his or her commission to an insured or purchaser of a health insurance policy, nor have you alleged any such term in the employer’s health insurance policy.