Source: https://www.dfs.ny.gov/insurance/ogco2005/rg050230.htm
Timestamp: 2019-04-21 16:09:49+00:00

Document:
The Office of General Counsel issued the following opinion on February 28, 2005, representing the position of the New York State Insurance Department.
What rights are granted a terminated insurance agent, who has produced non-commercial automobile insurance business for the insurer, under the New York Insurance Law?
The rights that are granted a terminated insurance agent, who has produced non-commercial automobile insurance business for the insurer in the voluntary market, are generally contained in N.Y. Ins. Law § 3425(j) (McKinney Supp. 2005).
An employee of ABC Company states that this company acts as the managing general agent for XYZ Insurance Company, an authorized insurer in New York, for its line of non-commercial automobile insurance policies for antique autos. The employee states that ABC administers to and manages all of the insurance transactions for XYZ, except for claims adjusting, which XYZ handles itself.
The employee states further that ABC deals with appointed agents in NY that receive commission on the sale of new and renewal XYZ automobile insurance policies for antique autos, and that one of these agents has made derogatory comments about ABC in letters that it sent to XYZs policyholders asking the policyholders to switch to a new insurer. The employee wishes, on ABCs behalf, to terminate the agency agreement and questions how this is to be accomplished under the New York Insurance Law.
(2) This subsection shall not apply to an agent who agrees to represent exclusively one insurer or a group of insurers under common management or an agent or broker whose license has been revoked by the superintendent or whose contract or account has been terminated for insolvency, abandonment, gross and willful misconduct, or failure to pay over to the insurer moneys due to the insurer after receipt of a written demand therefor.
(ii) Negotiates reinsurance on behalf of the insurer.
To be considered a managing general agent in New York, all of the criteria of § 33.2(c) must be met. It was stated that ABC does not handle the claims adjusting for XYZ. Thus, it is not likely that ABC meets the definition of managing general agent. Based on Department records, ABC is not licensed as an insurance agent in New York, although it is licensed as an insurance broker. However, this does not mean that ABC is not an agent of XYZ for purposes of N.Y. Ins. Law § 3425(j)(1). Based on the description provided of the services that ABC provides for XYZ, ABC is authorized by such insurer to accept lines of insurance from licensed agents or brokers. Therefore, ABC is acting as an agent under N.Y. Ins. Law § 3425(j).
N.Y. Ins. Law § 3425(j) provides a terminated insurance agent with certain rights regarding business that it produced for the insurer. However, pursuant to N.Y. Ins. Law § 3425(m), different provisions of § 3425(j) apply based upon when the policy was first written.
The required policy period for a covered policy of automobile insurance voluntarily written on dates other than 8/2/2001  6/25/2003 is one year pursuant to N.Y. Ins. Law § 3425(a)(8) and (m) (McKinney Supp. 2005). Where an agents contract has been terminated, N.Y. Ins. Law § 3425(j)(1)(B) (McKinney Supp. 2005) requires an insurer to offer to keep such policy in force through the terminated agent for any remaining part of the one-year required policy period. Thereafter, at the specific request of the insured, the insurer shall offer to continue the policy through the terminated agent for three successive one year policy periods, which commence one year from the date that the termination notice was mailed or delivered.
The required policy period for a new automobile insurance policy that was voluntarily written between 8/2/2001  6/25/2003 is three years pursuant to N.Y. Ins. Law § 3425(m) (McKinney Supp. 2005).
Where an agent who has placed such policies has its contract with the insurer terminated, N.Y. Ins. Law § 3425(j)(1)(A) (McKinney Supp. 2005) applies. This section requires the insurer to offer to keep such policy in force for the remainder of the three-year required policy period. In addition, the insurer must also offer to continue the policy through the terminated agent for the next one-year policy period. Thereafter, at the specific request of the insured, the insurer must offer to continue the policy through the terminated agent for the remaining years of the three-year required policy period.
Practically speaking, however, a policy originally written between 8/2/2001  6/25/2003 will have a required policy period renewal date that falls outside the three-year required policy period. After the three-year required policy period, such policy, if renewed, becomes subject to the one-year required policy period of § 3425, including the § 3425(j)(1)(B) requirements where the insurer must offer to continue the policy through the terminated agent for three successive one year policy periods, which commence one year from the date that the termination notice was mailed or delivered.
It should be noted that an agents rights under § 3425(j) neither enhance nor diminish the rights accorded to insureds or insurers under § 3425. Thus, an insured may cancel or non-renew a policy that had been placed by a terminated agent at any time at his or her discretion. And an insurer may cancel or non-renew a policy that had been placed by a terminated agent based upon any of the grounds, and in the manner, provided by the other applicable provisions of § 3425, unimpeded by § 3425(j).
For further information you may contact Associate Attorney Sally Geisel at the New York City Office.

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