State RegulationsNY specificDifficulty 1/5
Under the compensation provisions of the New York Insurance Law (§§2114–2116), an insurer may pay commissions for the sale or solicitation of insurance to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under N.Y. Ins. Law §§2114 through 2116, commissions and other compensation for the sale or solicitation of insurance may be paid only to persons who are properly licensed for that line of business. Paying unlicensed persons for solicitation would gut the licensing and examination system that qualifies producers to deal with the public.
Why the other options are wrong
- B) Unlicensed agency employees may perform clerical work for a salary, but commissions for sale or solicitation are reserved for licensees.
- C) Paying the insured an inducement tied to the policy is rebating, prohibited by §2324, not lawful compensation.
- D) The agent cannot delegate compensation to unlicensed designees; the licensure requirement follows the money.
Memory hook
No license, no commission.