December 9, 2011
INSURANCE AGENCY OWNED BY INSURANCE COMPANY
By: Janet L. Kaminski Leduc, Senior Legislative Attorney
You asked if Connecticut, Massachusetts, New York, or Rhode Island require an insurance agency to notify customers that the agency is owned by an insurance company.
Neither Connecticut nor Rhode Island requires an insurance agency to notify customers that the agency is owned by an insurance company. But both New York and Massachusetts require disclosure in certain circumstances.
According to the Connecticut Insurance Department, when an agency is owned by an insurance company, it is typically because that company uses an exclusive agent distribution system and the name of the insurer is prominently displayed (e.g., State Farm, Allstate, etc.).
New York requires producers to disclose compensation and, if requested, certain related information (Regulation 194, effective January 1, 2011). Among the information to be disclosed is “a description of any material ownership interest the insurer issuing the insurance contract or any parent, subsidiary, or affiliates has in the insurance producer . . . .” For a copy of Regulation 194, see http://www.victorson.com/email_news_letter/Reg_194_disclosure/Regulation%20194%20-%20Final.pdf.
Massachusetts requires a producer (e.g., insurance agent) to inform a prospective life insurance purchaser, before beginning a life insurance sales presentation, that he or she is “acting as an insurance producer and inform the prospective purchaser of the full name of the insurance company which he is representing to the buyer” (211 CMR 31.07).