OGC Opinion No. 07-08-05
The Office of General Counsel issued the following opinion on August 27, 2007 representing the position of the New York State Insurance Department.
RE: Qualification as an “Insured’s Authorized Agent or Broker”
Question Presented:
Does the termination of an agent’s or broker’s relationship with an insurer affect the determination of who qualifies as an insured’s “authorized agent or broker” for purposes of requesting loss information pursuant to N.Y. Ins. Law § 3426(g)(2)(McKinney 2006)?
Conclusion:
No. The term “authorized agent or broker” refers to an agent or broker who is authorized by the insured to receive or transmit information on an insured’s loss information. The termination of the contractual relationship between the agent or broker and the insurer is not determinative of an agent’s or broker’s status as an “authorized agent or broker.”
Facts:
The inquiry is general in nature, without reference to specific facts.
Analysis:
New York Insurance Law § 3426 governs cancellation and nonrenewal of most commercial lines property/casualty insurance policies by an authorized insurer, and subsection (g) specifically delineates what loss information must be provided by the insurer to an insured and the insured's authorized agent or broker. Insurance Law § 3426(g) (2) states:
(2) Upon written request by the first-named insured or such insured's authorized agent or broker, the insurer shall mail or deliver the following loss information covering a period of years specified by the superintendent by regulation or the period of time coverage has been provided by the insurer, whichever is less, within ten days of such request:
(A) Information on closed claims, including date and description of occurrence, and any payments;
(B) Information on open claims, including date and description of occurrence, and amounts of any payments; and
(C) Information on notice of any occurrences, including date and description of occurrence.
The inquiry focuses on the insurer’s relationship with the agent or broker; specifically, it asks about the effect of the termination of the agent’s or broker’s relationship with the insurer upon the agent’s or broker’s status as an “insured’s authorized agent or broker.” However, the producer-insurer relationship is not the one addressed by the statute. Rather, as used in § 3426(g) and other sections of the Insurance Law,1 the term “insured’s authorized agent or broker” refers to an agent or broker who is authorized by the insured to receive (or transmit) information on the insured’s behalf. This is evident from the language of the statute, which contains the phrase “such insured’s authorized agent or broker.” Clearly, the “authorization” flows from the insured to the broker or agent; the broker’s or agent’s relationship with the insurer is not implicated.
Thus, where an insurer terminates its relationship with an agent or broker, the termination does not affect the agent’s or broker’s relationship with the insured. Accordingly, the termination of the contractual relationship between the agent or broker and the insurer is not relevant to a determination of an agent’s or broker’s status as an “authorized agent or broker,” as that term is used in Insurance Law § 3426(g)(2).2
For further information you may contact Supervising Attorney Michael Campanelli at the New York City Office.
1 See, e.g., Insurance Law § 3425(d)(1), which addresses notification of nonrenewal of personal lines policies.
2 An exception could exist in a situation where an agent is a “captive agent” of a single insurer. In such cases, in the event of the termination of the agent’s contractual relationship with that insurer, it is possible that the agent would then no longer be an “agent” at all, if he were no longer be a representative of any insurer.