August 2022 | Volume 37, Number 8
One of the areas that we frequently see New York insurance agencies, brokerages, and individual producers run into regulatory problems with, is when they use an assumed name (also referred to as a DBA, fictitious name, or trade name) in connection with their business, without having followed the correct procedures to have that assumed name approved for use by both the Department of Financial Services (DFS) and the New York Secretary of State. In this issue of the E&O Report, we will discuss how the use of an assumed name should be handled by licensed New York insurance agencies, brokerages, and individual producers, so that they do not run afoul of the New York Law.
Pursuant to the New York Insurance Law, any insurance agency or brokerage, or agent or broker, that desires to operate using a name that is different in any way from the name that appears on their license, must first obtain approval from the DFS for the use of that assumed name. In connection with this, an insurance agency or brokerage, or an individual agent or broker, should make certain that the name that they use in connection with the conduct of their business does not vary in any way from the name that appears on their insurance license. This applies to everything that is done in connection with the sale of insurance, such as signage, letterhead, business cards, marketing materials, advertising materials, names on bank accounts and checks, and websites. For instance, if an insurance agency has its license issued by the DFS in the name of “Smith Insurance Agency, Inc.” but the agency uses the name “Smith Agency” on its letterhead, business cards, and website, this would be a violation of the New York Insurance Law. Instead, if the insurance agency wanted to use this shortened version of its name in connection with its business, it would first have to obtain the approval to do so from the DFS. Pursuant to New York Insurance Law section 2102(a), if an insurance agency, brokerage, agent, or broker conducts business under a name other than the one to which the license was issued, they will be considered to be conducting the business of insurance without a license, and they may also be considered by the Department to be acting in an untrustworthy manner. This conduct could be the basis for the DFS to impose a fine, or possibly even revoke the license, pursuant to New York Insurance Law Sections 2102(a)(2) and 2102(a)(3).
Obtaining the use of an assumed name is not a difficult or expensive thing to do, but the proper steps must all be taken in order to be in compliance with the governing New York Insurance Law and the New York General Business Law. The first step in the approval process is for the agency or brokerage, or individual agent or broker, that desires to use an assumed name is to obtain approval from the DFS to use that particular name. Requests for name approval can be submitted to the Department by an email sent to licensing at
licensing@dfs.ny.gov. If the name is approved for use by the Department, it will then issue a letter advising the business or individual of the approval and that the particular name they have approved will be held for their use for a period of six (6) months. Once the approval letter is issued by the DFS, the business or individual must then register that particular trade name with the New York Secretary of State and provide information about the New York state county, or counties, that they will be doing business in using that assumed name. After the assumed name is registered with the Secretary of State, they will then issue a certificate of filing of the assumed name. Once this document is received from the Secretary of State, the business or individual must then go back to the DFS to have the assumed name added to their insurance license. After this step is done, the DFS will then issue a letter confirming the approval for the business or individual to operate using the trade name in connection with the conduct of the business of insurance in New York state.
One thing to keep in mind when approaching the DFS for the first step in the process is to make sure that the name for which approval is being sought complies with certain requirements. For example, pursuant to Department rules, an insurance agency or brokerage may not have the word “insurance” in its name without also having the words “agency” or “brokerage” also listed. The reason for this is the Department currently believes that if an insurance agency or brokerage used the word insurance in its name, without also having the words agency or brokerage also being listed, the general public may be confused or misled and believe that the business was an insurance company and not an insurance agency or brokerage.1 The DFS also suggests that any request for a name approval that is submitted to the Licensing Division, as mentioned above, should have three (3) names listed that approval is being sought for, so that if the first name is unavailable, the Department will then review the other names for potential availability and approval.
The prudent insurance agency or brokerage, or individual agent or broker, that desires to use an assumed name, and follows all of the steps that we have outlined above, will help avoid potential regulatory action in connection with the conduct of the business of insurance using that name. If any readers of this E&O Report, have any questions, or require any assistance in connection with the process of using an assumed name in New York state, the attorneys at Keidel, Weldon & Cunningham are available to assist with this.
Submitted By:
James C. Keidel, Esq.
Keidel, Weldon & Cunningham, LLP
1. The law that the DFS follows when it evaluates names for insurance agencies and brokerages is set forth in New York Insurance Law section 1102(g)(1).
Keidel, Weldon & Cunningham, LLP concentrates its practice in the defense of insurance agents and broker's errors and omissions claims and litigation, errors and omissions loss control counsel and education, insurance coverage analysis and litigation and insurance regulatory matters. Please direct any comments or questions to James C. Keidel, Esq. by mail to the main office of Keidel, Weldon & Cunningham, LLP, at 925 Westchester Avenue, Suite 400, White Plains, NY 10604, telephone at (914) 948-7000 or e-mail at jkeidel@kwcllp.com. The law firm also maintains offices in Syracuse, New York; New York City, New York; Wilton, Connecticut; Fair Lawn, New Jersey; Warwick, Rhode Island, Philadelphia, Pennsylvania, Williston, Vermont and Naples, Florida.