N.Y. Insurance Law § 2117: Acting for or aiding unlicensed or unauthorized insurers or health maintenance organizations

§ 2117. Acting for or aiding unlicensed or unauthorized insurers or

health maintenance organizations. (a) No person, firm, association or

corporation shall in this state act as agent for any insurer or health

maintenance organization which is not licensed or authorized to do an

insurance or health maintenance organization business in this state, in

the doing of any insurance or health maintenance organization business

in this state or in soliciting, negotiating or effectuating any

insurance, health maintenance organization or annuity contract or shall

in this state act as insurance broker in soliciting, negotiating or in

any way effectuating any insurance, health maintenance organization or

annuity contract of, or in placing risks with, any such insurer or

health maintenance organization, or shall in this state in any way or

manner aid any such insurer or health maintenance organization in

effecting any insurance, health maintenance organization or annuity

contract.

(b) Notwithstanding the provisions of subsection (a) hereof, any

insurance broker licensed under subparagraph (B) of paragraph one of

subsection (b) of section two thousand one hundred four of this article

may negotiate a contract of insurance, or place insurance, in an insurer

not authorized to do business in this state, as follows:

(1) a contract of reinsurance on risks produced by such broker;

(2) insurance against loss of or damage to property having a permanent

situs outside of this state; and

(3) marine insurance of the following kind or kinds, where it is

reasonable so to do with due regard to the interests of all concerned

and whether or not, at the time of such negotiation, the subject matter

of such insurance is within or without this state:

(A) insurance against perils of navigation, transit or transportation

upon hulls, freights or disbursements, or other shipowner interests,

goods, wares, merchandise and all other personal property and interests

therein, in course of exportation from or importation into any country,

or transportation coastwise, including transportation by land or water

from point of origin to final destination and including war risks and

marine builders' risks; and

(B) insurance in connection with ocean going vessels against any of

the risks specified in paragraph twenty-one of subsection (a) of section

one thousand one hundred thirteen of this chapter.

(c) Notwithstanding the provisions of subsection (a) hereof, any

insurance broker licensed under subparagraph (B) of paragraph one of

subsection (b) of section two thousand one hundred four of this article

may negotiate a contract of insurance or place insurance in an

unauthorized insurer as follows:

(1) insurance against legal liability arising out of the ownership,

operation or maintenance of any motor vehicle or aircraft which is

neither principally garaged nor principally used in this state, arising

out of any activity carried on wholly outside of this state or arising

out of the ownership, operation or maintenance of any property having a

permanent situs outside of this state, but in case such property or risk

is located in any other state, then only in an insurer authorized to do

such business in such state or in an insurer in which a licensed

insurance broker of such state may lawfully place such insurance; and

(2) fidelity bonds guaranteeing the fidelity of persons holding or

exercising positions of public or private trust wholly outside of this

state, and surety bonds guaranteeing or assuming the performance of any

contract or other obligation of the kind included under subparagraphs

(B) and (C) of paragraph sixteen of subsection (a) of section one

thousand one hundred thirteen of this chapter, to be performed wholly

outside of this state; but if such positions are held or exercised in

another state or if such contract or other obligation is to be performed

wholly or partly in another state, then only if such insurance is placed

in an insurer authorized to do such business in such state, or in which

a licensed broker of such state may lawfully place such insurance.

(d) Notwithstanding the provisions of subsection (a) hereof, any

licensed reinsurance intermediary may negotiate a contract of

reinsurance, or place reinsurance, in an insurer not authorized to do

business in this state.

(e) This section shall not authorize any person, firm, association or

corporation to guarantee or otherwise validate or secure the performance

or legality of any agreement, instrument or policy of insurance or

annuity contract of any insurer not authorized to do business in this

state, or to bind risks, validate, effect by countersignature,

endorsement or otherwise, any binder, memorandum, cover note, slip,

certificate, policy or other instrument of insurance of any insurer not

authorized or licensed to do business in this state, or to make binding

declarations of risks thereunder, or permit any unauthorized insurer to

do any insurance business by its agent acting within this state; but

licensed insurance brokers acting pursuant to subsections (b) and (c)

hereof may issue to their clients, the insureds, confirmation of

insurance so lawfully placed.

(f) This chapter shall not prohibit or prevent an attorney and

counsellor at law from representing an unauthorized insurer in

litigation or settlement of claims in this state.

(g) Any person, firm, association or corporation violating any

provision of this section shall, in addition to any other penalty

provided by law, forfeit to the people of the state the sum of five

hundred dollars for each transaction.

(h) (1) This section shall not prohibit any person, firm, association

or corporation from acting within the scope of the authority conferred

by section two thousand one hundred five of this article.

(2) Notwithstanding subsection (a) of this section, a licensed

insurance broker may deliver to the insured an insurance policy or

contract procured by any person, firm, association or corporation acting

pursuant to the authority conferred by section two thousand one hundred

five of this article.

(3) Notwithstanding subsection (a) of this section and any other

provision of law to the contrary, any excess line broker licensed

pursuant to section two thousand one hundred five of this article may

exercise binding authority and execute an authority to bind coverage on

behalf of an insurer not licensed or authorized to do business in this

state pursuant to the provisions of subsection (f) of section two

thousand one hundred eighteen of this article.

(i) Notwithstanding subsection (a) of this section, a licensed insurer

may provide, from its office in the state, services to support the

insurance business of an unauthorized insurer with which it is

affiliated, provided that the unauthorized insurer has satisfied all

applicable requirements for placements by excess line brokers as set

forth in section two thousand one hundred eighteen of this article. Such

services may include, but shall not be limited to, computer operations,

clerical and staffing support, underwriting, negotiating contract terms,

quoting premiums, binding coverage, drafting and issuing policies and

claims handling, investigation and payment, among other incidental

services. Services expressly prohibited under this section include the

marketing, soliciting or advertising by the unauthorized insurer

directly to policyholders. Notwithstanding paragraph two of subsection

(a) of section two thousand one hundred twenty-two of this article, such

unauthorized insurers shall be permitted to advertise to, and market and

solicit through, excess line brokers licensed pursuant to section two

thousand one hundred five of this article, from an office within the

state. All obligations of such licensee under this article shall remain

in full force and effect. Any document issued by an unauthorized insurer

that indicates any location within this state in which it conducts its

operations shall include a prominent notice that the insurer is not

licensed by the state of New York, in no smaller than 10 point type, in

accordance with regulations as may be promulgated by the superintendent.

(j) Nothing in this section shall prohibit a person who is not a

resident of this state from selling, soliciting or negotiating a

property/casualty insurance contract of an insurer not authorized to do

business in this state, provided that: (1) the insured's home state is a

state other than this state; and (2) the person is licensed to sell,

solicit or negotiate excess line insurance in the insured's home state.

(k)(1) Notwithstanding subsection (a) of this section, any insurance

broker licensed under subparagraph (A) of paragraph one of subsection

(b) of section two thousand one hundred four of this article with

respect to life insurance or annuities, subparagraph (A) or (B) of

paragraph one of subsection (b) of such section with respect to accident

and health insurance, or subparagraph (B) of this paragraph with respect

to property/casualty insurance may engage in the activities specified in

paragraph two of this subsection with respect to an alien insurer not

authorized to do an insurance business in this state, provided that:

(A) the activities relate to a policy or contract of group life, group

annuity, group accident and health insurance, or property/casualty

insurance where the policyholder or proposed policyholder is a

multinational entity resident outside the United States, the policy or

contract covers the multinational entity's liabilities, properties,

employees and their dependents, and the liabilities arise, or the

properties and employees reside outside of the United States, except

that the policy or contract may provide coverage to employees who are

temporarily inside the United States;

(B) the policy or contract shall not be underwritten or negotiated in

this state or issued or delivered in the United States;

(C) the alien insurer is authorized to transact the kinds of insurance

business in the jurisdictions where the policies or contracts will be

issued or delivered and the policies or contracts are issued in

conformance with the laws of such jurisdictions;

(D) before engaging in any of the activities specified in paragraph

two of this subsection, the licensed insurance broker provides written

notice to the multinational entity that the alien insurer is not

licensed in or authorized to do business in this state; the policy or

contract is not protected by the New York state guaranty funds; the

policy or contract has not been approved by the superintendent; and the

policy or contract may not be subject to all of the laws of this state;

(E) the alien insurer shall not maintain any office in this state; and

(F) except as specifically provided in this section, the licensed

insurance broker shall not call attention to the alien insurer by any

advertisement or public announcement in this state.

(2) Subject to paragraph one of this subsection, the licensed

insurance broker may engage in this state in only the following

activities with respect to the alien insurer:

(A) provide information to the multinational entity with respect to a

policy or contract of group life, group annuity, group accident and

health insurance, or a property/casualty insurance policy issued or

delivered or that will be issued or delivered by the alien insurer;

(B) meet and discuss insurance needs with the multinational entity,

including providing information directly to the entity in person or

otherwise about the policies or contracts offered by the alien insurer;

and facilitating introductions with the multinational entity's human

resources and benefits manager in each country in which the

multinational entity has employee benefit needs;

(C) refer the multinational entity to the alien insurer and provide

information to the multinational entity about the alien insurer;

(D) respond to requests for information by representatives of the

multinational entity concerning quotes and any other specific terms and

conditions of a group life, group annuity, group accident and health

insurance, or property/casualty insurance policy or contract being

negotiated in the jurisdiction where the policy or contract will be

issued or delivered by the alien insurer;

(E) provide information concerning renewals of existing policies or

contracts of group life, group annuity, group accident and health

insurance, or a property/casualty insurance policy issued by the alien

insurer; and

(F) manage the employee benefits program of the multinational entity,

including aggregating and reporting employee benefits and financial

information about the program.

(3) Any activity in which a licensed insurance broker engages with

respect to an alien insurer pursuant to this subsection shall be deemed

to be included within the meaning of "any other transaction of business"

for the purposes of section one thousand two hundred thirteen of this

article.

(4) For purposes of this subsection:

(A) "multinational entity" shall mean an institution that is a member

of a multinational group of institutions operating globally where: (i)

at least one institution in the group is formed under the laws of the

United States or has significant operations in the United States; and

(ii) at least one institution in the group has offices outside the

United States; and

(B) "group of institutions" shall mean a parent corporation and its

subsidiaries.