OGC Op. No. 11-06-03
The Office of General Counsel issued the following opinion on June 21, 2011 representing the position of the New York State Insurance Department.
Re: Cancellation Notification to Both an Agent and a Broker
Must an insurer that cancels an insurance policy in accordance with N.Y. Ins. Law
No. In addition to providing a cancellation notice to the insured, pursuant to Insurance Law
The inquirer states that he represents an authorized property/casualty insurer. He asks whether the insurer must send a cancellation notice to both an insurance broker and an insurance agent in instances where an insurance broker has procured the policy and places it through an insurance agent.
A copy of every notice of cancellation, reduction of limits, substitution of policy form, elimination of coverages, conditioned renewal or of intention not to renew, including the reasons therefor, or a summary of such notice, shall be mailed, delivered or transmitted to the insured’s authorized agent or broker within seven days of the time such notice is mailed to the named insured.
Accordingly, a copy of every notice of cancellation must be mailed, delivered or transmitted to the insured’s authorized agent or broker within seven days of the time such notice is mailed to the named insured.
Here, you ask whether an insurer must send a cancellation to both an insurance agent and broker where a broker procures a policy governed by Insurance Law
In an Office of General Counsel (“OGC”) opinion dated April 16, 1990, the OGC addressed the same question with respect to commercial lines policies cancelled pursuant to Insurance Law
We note that there is no definition of the word “authorized” in the statute. The Department interprets the insured’s authorized agent or broker to be the agent or broker that the insured designates to receive information on its behalf. The purpose of this requirement is for the insured to be advised as soon as possible by the agent or broker that it chose to procure insurance. The agent or broker that the insured actually and directly authorized to service its insurance needs would presumably be most interested in retaining business from the client by providing the most effective consultation. Usually, such licensee would also be the individual listed on the policy as the authorized agent or broker but in those cases where a number of licensees have been engaged in the particular insurance transaction, the only agent or broker the law requires the insurer to notify is the licensee that the insured chose to do business with. The insurer must establish in its underwriting practice the necessity of obtaining the identity and address of the insured’s authorized agent or broker in order to be in compliance with the notification requirements of Section 3426. In those cases where the insured terminates the relationship with the licensee, the successor licensee chosen by the insured to handle the account would have to make his or her identity known to the insurer or its agent in order to receive notification under
Both Insurance Law
Accordingly, in addition to providing a cancellation notice to the insured, an insurer need only provide a cancellation notice to the authorized insurance agent or broker that the insured designates to receive information on its behalf.
For further information, you may contact Senior Attorney Sapna Maloor at the New York City office.