NY Insurance Law regarding terminations of insurance agents and brokers

[DLJ Insurance Group]

Jurisdiction

New York

Anyone familiar with NY Insurance law 2112D - appointment terminations. A cousin of mine worked for a local agency in upstate NY. She was let go from the agency last year due to lack
of production. She received a letter from NYS Insurance dept. asking about the details of her termination. The insurance dept. told her that her appointment was terminated for cause from the insurer. She had no knowledge of this termination. She suspected that the agency knew but did not tell her. In reading the insurance laws in NYS, in particular NY Insurance law 2112D, it states when an agent is terminated for cause, the insurer has to send the agent a
statement of facts regarding the termination via certified mail, return receipt within 15 days of the termination. She never received any notification, regular or certified mail. She is really nervous about this. She came to me for advise since I am in the insurance industry for over 30 years. Is this termination even valid since the insurer failed to notify her??

 

[Tax Counsel]

Anyone familiar with NY Insurance law 2112D - appointment terminations.

It's NY insurance law section 2112(d). The failure of the insurer to send a copy of the filing with the insurance department of the cause for termination doesn't make the termination invalid. But it does appear that the time period for the agent (producer) to respond to the filing is triggered by the sending of the notice. In other words, if the notice was not sent as required it appears that the time for agent to respond has not started yet and she should still be able to submit any rebuttal she wishes to make.

 

[adjusterjack]

She came to me for advise since I am in the insurance industry for over 30 years.

Please have your cousin register at

Insurance Forums (insurance-forums.com)

And post her situation personally in the appropriate forum. There may be NY insurance agents there who have experience with this issue.

 

[DLJ Insurance Group]

Thank you so much for your reply back. What my cousin is really concerned about is that she renewed her insurance licenses on 08/13/20.
On the renewal application there is a question on there - "have you ever had a business relationship with an insurance agency contract terminated for alleged misconduct (for cause)?" She answered "no" to this question because she had no knowledge that she was terminated for cause. She was notified by the insurance department on 08/20/20 that she was terminated for cause on 06/03/20. She told the insurance dept. she had no
knowledge of this termination for cause. She asked the insurance dept. to find out the facts regarding the termination. The insurance department replied back to her on 12/01/20 with the facts. She then provided a rebuttal back to them regarding the termination. She has never heard back from the insurance department since.

She is concerned that she will get penalized from the insurance dept. for answering "no" to that question on her renewal application. I keep telling her that she should not worry because the insurance company failed to notify you that you were terminated for cause so you had no knowledge of this when you completed your application.

Can I please have your thoughts regarding this matter??

 

[adjusterjack]

The insurance department replied back to her on 12/01/20 with the facts. She then provided a rebuttal back to them regarding the termination. She has never heard back from the insurance department since.

Did she think to call up and ask whoever she was talking to originally?

She can go online to the DOI and check her license status. Maybe even the status of the investigation.

She is concerned that she will get penalized from the insurance dept. for answering "no" to that question on her renewal application.

After 10 months? If it hasn't happened by now, it probably won't.

And if she is so concerned, tell her to call the DOI for the disposition. Seems like common sense to me.