PLNew Yorkmedium
A New York broker without a particular specialty appointment refers an unusual personal inland-marine fine-arts schedule to another NY licensed broker who places it with an admitted insurer and earns the commission. The originating broker receives a portion of the commission for the referral. Under NY rules governing sub-broker arrangements, this is permissible only if:
AThe referring broker has been licensed for at least 10 years
BThe placing broker pays the entire commission to the referring broker
Both producers hold valid NY licenses for the applicable line of authority, and the referring broker does not receive compensation contingent on the consumer's selection of a specific insurer in violation of Reg 194 or anti-rebating rules
DThe consumer pays an additional fee at policy issuance to compensate both brokers separately
Why this is the answer
NY Ins. Law § 2115(a)(3) and § 2128 read together permit licensed producers to share commissions only with other licensees having the same or higher line authority. A consumer-fee arrangement that bypasses commission and forces double compensation can run afoul of Reg 194 (transparency) and the anti-rebating rule (§ 4224) if undisclosed. Length of licensure is not a statutory gate, and the placing broker is not required to remit the entire commission.
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