State RegulationsNY specificDifficulty 2/5
A licensed New York agent offers to share commissions with a friend who helps solicit applications but holds no insurance license. Under the New York Insurance Law, this arrangement is:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under N.Y. Ins. Law §§2121 and 2128, a licensee may not share commissions with a person who is not licensed for the business involved. Compensating an unlicensed person out of commission dollars for soliciting insurance would let unqualified people sell coverage while evading the licensing system.
Why the other options are wrong
- A) Future licensure does not cure present payments; the friend must be licensed when the commission is shared.
- C) Clerical employees may be paid salaries, but sharing commissions — compensation tied to solicitation — crosses the statutory line.
- D) No report to the Superintendent can authorize paying commissions to an unlicensed person; the prohibition is absolute.
Memory hook
Commission dollars flow only to licensees.