Question from an IIABNY member: Back in the day when I became a licensed broker, the only P&C option available was a full P&C license to become an agent or broker. Now with GEICO coming to western New York, the option of having a personal lines license is available. My question is, if a staff member opts to only obtain a personal lines brokers license, as an agency does that prohibit us from allowing the staff member to do certain things in commercial lines? I understand that they shouldn’t be selling commercial lines but what about serving commercial lines?
Answer: I think the best way to answer this question is to look at the definitions in New York insurance law, specifically Section 2101.
(c) In this article, "insurance broker" means any person, firm, association or corporation who or which for any compensation, commission or other thing of value acts or aids in any manner in soliciting, negotiating or selling, any insurance or annuity contract or in placing risks or taking out insurance, on behalf of an insured other than himself, herself or itself or on behalf of any licensed insurance broker, except that such term shall not include: …
(2) an officer, director or employee of a licensed insurance producer, provided that the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state and:
(A) the officer, director or employee's activities are executive, administrative, managerial, clerical or a combination of these, and are only indirectly related to the sale, solicitation or negotiation of insurance; or
(B) the officer, director or employee's function relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance; or
(C) the officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting licensed insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance; …
(m) In this article, "negotiate" or "negotiation" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from licensed insurers, fraternal benefit societies or health maintenance organizations for purchasers.
(n) In this article, "sell" or "sale" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of a licensed insurer, fraternal benefit society or health maintenance organization.
(o) In this article, "solicit" or "solicitation" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular licensed insurer, fraternal benefit society or health maintenance organization.
You need a license to perform any of the activities described in (m), (n) and (o). You do not need a license if you are not receiving commissions and you perform the activities described in (2)(A), (B) and (C). Therefore, the answer to your question really depends on the types of service activities this person might perform. Forwarding endorsement requests to carriers, issuing certificates of insurance, recording claim reports on forms, and issuing auto I.D. cards are clerical tasks that do not require a license. Giving someone coverage advice, advising them to buy cyber insurance from Zurich, or selling them higher umbrella limits are all producer activities which require a license.