OGC Opinion No. 06-12-20

The Office of General Counsel issued the following opinion on December 28, 2006, representing the position of the New York State Insurance Department.

Re: Notification of Renewal Through Different Agent

Question Presented:

Where an agent-insurer contract was terminated three years earlier, may the insurer now notify an insured, whose personal lines insurance policy is nearing the end of its three-year required policy period, that coverage will be renewed through a different agent unless the insured requests cancellation of the policy?


Yes, nothing in the Insurance Law would preclude the insurer from notifying the insured whose policy is about to expire that the personal lines insurance policy will be renewed through a different agent unless the insured requests cancellation.


An insurance agent's contract with an authorized property/casualty insurer in New York was terminated three years ago due to reasons other than those contained in N.Y. Ins. Law § 3425(j)(2) (McKinney Supp. 2007). The agent states that the insurer had been sending notices to the insureds, for whom the agent had placed coverage, stating that the policies would be renewed through a different agent unless the insureds requested cancellation of the policies. The agent questions the propriety of the insurer sending such notices since the three year required policy period for these policies is about to expire and the requirements of N.Y. Ins. Law § 3425(j) need no longer be complied with. The agent further questions whether its contract with the insurer, regarding ownership of the book of business, could prohibit the insurer from sending the notices.


N.Y. Ins. Law § 3425(j) (McKinney Supp. 2007) provides a terminated insurance agent with certain rights regarding business that it produced for the insurer and states in pertinent part:

(j) (1) Where an insurer or an agent who is authorized by such insurer to accept lines of insurance from licensed agents or brokers notifies a licensed agent or broker that its contract or account shall be terminated:

(A) with respect to a personal lines insurance policy required to be continued by this section, the insurer shall offer to continue the policy for any remaining part of the required policy period and any statutory extension and the insurer shall offer to continue the policy through the terminated agent or broker for at least its next one year policy period which commences within one year following the date of mailing or delivery to the terminated agent or broker of written notice of termination of such contract or account, and thereafter, at the specific request of the insured, shall offer to continue the policy through such terminated agent or broker for any remaining part of the required policy period including statutory extension;

Once the statutory time frame of § 3425(j) has passed, those rights expire and the insurer is under no obligation to retain a relationship with the producing agent or broker. In accordance with § 3425, the insurer must either renew an expiring policy or send notice of non-renewal as described in § 3425. Where an insurer chooses to renew a policy through a different agent, the Department would expect the insurer to advise the insured accordingly.

With respect to any agreements made between the insurer and the agent regarding book of business ownership, that is a contractual matter not addressed by the Insurance Law and not regulated by the Department. The insurer is nonetheless required to comply with N.Y. Ins. Law § 3425.

For further information you may contact Associate Attorney Sally Geisel at the New York City Office.