New York State Regulations & NAIC Insurance Law

Licensing

To apply for a New York resident producer’s license, you must:

Be at least 18 years old
Be a New York resident before you submit your application

Pre-licensing course and exam

New York requires an approved prelicensing course of at least 20 hours for a life-only or an accident and health-only agent license, 40 hours for a combined life, accident and health license or a personal lines license, and 90 hours for a property and casualty license (N.Y. Dept. of Financial Services).

A candidate must score at least 70% to pass the New York insurance licensing examination (PSI, New York State Insurance Candidate Information Bulletin).

Fingerprints/background check

The Superintendent reviews an applicant’s background before issuing a license, and many states require applicants to submit fingerprints for a state and FBI criminal history check as part of the application.

Controlled business

Controlled business is insurance written on the producer’s own life, property or interests, or on those of the producer’s family, employer or a business the producer controls. A producer may insure themselves and their family, but a license exists to sell insurance to the public, so states generally restrict obtaining or using a license principally to write controlled business.

New York may refuse, suspend or revoke a license if more than 10% of the applicant’s net commissions over the preceding or coming 12 months come from insurance on the property and risks of the applicant’s spouse, a corporation the applicant controls, or similar closely related parties (N.Y. Ins. Law § 2103(i)). An agent or broker may keep the commission on insurance placed on the agent’s own property or risks only while those commissions stay within 5% of total net commissions for the year (N.Y. Ins. Law § 2324(a)). That rule is in § 2324, which does not apply to life, accident or health insurance subject to § 4224 (§ 2324(e)).

Non-resident license

A producer licensed in another state can obtain a New York nonresident license without taking New York’s examination. Under the NAIC’s Producer Licensing Model Act, which most states have adopted in some form, a nonresident receives the license if the person:

Is currently licensed as a resident, and in good standing, in the home state
Has applied (the home-state application or the Uniform Application) and paid the fees
Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Under the same model, a producer who moves to another state files a change of address, with certification from the new home state, within 30 days. A licensed producer who moves into a state applies for a resident license there within 90 days and does not repeat prelicensing education or the examination for lines already held.

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:

The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
A member or employee of a business entity producer, on the death or disability of its designated producer
The designee of a producer entering active military service

Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.

The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.

On the death of a licensed New York agent or broker, a temporary license to carry on the business may be issued for up to 90 days and renewed in 90-day terms, to no more than 15 months in all (N.Y. Ins. Law § 2109(e)).

Military service

When a New York licensee cannot apply personally for renewal because of military service, the Superintendent may accept an application filed on the licensee’s behalf by someone who knows the facts (N.Y. Ins. Law § 2103(j)(8)).

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

A New York individual license expires on the licensee’s birthday every two years (in odd-numbered years for someone born in an odd-numbered year, even-numbered years otherwise) and may be renewed for the next 24 months (N.Y. Ins. Law § 2103(j)(2)).

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

A former New York agent who applies again within two years after the license terminated does not have to retake the written examination (N.Y. Ins. Law § 2103(g)(7)).

Continuing education

All states, including New York, have continuing education requirements that must be met to renew any major lines (life, health, property, liability) insurance license. Many states also require continuing education of other licensees, such as adjusters or title or bail bond agents, while exempting producers who hold only certain limited lines; each state’s law says which. Individuals licensed in the state of New York must complete continuing education before renewing their license. The number of hours required is set by state law and published by the state insurance department.

Notice of change of name or address

A New York licensee must inform the Superintendent of a change of address within 30 days of the change (N.Y. Ins. Law § 2134(a)).

The model also requires a producer to report to the regulator within 30 days any administrative action taken against the producer in another state or by another government agency, counted from the final disposition, and any criminal prosecution in any jurisdiction, counted from the initial pretrial hearing date. A producer who does business under any name other than their legal name must notify the regulator before using it.

Company regulations

An insurance company must be authorized by the Department of Financial Services to conduct business in New York. To receive a certificate of authority, the company applies to the Superintendent and files its charter or articles of incorporation, financial statements showing that it meets the state’s capital and surplus requirements, and the other documents and fees the state requires.

Capital and surplus requirement

A company authorized to conduct insurance business in New York must meet minimum corporate standards. The certificate of authority allows the insurer to conduct business in the state only if it maintains the minimum capital or permanent surplus required. In New York, the Superintendent orders an impaired domestic insurer to eliminate the impairment within no more than 90 days and may bar it from issuing new policies meanwhile (N.Y. Ins. Law § 1310(a)); an impaired foreign stock insurer may, after notice and hearing, be barred from issuing new policies or have its license revoked (§ 1310(b)).

Duties of the Superintendent of Financial Services

The New York Superintendent of Financial Services is a state executive position in the New York government. The Superintendent is the chief executive of the New York Department of Financial Services, which regulates insurance companies operating in New York. This position is appointed by the Governor and serves at the pleasure of the Governor. The appointment is made with the advice and consent of the Senate (N.Y. Fin. Serv. Law § 202(a)).

The Superintendent establishes and enforces regulations in the New York insurance market in a manner that protects consumers and encourages economic development. Their duties include:

Investigate all claims and complaints of legal violations relating to insurance.
If the Superintendent finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution.
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
Audit the books and records of any resident producer as frequently as necessary. Under the NAIC’s examination model, the regulator may examine any person subject to its authority, nonresident producers included, as often as it considers appropriate.
Collect all fees associated with producers and insurers.
Determine and administer fines associated with violations for insurers and producers.
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
Approve documentation used by insurance companies such as forms and rates.

Sidenote

Know this...

The Superintendent does not have the authority to arrest, issue injunctions, or sentence jail time. The Superintendent can start the process, but it takes a law officer to arrest and a judge or court of law to issue injunctions or sentence jail time.

Suspend, revoke or non-renew

The Superintendent has the authority to suspend, revoke, or refuse to renew a license for:

Providing false information on the application for an insurance license.
Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license. Under the NAIC’s model act, the ground is broader: providing incorrect, misleading, incomplete or materially untrue information in the license application.
Being found guilty of a violation or the noncompliance of insurance regulations and laws…
Committing fraud while attempting to obtain an insurance license.
Mingling funds received as an agent or broker with the producer’s own funds without the express consent of the principal (N.Y. Ins. Law § 2120(a)).
Providing false information in reference to the terms and conditions of an insurance contract.
Having been convicted of a felony.
Having admitted or been found to have committed any insurance unfair trade practice or fraud.
Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
Having had a prior insurance license revoked or suspended in a state other than New York. Under the NAIC’s model act, a license denied in another state is also a ground.
Using another person’s identity and forging their name on an insurance application.
Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

If the Superintendent finds that a producer has violated the state’s insurance laws, the Superintendent may order the producer to cease and desist. The recipient of a cease and desist order has not had their registration suspended or revoked, but is required to stop or limit the activity addressed in the order.

Hearing and penalties

A person facing action by the Superintendent is entitled to notice and an opportunity for a hearing, within time limits set by New York law, and may ask a court to review the final order. Under New York’s unfair practices law the hearing comes first: the Superintendent serves a statement of the charges and notice of a hearing held at least 10 days later, the order follows the hearing, and it becomes final only when the time for judicial review has passed (N.Y. Ins. Law §§ 2405(a), 2406).

Before revoking or suspending a producer’s license, the Superintendent must give the licensee notice and hold a hearing at least 10 days after the notice (N.Y. Ins. Law § 2110(b)).

A violation of the insurance laws can bring a civil penalty in addition to action against a license. State law sets the maximum, usually per violation and often with a cap on the total, and a higher tier commonly applies to a violation that was knowing or flagrant. Some violations are also crimes.

Instead of revoking or suspending a license, the Superintendent may order the licensee to pay a penalty of up to $500 for each offense, and up to $2,500 in all for the offenses in one proceeding (N.Y. Ins. Law § 2127(a)).

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form.
Failing, in the case of claims denials or offers of compromise settlement, to promptly provide a reasonable and accurate explanation of the basis for such actions.
Refusing to pay claims without conducting a reasonable investigation.
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.
Denying a claim without conducting a thorough investigation.
Attempting to settle or settling a claim for less than the amount a reasonable person would believe the insured or beneficiary was entitled to by reference to written or printed advertising material accompanying or made part of an application.

Policy forms

Insurers file their policy forms with the Superintendent.

A New York life, accident and health or annuity policy form may not be delivered until the Superintendent has approved it (N.Y. Ins. Law § 3201(b)(1)). A property and casualty form may be used once approved, or once 30 days have passed after filing without disapproval (N.Y. Ins. Law § 2307(b)).

Under the usual conformity rule, which many states’ insurance codes write into law, a policy provision that conflicts with state law does not make the policy invalid: the policy is read as amended to conform to the law.

The interest rate an insurer may charge on a life insurance policy loan is also limited by state law.

Record maintenance

A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Superintendent’s inspection.

Fraudulent producer representation

An insurance producer who represents to the public that they are licensed to conduct insurance business in New York, but has not passed the appropriate licensing examination, is in violation of regulation. Any means of public communication - including advertisements, letterheads, circulars, business cards, and other methods of representation - are included in the definition of impersonating a licensed producer.

A producer found guilty of conducting business in New York in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited. Under the NAIC’s model act, any estimate, illustration or statement that misrepresents a policy’s benefits, advantages, conditions or terms is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation as well (twisting).

False advertising

Making, publishing or circulating an advertisement, announcement or statement about the business of insurance that is untrue, deceptive or misleading is an unfair trade practice under the NAIC’s model act. The medium does not matter: the rule reaches newspapers, magazines, radio and television, and also notices, circulars, pamphlets, letters, posters and any other way of placing the statement before the public. Under the model act, such a statement is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice. Some state laws adopt this condition, and others reach a single such statement. In New York, the Insurance Law bars every act it lists as a defined violation (N.Y. Ins. Law §§ 2402(b), 2403). The list takes in any illustration, circular, statement or memorandum misrepresenting the terms, benefits or advantages of a life, accident or health policy or an annuity contract (N.Y. Ins. Law §§ 2123(a)(1), 4226(a)(1)), a producer’s advertisement of an insurer’s financial condition that does not meet the law’s requirements, and any advertisement calling attention to an unauthorized insurer (N.Y. Ins. Law § 2122(a)).

Defamation

Defamation of an insurer is an unfair trade practice under state law, based on the NAIC’s model act: making, publishing or circulating an oral or written statement that is false, or maliciously critical of or derogatory to the financial condition of an insurer, and that is calculated to injure such insurer. Some states’ laws reach further, to a statement calculated to injure any person engaged in the business of insurance. New York’s own rule reaches a person who wilfully makes, circulates or transmits a statement that is untrue in fact and directly or by inference derogatory to the financial condition of any insurer doing business in the state (N.Y. Ins. Law § 2604). Spreading an untrue rumor that a competing insurer is about to fail is the classic example.

Boycott, coercion and intimidation

Entering into an agreement to commit, or by concerted action committing, any act of boycott, coercion or intimidation that results or tends to result in unreasonable restraint of, or monopoly in, the business of insurance is prohibited.

False financial statements

Any licensed producer who makes false statements containing any information that involves inaccurate material facts or false statements on an application for insurance is in violation of the state’s unfair trade practices law. The rule is not limited to licensed producers: under the NAIC’s model act, it is an unfair trade practice for an insurer or any person engaged in the business of insurance to make false or fraudulent statements or representations on or relative to an application for a policy, for the purpose of obtaining a fee, commission, money or other benefit from any provider or individual person.

Illegal inducements

Offering anything of value not specified in the policy (money, a service, a favor or a gift) as an inducement to buy insurance is prohibited unless state law expressly allows it, and any agreement made as part of the sale must be written into the policy.

No New York insurer, agent or broker may make a contract of insurance other than as plainly expressed in the policy, or pay or allow the insured, directly or indirectly, any rebate of the premium as an inducement to insure (N.Y. Ins. Law § 2324(a)).

New York’s rebating law exempts merchandise, periodical subscriptions or other valuable consideration worth no more than $25 (N.Y. Ins. Law § 2324(a)). Section 2324 does not apply to life, accident or health insurance subject to § 4224 (§ 2324(e)); for those, § 4224(c) sets the same rule and the same $25 allowance.

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:

Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind.

Errors & omissions

Errors & Omissions (E&O) insurance is a type of professional liability insurance that protects insurance agents if they are sued for negligent performance of their duties. E&O covers negligence and unintentional mistakes that cause financial harm to clients. It does not cover intentional misconduct, criminal acts, or regulatory fines.

Rebating

New York licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

The splitting or sharing of commissions with a licensed producer is allowed. Both parties must be licensed in the line of business in which the proposed commission is to be split. Under the NAIC’s model act, a commission may also be paid to an insurance agency, or to a person who does not sell, solicit or negotiate insurance. New York is narrower: a commission for placing life insurance or an annuity may be paid only to a licensed life insurance agent of the insurer or a licensed broker (N.Y. Ins. Law § 2114(a)), and one for other insurance only to a licensed agent of the insurer or the others the law names (§ 2115(a)). Referring someone to a licensed agent or broker without discussing policy terms, for pay not based on the purchase, is not acting as an agent.

Twisting

Providing false information or expressing derogatory ideas about the financial conditions of a competitor company with the intent to lapse or surrender an existing policy is a violation of the law. New York’s own rule, for life, accident and health insurance and annuities, bars misrepresenting a policy’s terms, benefits or advantages or the insurer’s financial condition, and making an incomplete comparison of policies to induce anyone to lapse, forfeit or surrender a policy (N.Y. Ins. Law § 2123(a)). Any written or oral statements used to induce the lapse, termination, exchange, or surrender of an insurance contract based on inaccurate information are prohibited.

Under the NAIC’s model act, twisting is a misrepresentation made to induce a policyholder to lapse, forfeit, surrender, exchange or convert a policy. A false or maliciously critical statement about a competing insurer’s finances, made to injure it, is defamation.

Unfair marketing practices

The Department of Financial Services is responsible for establishing minimum standards for the full and fair disclosure of policy content. The Department also requires the standardization and simplification of the terms used to describe insurance coverage. Advertising may not involve the following:

Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

This law repealed the parts of the Glass-Steagall Act of 1933 that kept commercial banks and securities firms apart, and allowed the consolidation of commercial banks, investment institutions and insurance companies. GLBA established a framework of responsibilities of federal and state regulators for these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.

McCarran-Ferguson Act

Federal law signed in 1945 in which Congress declared that the insurance industry would be regulated at the state level. Grants insurers a limited exemption from federal antitrust legislation. Since 2021 the exemption does not cover the business of health insurance, apart from narrow activities such as sharing historical loss data (15 U.S.C. § 1013(c)).

National Association of Insurance Commissioners (NAIC)

The U.S. standard-setting and regulatory support organization is created and governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA, 15 U.S.C. 1681) regulates consumer reporting agencies and the use of consumer reports, such as credit reports, MIB records and investigative reports, including in insurance underwriting.

When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

The federal Privacy Act of 1974 governs how federal agencies handle personal information. It does not apply to private insurers. An insurer’s use of an applicant’s personal information is governed by the FCRA, the Gramm-Leach-Bliley Act and state insurance privacy law.

In states that adopted the NAIC’s Insurance Information and Privacy Protection Model Act, an authorization to collect personal information signed with an application is valid for no more than 30 months for life, health or disability insurance and one year for property or casualty insurance.

Under the same model act, a person told of an adverse underwriting decision may ask in writing, within 90 business days of the notice, for the specific reasons for it, which must be given within 21 business days of the request.

Telemarketing

The National Do Not Call Registry is a list of telephone numbers whose owners do not want to receive telemarketing calls. Telemarketers may not call registered numbers without the person’s permission or an established business relationship, and unsolicited sales calls:

May be made only between 8 a.m. and 9 p.m. in the recipient’s local time
Must give the caller’s name, the name of the company the call is made for, and a telephone number or address at which that company can be contacted

CAN-SPAM

A commercial email must:

Be identified clearly as an advertisement
Carry accurate header information and a subject line that is not deceptive
Include the sender’s valid physical postal address
Offer a way to opt out, and the sender must honor an opt-out within 10 business days

Licensing

Must be 18+ and a NY resident before applying
Pre-licensing hours: 20 (life or A&H only), 40 (combined life/A&H or personal lines), 90 (P&C)
Passing exam score: 70%

Fingerprints/background check

Superintendent reviews background before licensing
Fingerprints often required for state/FBI criminal history check

Controlled business

Insurance on producer’s own/family/employer/controlled business interests
NY: license may be revoked if >10% of net commissions (12 months) come from closely related parties (§2103(i))
Agent may keep commission on own property only if ≤5% of total net commissions yearly (§2324(a)); doesn’t apply to life/A&H (§4224)

Non-resident license

No NY exam needed if licensed/in good standing in home state, applied properly, and reciprocity exists
Address change: file within 30 days with new state certification
Moving to new state: apply for resident license within 90 days; no repeat of PLE/exam for held lines

Temporary license

Issued without exam to keep business serviced (e.g., death/disability of producer, military deployment)
Sponsor may be required to supervise temporary licensee
NY: up to 90 days, renewable, max 15 months total (§2109(e))

Military service

Superintendent may accept renewal application filed by another person on licensee’s behalf if licensee is in military service (§2103(j)(8))

Renewal and reinstatement

License active only if renewed on time (fee + CE)
NY individual license expires on birthday every 2 years; renewable for 24 months (§2103(j)(2))
Reinstatement within 2 years avoids retaking exam (§2103(g)(7))

Continuing education

Required in all states, including NY, to renew major lines licenses
Hours set by state law/insurance department

Notice of change of name or address

NY: report address change within 30 days (§2134(a))
Report administrative/criminal actions within 30 days of final disposition or initial hearing
Must notify regulator before using any assumed business name

Company regulations

Insurer must be authorized (certificate of authority) by NY DFS
Application requires charter, financial statements, proof of capital/surplus, fees

Capital and surplus requirement

Insurer must maintain minimum capital/surplus to keep certificate of authority
NY: impaired domestic insurer given ≤90 days to fix impairment, barred from new policies meanwhile (§1310(a))
Impaired foreign stock insurer: notice/hearing may lead to license revocation (§1310(b))

Duties of the Superintendent of Financial Services

Chief executive of NY DFS; appointed by Governor with Senate consent
Duties: investigate complaints, refer for prosecution, monitor insurers, audit producers, collect fees, issue fines, approve forms/rates
Cannot arrest, issue injunctions, or sentence jail time (only starts process)

Suspend, revoke or non-renew

Grounds: false application info, fraud, felony conviction, commingling funds, unfair trade practices, forging signatures, cheating on exam, prior license revoked elsewhere

Cease and desist

Ordered when producer violates insurance laws
Does not suspend/revoke license, but requires stopping specified activity

Hearing and penalties

Right to notice and hearing before license action
NY: hearing at least 10 days after notice (§2110(b)); unfair practices hearing before order (§§2405(a), 2406)
NY penalty alternative: up to $500/offense, max $2,500 total per proceeding (§2127(a))

Unfair claims settlement practices

Violations when flagrant/repeated: delaying claims, failing to investigate, misusing altered application info, denying without investigation, settling for less than the application’s advertising material led the insured to expect

Policy forms

Insurers file forms with Superintendent
NY: life/A&H/annuity forms need approval before use (§3201(b)(1)); P&C forms usable after approval or 30 days unopposed (§2307(b))
Conflicting provisions read as amended to match law
Policy loan interest rates capped by state law

Record maintenance

Producers must keep transaction records (policies, insureds, premiums, changes) for Superintendent review

Fraudulent producer representation

Falsely claiming licensure via any public communication is a violation
Unlicensed activity may cause suspension/revocation of other licenses held

Misrepresentation

Prohibited: false/inaccurate policy illustrations, incomplete benefit comparisons, inducing lapse/surrender via false info (twisting)

False advertising

NAIC model act: untrue, deceptive or misleading statements about insurance business
Applies across all media; NAIC model: unfair if flagrant and in conscious disregard of the law, or a general business practice
New York bars each act its Insurance Law lists as a defined violation, such as misrepresenting the terms or benefits of a life, accident or health policy or an annuity, or advertising an unauthorized insurer (N.Y. Ins. Law §§ 2402(b), 2403)

Defamation

False/malicious statements harming insurer’s financial reputation = unfair trade practice
NY: willful untrue statements about insurer’s financial condition prohibited (§2604)

Boycott, coercion and intimidation

Concerted acts causing unreasonable restraint/monopoly in insurance business prohibited

False financial statements

Producers making false statements/inaccurate material facts on applications violate unfair trade practices law

Illegal inducements

Offering unlisted value to induce purchase prohibited unless law allows
NY: no rebates of premium allowed (§2324(a)); exemption for items ≤$25
Same $25 rule applies to life/A&H under §4224(c)

Unfair discrimination

Prohibited: differing treatment of same-class/equal-risk individuals in rates/benefits
Cannot discriminate based on sex, marital status, race, religion, national origin
P&C: cannot deny solely due to geography (unless justified) or physical/mental impairment
Many states also protect blind/partially blind individuals

Errors & omissions

E&O insurance protects agents from negligence lawsuits
Covers unintentional mistakes/financial harm; excludes intentional misconduct, crimes, fines

Rebating

NY producers barred from giving refunds/discounts/credits to induce purchase
Soliciting/negotiating insurance implies licensure

Sharing commission

Allowed only between licensed producers in same line
NY: life/annuity commissions only to licensed agents/brokers (§2114(a)); other insurance per §2115(a)
Referral without policy discussion, pay not tied to purchase, is not considered acting as agent

Twisting

Misrepresenting facts/finances to induce lapse or surrender is prohibited
NY: bars misrepresenting policy terms/insurer finances and incomplete comparisons (§2123(a))

Unfair marketing practices

DFS sets standards for full/fair disclosure and standardized terms
Advertising can’t falsely imply government/organization endorsement or misstate claims payment timing

Gramm-Leach Bliley Act (GLBA)

Repealed key parts of Glass-Steagall; allows merging of banks, insurers, investment firms
Establishes federal/state regulatory framework for combined financial services

McCarran-Ferguson Act

1945 law: insurance regulated at state level
Grants limited antitrust exemption; health insurance exemption ended in 2021 (except historical loss data sharing)

National Association of Insurance Commissioners (NAIC)

Standard-setting body governed by state insurance regulators
Supports peer review, model laws, and coordinated regulatory oversight

Fair Credit Reporting Act

Regulates use of consumer reports (credit, MIB, investigative) in underwriting
Investigative report request: disclose to consumer within 3 days
Adverse action: must notify consumer; 60 days to request free report; may also dispute errors

Privacy Act of 1974

Governs federal agencies’ handling of personal info; doesn’t apply to private insurers
Insurer privacy governed by FCRA, GLBA, state law
NAIC model: authorization valid up to 30 months (life/health/disability) or 1 year (P&C)

Telemarketing

Do Not Call Registry protects listed numbers from telemarketing
Calls allowed only 8 a.m.–9 p.m. local time
Must disclose caller’s name, the company the call is made for, and a number or address for it

CAN-SPAM

Commercial emails must be labeled as ads, have accurate headers/subject lines
Must include sender’s physical address
Opt-out required and must be honored within 10 business days

New York State Regulations & NAIC Insurance Law

Licensing

To apply for a New York resident producer’s license, you must:

Be at least 18 years old
Be a New York resident before you submit your application

Pre-licensing course and exam

A candidate must score at least 70% to pass the New York insurance licensing examination (PSI, New York State Insurance Candidate Information Bulletin).

Fingerprints/background check

Controlled business

Non-resident license

Is currently licensed as a resident, and in good standing, in the home state
Has applied (the home-state application or the Uniform Application) and paid the fees
Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:

The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
A member or employee of a business entity producer, on the death or disability of its designated producer
The designee of a producer entering active military service

Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.

The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.

Military service

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

A former New York agent who applies again within two years after the license terminated does not have to retake the written examination (N.Y. Ins. Law § 2103(g)(7)).

Continuing education

Notice of change of name or address

A New York licensee must inform the Superintendent of a change of address within 30 days of the change (N.Y. Ins. Law § 2134(a)).

Company regulations

Capital and surplus requirement

Duties of the Superintendent of Financial Services

The Superintendent establishes and enforces regulations in the New York insurance market in a manner that protects consumers and encourages economic development. Their duties include:

Investigate all claims and complaints of legal violations relating to insurance.
If the Superintendent finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution.
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
Audit the books and records of any resident producer as frequently as necessary. Under the NAIC’s examination model, the regulator may examine any person subject to its authority, nonresident producers included, as often as it considers appropriate.
Collect all fees associated with producers and insurers.
Determine and administer fines associated with violations for insurers and producers.
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
Approve documentation used by insurance companies such as forms and rates.

Sidenote

Know this...

Suspend, revoke or non-renew

The Superintendent has the authority to suspend, revoke, or refuse to renew a license for:

Providing false information on the application for an insurance license.
Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license. Under the NAIC’s model act, the ground is broader: providing incorrect, misleading, incomplete or materially untrue information in the license application.
Being found guilty of a violation or the noncompliance of insurance regulations and laws…
Committing fraud while attempting to obtain an insurance license.
Mingling funds received as an agent or broker with the producer’s own funds without the express consent of the principal (N.Y. Ins. Law § 2120(a)).
Providing false information in reference to the terms and conditions of an insurance contract.
Having been convicted of a felony.
Having admitted or been found to have committed any insurance unfair trade practice or fraud.
Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
Having had a prior insurance license revoked or suspended in a state other than New York. Under the NAIC’s model act, a license denied in another state is also a ground.
Using another person’s identity and forging their name on an insurance application.
Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

Hearing and penalties

Before revoking or suspending a producer’s license, the Superintendent must give the licensee notice and hold a hearing at least 10 days after the notice (N.Y. Ins. Law § 2110(b)).

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form.
Failing, in the case of claims denials or offers of compromise settlement, to promptly provide a reasonable and accurate explanation of the basis for such actions.
Refusing to pay claims without conducting a reasonable investigation.
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.
Denying a claim without conducting a thorough investigation.
Attempting to settle or settling a claim for less than the amount a reasonable person would believe the insured or beneficiary was entitled to by reference to written or printed advertising material accompanying or made part of an application.

Policy forms

Insurers file their policy forms with the Superintendent.

The interest rate an insurer may charge on a life insurance policy loan is also limited by state law.

Record maintenance

A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Superintendent’s inspection.

Fraudulent producer representation

A producer found guilty of conducting business in New York in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited. Under the NAIC’s model act, any estimate, illustration or statement that misrepresents a policy’s benefits, advantages, conditions or terms is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation as well (twisting).

False advertising

Defamation

Boycott, coercion and intimidation

False financial statements

Illegal inducements

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:

Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind.

Errors & omissions

Rebating

New York licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

Twisting

Unfair marketing practices

Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

McCarran-Ferguson Act

National Association of Insurance Commissioners (NAIC)

Fair Credit Reporting Act

When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

Telemarketing

May be made only between 8 a.m. and 9 p.m. in the recipient’s local time
Must give the caller’s name, the name of the company the call is made for, and a telephone number or address at which that company can be contacted

CAN-SPAM

A commercial email must:

Be identified clearly as an advertisement
Carry accurate header information and a subject line that is not deceptive
Include the sender’s valid physical postal address
Offer a way to opt out, and the sender must honor an opt-out within 10 business days

New York State Regulations & NAIC Insurance Law

Licensing

To apply for a New York resident producer’s license, you must:

Be at least 18 years old
Be a New York resident before you submit your application

Pre-licensing course and exam

A candidate must score at least 70% to pass the New York insurance licensing examination (PSI, New York State Insurance Candidate Information Bulletin).

Fingerprints/background check

Controlled business

Non-resident license

Is currently licensed as a resident, and in good standing, in the home state
Has applied (the home-state application or the Uniform Application) and paid the fees
Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:

The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
A member or employee of a business entity producer, on the death or disability of its designated producer
The designee of a producer entering active military service

Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.

The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.

Military service

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

A former New York agent who applies again within two years after the license terminated does not have to retake the written examination (N.Y. Ins. Law § 2103(g)(7)).

Continuing education

Notice of change of name or address

A New York licensee must inform the Superintendent of a change of address within 30 days of the change (N.Y. Ins. Law § 2134(a)).

Company regulations

Capital and surplus requirement

Duties of the Superintendent of Financial Services

The Superintendent establishes and enforces regulations in the New York insurance market in a manner that protects consumers and encourages economic development. Their duties include:

Investigate all claims and complaints of legal violations relating to insurance.
If the Superintendent finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution.
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
Audit the books and records of any resident producer as frequently as necessary. Under the NAIC’s examination model, the regulator may examine any person subject to its authority, nonresident producers included, as often as it considers appropriate.
Collect all fees associated with producers and insurers.
Determine and administer fines associated with violations for insurers and producers.
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
Approve documentation used by insurance companies such as forms and rates.

Sidenote

Know this...

Suspend, revoke or non-renew

The Superintendent has the authority to suspend, revoke, or refuse to renew a license for:

Providing false information on the application for an insurance license.
Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license. Under the NAIC’s model act, the ground is broader: providing incorrect, misleading, incomplete or materially untrue information in the license application.
Being found guilty of a violation or the noncompliance of insurance regulations and laws…
Committing fraud while attempting to obtain an insurance license.
Mingling funds received as an agent or broker with the producer’s own funds without the express consent of the principal (N.Y. Ins. Law § 2120(a)).
Providing false information in reference to the terms and conditions of an insurance contract.
Having been convicted of a felony.
Having admitted or been found to have committed any insurance unfair trade practice or fraud.
Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
Having had a prior insurance license revoked or suspended in a state other than New York. Under the NAIC’s model act, a license denied in another state is also a ground.
Using another person’s identity and forging their name on an insurance application.
Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

Hearing and penalties

Before revoking or suspending a producer’s license, the Superintendent must give the licensee notice and hold a hearing at least 10 days after the notice (N.Y. Ins. Law § 2110(b)).

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form.
Failing, in the case of claims denials or offers of compromise settlement, to promptly provide a reasonable and accurate explanation of the basis for such actions.
Refusing to pay claims without conducting a reasonable investigation.
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.
Denying a claim without conducting a thorough investigation.
Attempting to settle or settling a claim for less than the amount a reasonable person would believe the insured or beneficiary was entitled to by reference to written or printed advertising material accompanying or made part of an application.

Policy forms

Insurers file their policy forms with the Superintendent.

The interest rate an insurer may charge on a life insurance policy loan is also limited by state law.

Record maintenance

A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Superintendent’s inspection.

Fraudulent producer representation

A producer found guilty of conducting business in New York in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited. Under the NAIC’s model act, any estimate, illustration or statement that misrepresents a policy’s benefits, advantages, conditions or terms is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation as well (twisting).

False advertising

Defamation

Boycott, coercion and intimidation

False financial statements

Illegal inducements

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:

Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind.

Errors & omissions

Rebating

New York licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

Twisting

Unfair marketing practices

Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

McCarran-Ferguson Act

National Association of Insurance Commissioners (NAIC)

Fair Credit Reporting Act

When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

Telemarketing

May be made only between 8 a.m. and 9 p.m. in the recipient’s local time
Must give the caller’s name, the name of the company the call is made for, and a telephone number or address at which that company can be contacted

CAN-SPAM

A commercial email must:

Be identified clearly as an advertisement
Carry accurate header information and a subject line that is not deceptive
Include the sender’s valid physical postal address
Offer a way to opt out, and the sender must honor an opt-out within 10 business days

Licensing

Must be 18+ and a NY resident before applying
Pre-licensing hours: 20 (life or A&H only), 40 (combined life/A&H or personal lines), 90 (P&C)
Passing exam score: 70%

Fingerprints/background check

Superintendent reviews background before licensing
Fingerprints often required for state/FBI criminal history check

Controlled business

Insurance on producer’s own/family/employer/controlled business interests
NY: license may be revoked if >10% of net commissions (12 months) come from closely related parties (§2103(i))
Agent may keep commission on own property only if ≤5% of total net commissions yearly (§2324(a)); doesn’t apply to life/A&H (§4224)

Non-resident license

No NY exam needed if licensed/in good standing in home state, applied properly, and reciprocity exists
Address change: file within 30 days with new state certification
Moving to new state: apply for resident license within 90 days; no repeat of PLE/exam for held lines

Temporary license

Issued without exam to keep business serviced (e.g., death/disability of producer, military deployment)
Sponsor may be required to supervise temporary licensee
NY: up to 90 days, renewable, max 15 months total (§2109(e))

Military service

Superintendent may accept renewal application filed by another person on licensee’s behalf if licensee is in military service (§2103(j)(8))

Renewal and reinstatement

License active only if renewed on time (fee + CE)
NY individual license expires on birthday every 2 years; renewable for 24 months (§2103(j)(2))
Reinstatement within 2 years avoids retaking exam (§2103(g)(7))

Continuing education

Required in all states, including NY, to renew major lines licenses
Hours set by state law/insurance department

Notice of change of name or address

NY: report address change within 30 days (§2134(a))
Report administrative/criminal actions within 30 days of final disposition or initial hearing
Must notify regulator before using any assumed business name

Company regulations

Insurer must be authorized (certificate of authority) by NY DFS
Application requires charter, financial statements, proof of capital/surplus, fees

Capital and surplus requirement

Insurer must maintain minimum capital/surplus to keep certificate of authority
NY: impaired domestic insurer given ≤90 days to fix impairment, barred from new policies meanwhile (§1310(a))
Impaired foreign stock insurer: notice/hearing may lead to license revocation (§1310(b))

Duties of the Superintendent of Financial Services

Chief executive of NY DFS; appointed by Governor with Senate consent
Duties: investigate complaints, refer for prosecution, monitor insurers, audit producers, collect fees, issue fines, approve forms/rates
Cannot arrest, issue injunctions, or sentence jail time (only starts process)

Suspend, revoke or non-renew

Grounds: false application info, fraud, felony conviction, commingling funds, unfair trade practices, forging signatures, cheating on exam, prior license revoked elsewhere

Cease and desist

Ordered when producer violates insurance laws
Does not suspend/revoke license, but requires stopping specified activity

Hearing and penalties

Right to notice and hearing before license action
NY: hearing at least 10 days after notice (§2110(b)); unfair practices hearing before order (§§2405(a), 2406)
NY penalty alternative: up to $500/offense, max $2,500 total per proceeding (§2127(a))

Unfair claims settlement practices

Violations when flagrant/repeated: delaying claims, failing to investigate, misusing altered application info, denying without investigation, settling for less than the application’s advertising material led the insured to expect

Policy forms

Insurers file forms with Superintendent
NY: life/A&H/annuity forms need approval before use (§3201(b)(1)); P&C forms usable after approval or 30 days unopposed (§2307(b))
Conflicting provisions read as amended to match law
Policy loan interest rates capped by state law

Record maintenance

Producers must keep transaction records (policies, insureds, premiums, changes) for Superintendent review

Fraudulent producer representation

Falsely claiming licensure via any public communication is a violation
Unlicensed activity may cause suspension/revocation of other licenses held

Misrepresentation

Prohibited: false/inaccurate policy illustrations, incomplete benefit comparisons, inducing lapse/surrender via false info (twisting)

False advertising

NAIC model act: untrue, deceptive or misleading statements about insurance business
Applies across all media; NAIC model: unfair if flagrant and in conscious disregard of the law, or a general business practice
New York bars each act its Insurance Law lists as a defined violation, such as misrepresenting the terms or benefits of a life, accident or health policy or an annuity, or advertising an unauthorized insurer (N.Y. Ins. Law §§ 2402(b), 2403)

Defamation

False/malicious statements harming insurer’s financial reputation = unfair trade practice
NY: willful untrue statements about insurer’s financial condition prohibited (§2604)

Boycott, coercion and intimidation

Concerted acts causing unreasonable restraint/monopoly in insurance business prohibited

False financial statements

Producers making false statements/inaccurate material facts on applications violate unfair trade practices law

Illegal inducements

Offering unlisted value to induce purchase prohibited unless law allows
NY: no rebates of premium allowed (§2324(a)); exemption for items ≤$25
Same $25 rule applies to life/A&H under §4224(c)

Unfair discrimination

Prohibited: differing treatment of same-class/equal-risk individuals in rates/benefits
Cannot discriminate based on sex, marital status, race, religion, national origin
P&C: cannot deny solely due to geography (unless justified) or physical/mental impairment
Many states also protect blind/partially blind individuals

Errors & omissions

E&O insurance protects agents from negligence lawsuits
Covers unintentional mistakes/financial harm; excludes intentional misconduct, crimes, fines

Rebating

NY producers barred from giving refunds/discounts/credits to induce purchase
Soliciting/negotiating insurance implies licensure

Sharing commission

Allowed only between licensed producers in same line
NY: life/annuity commissions only to licensed agents/brokers (§2114(a)); other insurance per §2115(a)
Referral without policy discussion, pay not tied to purchase, is not considered acting as agent

Twisting

Misrepresenting facts/finances to induce lapse or surrender is prohibited
NY: bars misrepresenting policy terms/insurer finances and incomplete comparisons (§2123(a))

Unfair marketing practices

DFS sets standards for full/fair disclosure and standardized terms
Advertising can’t falsely imply government/organization endorsement or misstate claims payment timing

Gramm-Leach Bliley Act (GLBA)

Repealed key parts of Glass-Steagall; allows merging of banks, insurers, investment firms
Establishes federal/state regulatory framework for combined financial services

McCarran-Ferguson Act

1945 law: insurance regulated at state level
Grants limited antitrust exemption; health insurance exemption ended in 2021 (except historical loss data sharing)

National Association of Insurance Commissioners (NAIC)

Standard-setting body governed by state insurance regulators
Supports peer review, model laws, and coordinated regulatory oversight

Fair Credit Reporting Act

Regulates use of consumer reports (credit, MIB, investigative) in underwriting
Investigative report request: disclose to consumer within 3 days
Adverse action: must notify consumer; 60 days to request free report; may also dispute errors

Privacy Act of 1974

Governs federal agencies’ handling of personal info; doesn’t apply to private insurers
Insurer privacy governed by FCRA, GLBA, state law
NAIC model: authorization valid up to 30 months (life/health/disability) or 1 year (P&C)

Telemarketing

Do Not Call Registry protects listed numbers from telemarketing
Calls allowed only 8 a.m.–9 p.m. local time
Must disclose caller’s name, the company the call is made for, and a number or address for it

CAN-SPAM

Commercial emails must be labeled as ads, have accurate headers/subject lines
Must include sender’s physical address
Opt-out required and must be honored within 10 business days

New York State Regulations & NAIC Insurance Law

Licensing

To apply for a New York resident producer’s license, you must:

Be at least 18 years old
Be a New York resident before you submit your application

Pre-licensing course and exam

A candidate must score at least 70% to pass the New York insurance licensing examination (PSI, New York State Insurance Candidate Information Bulletin).

Fingerprints/background check

Controlled business

Non-resident license

Is currently licensed as a resident, and in good standing, in the home state
Has applied (the home-state application or the Uniform Application) and paid the fees
Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:

The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
A member or employee of a business entity producer, on the death or disability of its designated producer
The designee of a producer entering active military service

Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.

The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.

Military service

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

A former New York agent who applies again within two years after the license terminated does not have to retake the written examination (N.Y. Ins. Law § 2103(g)(7)).

Continuing education

Notice of change of name or address

A New York licensee must inform the Superintendent of a change of address within 30 days of the change (N.Y. Ins. Law § 2134(a)).

Company regulations

Capital and surplus requirement

Duties of the Superintendent of Financial Services

The Superintendent establishes and enforces regulations in the New York insurance market in a manner that protects consumers and encourages economic development. Their duties include:

Investigate all claims and complaints of legal violations relating to insurance.
If the Superintendent finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution.
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
Audit the books and records of any resident producer as frequently as necessary. Under the NAIC’s examination model, the regulator may examine any person subject to its authority, nonresident producers included, as often as it considers appropriate.
Collect all fees associated with producers and insurers.
Determine and administer fines associated with violations for insurers and producers.
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
Approve documentation used by insurance companies such as forms and rates.

Sidenote

Know this...

Suspend, revoke or non-renew

The Superintendent has the authority to suspend, revoke, or refuse to renew a license for:

Providing false information on the application for an insurance license.
Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license. Under the NAIC’s model act, the ground is broader: providing incorrect, misleading, incomplete or materially untrue information in the license application.
Being found guilty of a violation or the noncompliance of insurance regulations and laws…
Committing fraud while attempting to obtain an insurance license.
Mingling funds received as an agent or broker with the producer’s own funds without the express consent of the principal (N.Y. Ins. Law § 2120(a)).
Providing false information in reference to the terms and conditions of an insurance contract.
Having been convicted of a felony.
Having admitted or been found to have committed any insurance unfair trade practice or fraud.
Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
Having had a prior insurance license revoked or suspended in a state other than New York. Under the NAIC’s model act, a license denied in another state is also a ground.
Using another person’s identity and forging their name on an insurance application.
Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

Hearing and penalties

Before revoking or suspending a producer’s license, the Superintendent must give the licensee notice and hold a hearing at least 10 days after the notice (N.Y. Ins. Law § 2110(b)).

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form.
Failing, in the case of claims denials or offers of compromise settlement, to promptly provide a reasonable and accurate explanation of the basis for such actions.
Refusing to pay claims without conducting a reasonable investigation.
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.
Denying a claim without conducting a thorough investigation.
Attempting to settle or settling a claim for less than the amount a reasonable person would believe the insured or beneficiary was entitled to by reference to written or printed advertising material accompanying or made part of an application.

Policy forms

Insurers file their policy forms with the Superintendent.

The interest rate an insurer may charge on a life insurance policy loan is also limited by state law.

Record maintenance

A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Superintendent’s inspection.

Fraudulent producer representation

A producer found guilty of conducting business in New York in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited. Under the NAIC’s model act, any estimate, illustration or statement that misrepresents a policy’s benefits, advantages, conditions or terms is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation as well (twisting).

False advertising

Defamation

Boycott, coercion and intimidation

False financial statements

Illegal inducements

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:

Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind.

Errors & omissions

Rebating

New York licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

Twisting

Unfair marketing practices

Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

McCarran-Ferguson Act

National Association of Insurance Commissioners (NAIC)

Fair Credit Reporting Act

When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

Telemarketing

May be made only between 8 a.m. and 9 p.m. in the recipient’s local time
Must give the caller’s name, the name of the company the call is made for, and a telephone number or address at which that company can be contacted

CAN-SPAM

A commercial email must:

Be identified clearly as an advertisement
Carry accurate header information and a subject line that is not deceptive
Include the sender’s valid physical postal address
Offer a way to opt out, and the sender must honor an opt-out within 10 business days

Licensing

Must be 18+ and a NY resident before applying
Pre-licensing hours: 20 (life or A&H only), 40 (combined life/A&H or personal lines), 90 (P&C)
Passing exam score: 70%

Fingerprints/background check

Superintendent reviews background before licensing
Fingerprints often required for state/FBI criminal history check

Controlled business

Insurance on producer’s own/family/employer/controlled business interests
NY: license may be revoked if >10% of net commissions (12 months) come from closely related parties (§2103(i))
Agent may keep commission on own property only if ≤5% of total net commissions yearly (§2324(a)); doesn’t apply to life/A&H (§4224)

Non-resident license

No NY exam needed if licensed/in good standing in home state, applied properly, and reciprocity exists
Address change: file within 30 days with new state certification
Moving to new state: apply for resident license within 90 days; no repeat of PLE/exam for held lines

Temporary license

Issued without exam to keep business serviced (e.g., death/disability of producer, military deployment)
Sponsor may be required to supervise temporary licensee
NY: up to 90 days, renewable, max 15 months total (§2109(e))

Military service

Superintendent may accept renewal application filed by another person on licensee’s behalf if licensee is in military service (§2103(j)(8))

Renewal and reinstatement

License active only if renewed on time (fee + CE)
NY individual license expires on birthday every 2 years; renewable for 24 months (§2103(j)(2))
Reinstatement within 2 years avoids retaking exam (§2103(g)(7))

Continuing education

Required in all states, including NY, to renew major lines licenses
Hours set by state law/insurance department

Notice of change of name or address

NY: report address change within 30 days (§2134(a))
Report administrative/criminal actions within 30 days of final disposition or initial hearing
Must notify regulator before using any assumed business name

Company regulations

Insurer must be authorized (certificate of authority) by NY DFS
Application requires charter, financial statements, proof of capital/surplus, fees

Capital and surplus requirement

Insurer must maintain minimum capital/surplus to keep certificate of authority
NY: impaired domestic insurer given ≤90 days to fix impairment, barred from new policies meanwhile (§1310(a))
Impaired foreign stock insurer: notice/hearing may lead to license revocation (§1310(b))

Duties of the Superintendent of Financial Services

Chief executive of NY DFS; appointed by Governor with Senate consent
Duties: investigate complaints, refer for prosecution, monitor insurers, audit producers, collect fees, issue fines, approve forms/rates
Cannot arrest, issue injunctions, or sentence jail time (only starts process)

Suspend, revoke or non-renew

Grounds: false application info, fraud, felony conviction, commingling funds, unfair trade practices, forging signatures, cheating on exam, prior license revoked elsewhere

Cease and desist

Ordered when producer violates insurance laws
Does not suspend/revoke license, but requires stopping specified activity

Hearing and penalties

Right to notice and hearing before license action
NY: hearing at least 10 days after notice (§2110(b)); unfair practices hearing before order (§§2405(a), 2406)
NY penalty alternative: up to $500/offense, max $2,500 total per proceeding (§2127(a))

Unfair claims settlement practices

Violations when flagrant/repeated: delaying claims, failing to investigate, misusing altered application info, denying without investigation, settling for less than the application’s advertising material led the insured to expect

Policy forms

Insurers file forms with Superintendent
NY: life/A&H/annuity forms need approval before use (§3201(b)(1)); P&C forms usable after approval or 30 days unopposed (§2307(b))
Conflicting provisions read as amended to match law
Policy loan interest rates capped by state law

Record maintenance

Producers must keep transaction records (policies, insureds, premiums, changes) for Superintendent review

Fraudulent producer representation

Falsely claiming licensure via any public communication is a violation
Unlicensed activity may cause suspension/revocation of other licenses held

Misrepresentation

Prohibited: false/inaccurate policy illustrations, incomplete benefit comparisons, inducing lapse/surrender via false info (twisting)

False advertising

NAIC model act: untrue, deceptive or misleading statements about insurance business
Applies across all media; NAIC model: unfair if flagrant and in conscious disregard of the law, or a general business practice
New York bars each act its Insurance Law lists as a defined violation, such as misrepresenting the terms or benefits of a life, accident or health policy or an annuity, or advertising an unauthorized insurer (N.Y. Ins. Law §§ 2402(b), 2403)

Defamation

False/malicious statements harming insurer’s financial reputation = unfair trade practice
NY: willful untrue statements about insurer’s financial condition prohibited (§2604)

Boycott, coercion and intimidation

Concerted acts causing unreasonable restraint/monopoly in insurance business prohibited

False financial statements

Producers making false statements/inaccurate material facts on applications violate unfair trade practices law

Illegal inducements

Offering unlisted value to induce purchase prohibited unless law allows
NY: no rebates of premium allowed (§2324(a)); exemption for items ≤$25
Same $25 rule applies to life/A&H under §4224(c)

Unfair discrimination

Prohibited: differing treatment of same-class/equal-risk individuals in rates/benefits
Cannot discriminate based on sex, marital status, race, religion, national origin
P&C: cannot deny solely due to geography (unless justified) or physical/mental impairment
Many states also protect blind/partially blind individuals

Errors & omissions

E&O insurance protects agents from negligence lawsuits
Covers unintentional mistakes/financial harm; excludes intentional misconduct, crimes, fines

Rebating

NY producers barred from giving refunds/discounts/credits to induce purchase
Soliciting/negotiating insurance implies licensure

Sharing commission

Allowed only between licensed producers in same line
NY: life/annuity commissions only to licensed agents/brokers (§2114(a)); other insurance per §2115(a)
Referral without policy discussion, pay not tied to purchase, is not considered acting as agent

Twisting

Misrepresenting facts/finances to induce lapse or surrender is prohibited
NY: bars misrepresenting policy terms/insurer finances and incomplete comparisons (§2123(a))

Unfair marketing practices

DFS sets standards for full/fair disclosure and standardized terms
Advertising can’t falsely imply government/organization endorsement or misstate claims payment timing

Gramm-Leach Bliley Act (GLBA)

Repealed key parts of Glass-Steagall; allows merging of banks, insurers, investment firms
Establishes federal/state regulatory framework for combined financial services

McCarran-Ferguson Act

1945 law: insurance regulated at state level
Grants limited antitrust exemption; health insurance exemption ended in 2021 (except historical loss data sharing)

National Association of Insurance Commissioners (NAIC)

Standard-setting body governed by state insurance regulators
Supports peer review, model laws, and coordinated regulatory oversight

Fair Credit Reporting Act

Regulates use of consumer reports (credit, MIB, investigative) in underwriting
Investigative report request: disclose to consumer within 3 days
Adverse action: must notify consumer; 60 days to request free report; may also dispute errors

Privacy Act of 1974

Governs federal agencies’ handling of personal info; doesn’t apply to private insurers
Insurer privacy governed by FCRA, GLBA, state law
NAIC model: authorization valid up to 30 months (life/health/disability) or 1 year (P&C)

Telemarketing

Do Not Call Registry protects listed numbers from telemarketing
Calls allowed only 8 a.m.–9 p.m. local time
Must disclose caller’s name, the company the call is made for, and a number or address for it

CAN-SPAM

Commercial emails must be labeled as ads, have accurate headers/subject lines
Must include sender’s physical address
Opt-out required and must be honored within 10 business days