New York producer licensing: process, definitions, and license types (Ins. Law 2101-2109, 2136)

Who needs a New York license, and what kind

In New York, anyone who sells, solicits or negotiates insurance for compensation must hold a license from the Superintendent of Financial Services. The umbrella term is insurance producer. It covers insurance agents, title insurance agents and insurance brokers, plus specialised intermediaries such as excess line brokers and reinsurance intermediaries. Adjusters and insurance consultants are licensed separately and are not producers.

Agent versus broker: whom do you represent?

The single most tested distinction is whose representative you are.

• An insurance agent represents one or more insurers. The agent acts for the company and must be appointed by every insurer it represents.
• An insurance broker represents the insured (the customer). A broker shops the market on the client's behalf and is not appointed by insurers.

New York issues the two as different licenses. One person or firm may hold both an agent's and a broker's license, and the law treats them as two distinct capacities.

The license types

Agent licenses (Ins. Law § 2103) come in two families:

1. Life / accident and health agent, under § 2103(a). The lines of authority are life insurance, variable life and variable annuity products, and accident and health insurance, including HMO contracts and legal services insurance. They may be granted alone or in combination.
2. Property and casualty agent, under § 2103(b). The lines are accident and health, property, casualty, personal lines, or any line other than life and variable products.

Broker licenses (Ins. Law § 2104) mirror that split:

1. A life broker, for life, variable life and annuity, and accident and health lines.
2. A property/casualty broker, for any and every line except life and variable products.

Temporary licenses (Ins. Law § 2109) keep a book of business alive when the original licensee cannot act. The Superintendent may issue one without a written examination in three cases: the licensee's death (to the executor or administrator, next of kin, surviving partners or a corporate officer), absence on military service (to a person the licensee designates), or total disability (to next of kin). A temporary agent may represent only the insurers the original licensee represented.

Individuals, firms and sub-licensees

New York licenses business entities as well as individuals. A firm, association or corporation holds the license, and the natural persons who may act under it are named in it as sub-licensees. For a corporation, only its officers and directors may be sub-licensees. For a firm or association, only its members may be. Each sub-licensee acts only in the name of the licensee. If the entity's license is revoked or suspended, the authority of every sub-licensee ends with it.

The licensing process

1. Age. Every individual applicant and every proposed sub-licensee must be at least 18 when the license is issued.
2. Qualification. The applicant completes the required pre-licensing education and passes the state licensing examination. A broker must also be found trustworthy and competent to safeguard the insured's interests.
3. Application. An application, in the form the Superintendent prescribes, must be on file before any original license issues. An entity's application names its sub-licensees.
4. Issuance. The license states the licensee's name, address, identification number, issue date, lines of authority and expiration date.
5. Appointment (agents only). To let an agent represent it, the insurer files a notice of appointment within 15 days of executing the agency contract or receiving the first application. The appointment lasts until the insurer terminates it, the license is suspended or revoked, or the license expires unrenewed.

Exam tip: a broker is licensed but never appointed; an agent needs both a license and an appointment from each insurer.

Keeping the license

The Superintendent may refuse to renew, suspend or revoke a license after notice and a hearing. Grounds include fraud on the application, misappropriating funds, a felony conviction and incompetence. A licensee whose license is revoked is barred from any new license for one year. Every agent and broker holds premiums in a fiduciary capacity and may not commingle them with personal funds without the principal's express consent.