by Structured Settlement Watchdog
Rumors have been circulating for sometime that two or more structured settlement firms were approached by a major New York City law firm that was seeking a structured settlement firm to do work for it in exchange for "piece of the action" (rumored to be 25%). I have tried to learn how the proposed "deal" would be ..er..structured in order to comply with the laws of the state.
Today I discovered an opinion issued by the New York State Insurance Department office of General Counsel. The opinion states that the inquiry was general in nature and that no particular facts were presented.
- May an individual who is not a licensed agent or broker own a percentage of a corporate insurance agent or broker?
- Do the rules differ if an individual is admitted to the New York bar?
The answers: Yes to #1 and No to #2
The analysis accompanying the opinion states that "a non licensee that owns an interest in an insurance agent or broker may share in the overall profits generated by that business referring to a 2004 OCG opinion 04-08-11. A July 27, 2007 opinion however, states that a non licensed owner of an insurance agent or broker MUST COMPLY with Insurance Law Sections 2114, 2115, 2116 and 2102 with regard to commission sharing.
Further, the analysis confirms that "a non licensed owner also may make referrals to the insurance agent or broker, provided there is no discussion of specific policy terms and conditions and the compensation for the referrals is NOT based on whether a sale in made. OGC 06-01-13 (January 10,2006)
The opinion states that a licensed attorney who owns an interest in an insurance agent or broker must comply with the statutory provisions, without exception.
While the opinion is useful and instructive, if more specific and concrete scenarios were posed to Office of General Counsel the response would be far more useful. This author intends to seek guidance on some more concrete scenarios for best practice purposes.