As an initial matter, New York Insurance Law does not define or otherwise address the role of a CSR in an insurance agency or brokerage.  Instead, the Insurance Law only addresses when a person must hold an insurance agent or broker's license.  Therefore, from the point of view of the Insurance Law and the New York Department of Financial Services (NYDFS), there is no difference between an unlicensed CSR, receptionist, or any other unlicensed person who is working at an insurance agency or brokerage.

With that in mind, unlicensed CSRs and any other unlicensed employees are typically limited to providing technical advice and assistance to licensed individuals and are not permitted to engage in the sale, solicitation, or negotiation[1] of insurance.  However, an unlicensed CSR can engage in administrative, managerial, and clerical activities which are only indirectly related to the sale, solicitation, or negotiation of insurance.

While there is no comprehensive list of all activities an unlicensed CSR, or any other unlicensed employee, can engage in the NYDFS has approved the following list of activities as things that an unlicensed employee may perform, at least so long as the unlicensed employee is not compensated based upon sales, there is no discussion of coverage, and the employee is supervised by a licensee and/or sub-licensee holding the appropriate license:

• Answering phones;
• Scheduling appointments (provided there is no discussion about insurance coverage, cost or related issues);
• Maintaining files and records;
• Referring a prospect or customer to an agent or a licensed sales producer, where appropriate;
• Word processing and data entry;
• Assisting with advertising and mailing campaigns;
• Accepting payments on existing policies that are made in the office in situation in which there are no coverage discussions;
• Securing expiration dates from prospects limited to the date the policy expires and the current carrier, and whether they would be interested in speaking to the agent or a licensed sales producer;
• Taking loss information from customers and reporting this information to the claims department;
  
• Handling changes to existing policies that do not involve any discussion of coverages or require the binding of additional coverages, increasing or decreasing coverages, removal of coverages, or the addition of vehicles;
  
• Informing insureds as to coverages indicated in the policy record; and
• Receiving requests for coverage for transmittal to the agent or a licensed sales producer.[2]
  
  

The above is not intended as a comprehensive list of all permitted activities and there may be other activities that an unlicensed CSR may engage in without holding an appropriate license.  However, as a general rule, an unlicensed CSR should never receive commission for their work or otherwise have their compensation tied directly to sales.  There are also ways of engaging in these activities that would likely require a license (e.g., answering the phone by asking if the caller would like to buy insurance or discussing insurance coverage).

It is also important to note that an insurer may restrict or prohibit certain activities of non-licensed employees at an agency or brokerage.  In its December 1, 2004, OGC Opinion, the NYDFS stated the following on this issue:

Moreover, an insurer may restrict or prohibit the delegation of certain activities or duties to non-licensees, notwithstanding the statutory exemptions. Thus, an insurer may establish a list of non-delegable or unauthorized activities with respect to such insurer, even if the Insurance Law permits non-licensees to otherwise engage in such activities. A licensee that subsequently violates an insurer's prohibition or restriction on delegation may be found by the Superintendent to be acting in an untrustworthy or incompetent manner. 

When an unlicensed CSR engages in the approved activities, he or she must do so on behalf of a licensee and/or sub-licensee.  The licensee and/or sub-licensee supervising the unlicensed employee must make sure the unlicensed person is adequately trained, trustworthy, and aware of the limits on his or her ability to act on behalf of the licensee and/or sub-licensee.

There are, of course, some cases where it is not clear whether a license is required to engage in a particular activity.  Some insurance agencies and brokerages avoid this problem by just ensuring that all of their CSRs are also licensed.  However, if you find yourself in one of these cases where you are unsure whether the activities of an employee are permissible, it is best to discuss the situation with an attorney with experience handling insurance licensing, such as the attorneys in our office.

As with all licensing issues, every state has its own particular laws.  If your agency or brokerage is placing coverage for risks in other states, it is prudent to make sure that you understand the licensing requirements of that particular state.  Doing so will help ensure that the activities of employees are in compliance with the state licensing requirements.

Submitted by:
James C. Keidel, Esq.
Keidel, Weldon & Cunningham, LLP

[1] NY Insurance law section 2101 provides as follows: “In this article, 'negotiate' or 'negotiation' means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from licensed insurers, fraternal benefit societies or health maintenance organizations for purchasers."

[2] See, New York State Department of Financial Services Office of General Counsel Opinion on the Permissible Duties of Unlicensed Customer Service Representatives of an Agency or Brokerage, issued December 1,2004.