Agents work on behalf of the insurers who hire them. Brokers are the legal representatives of the annuity buyer (or prospective purchasers). A broker solicits and accepts insurance applications before placing the coverage with an insurer.
Can insurance producers share commissions?
On December 6, 2006, the Office of General Counsel, representing the New York State Insurance Department, issued the following opinion.
Questions Presented:
Is it permissible for a validly appointed and licensed life insurance agent to split commissions on the sale of a life insurance policy with a relative of the insured who is a licensed insurance agent but has not been designated as an agent for the insurer that offers the policy?
Conclusion:
No, a validly appointed and licensed life insurance agent may not share commissions with another insurance agent unless the latter was a licensed representative of the insurer that wrote the policy at the time of the solicitation, negotiation, and/or sale of the policy. An insurance agent who shares a commission with a non-appointed agent would be in violation of New York Insurance Law 2114. (McKinney 2006). Furthermore, even if both insurance agents were licensed agents of the insurer, the commission sharing would appear to be an enticement that is banned by New York Insurance Law 4224(c) under the conditions described below (McKinney Supp. 2006).
Facts:
An insurer duly appointed a licensed life insurance agent. A prospective customer expressed anxiety about acquiring a life insurance policy from the agent because the client has a relative who is a life insurance agent but has not been appointed by the insurer. The agent indicated that they agreed to split the insurance commissions with the relative in order to alleviate the prospective client’s fears, and that they had already made one payment as stipulated in the agreement.
Who can a life insurance producer share commissions with?
This set of terms includes (30) Who is eligible to get a portion of the commission from the sale of a life insurance policy? Insurance for the producer’s life or property, as well as the lives and property of his or her family and business associates.
What is an annuity transaction?
An annuitytransaction is an action made by an annuity owner relating to an annuity, as you taught in Annuities 101. Certain annuity transactions result in one of two additional MA-LTC requirements being applied to the annuity. Throughout the rest of this course, we’ll refer to these transactions as MA-LTC annuity transactions.
An MA-LTC annuity transaction is one in which the owner of the annuity has performed a qualified action on the annuity during the lookback period or when the person or the person’s spouse was an MA-LTC enrollee.
When an agent violates insurance Code with respect to an annuity sale to a senior the first time?
(a) Any broker, agent, or other person or entity involved in insurance transactions who violates this article, other than an insurer, faces an administrative penalty of at least one thousand dollars ($1,000) for the first offense.
Which action by an insurance agent is considered rebating?
Rebating is giving the insured a percentage of the premium or the agent’s/commission broker’s on the premium, as well as additional incentives to do business with a specific insurer.
What happens when an insurance policy is backdated?
When an insurance coverage is backdated, what happens? When you backdate your life insurance policy, you obtain lower rates based on your real age rather than your physical age or insurance age. To account for the policy’s backdate, you’ll have to pay higher premiums up front.
What is insurance commission sharing?
When a licensed agent or agency that does not have an appointment with a particular insurance company refers an application for insurance to another agent or managing general agent who does, and the referral results in the issuance of a policy of insurance written by that company, the agent who has the appointment may share the commission with the agent who does not.
The representative (without an appointment from the company that takes the risk or issues a policy)
- may deliver the policy and any endorsements to the insured and shall be regarded as the insured’s agent for such actions and shall not be recognized as the company’s agent for any purpose.
Upon receiving such a recommendation, the agent who does not have an appointment with the company that handles the risk must inform the insured in writing that he or she is not permitted to bind coverage, execute, or issue a policy for the subject risk.
Without an appointment from a specific insurer, an agent cannot sign or execute policies, issue binders, endorsements, or any other form of coverage on that insurer’s behalf.
An agent who accepts business from other agents must get a Managing General Agent’s license if the agency accepts more than $500,000 in annual premium volume or if the brokered business constitutes 50% or more of the agent’s total business, according to Chapter 4053 of the Texas Insurance Code.
- RULE 19.905 Appointments to Referral Businesses and Insurance Companies – Texas Administrative Code
Who can share commissions?
(1)(a) An agent may only split or share commissions with other agents who have been appointed and licensed to write the same type or types of insurance, or with a customer representative.
(b) This section shall not be construed to prohibit the payment or receipt of renewal commissions, other deferred commissions, or pensions to or by any person solely because that person has ceased to hold a license to act as an insurance agent or customer representative, nor shall it prohibit the payment of renewal commissions or other deferred commissions to any incorporated insurance agency solely because any of its stockholders has ceased to hold a license to act as an insurance agent or customer representative.
(2) Unless the corporation is an insurance agency, no such licensee may split a commission with it.
(3) A general lines agent may share commissions from the sale of crop hail or multiple-peril crop insurance with a production credit association or a federal land bank association organized under 12 U.S.C.A. ss. 2091-2098 if the association has specifically approved the insurance activity by its employees. The general lines agent and the corporation paying the commission will determine the amount of commission to be divided.
(4) Any licensee who violates or participates in a violation of this section will have his or her license revoked, in addition to any other penalties that may be imposed.
s. 277, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 3, ch. 81-282; ss. 2, 3, ch. 81-318; ss. 239, 241, 807, 810, ch. 82-243; s. 2, ch. 83-54; ss. 91, 206, 207, ch.