New York revises producer compensation rule

ALBANY, N.Y.—New York insurance regulators have submitted a revised agent and broker pay disclosure rule to the New York State Governor's Office of Regulatory Reform for review, but a key provision of the proposed rule that drew the ire of risk managers remains intact.

The proposed regulation, the Producer Compensation Transparency Regulation, would require insurance producers operating in the state to notify insurance buyers of their right to request information on the compensation they receive from insurers in connection with their insurance placements.

Now in its third iteration, the latest version of the rule was altered slightly since the previous version that was released July 8, according to Matthew J. Gaul, special counsel with the New York State Insurance Department. In particular, the department removed a blanket exemption for renewals and added a requirement that oral disclosures be followed up with written disclosures, he said.

However, the rule still requires insurance buyers to ask for compensation information before producers must disclose it, rather than mandating automatic disclosure, he said.

The Risk & Insurance Management Society Inc. previously has criticized this provision as a “significant retreat from the regulation's premise of protecting the rights of insurance consumers,” (BI, July 20).

The Independent Insurance Agents & Brokers of New York Inc. met with the Governor's Office of Regulatory Reform last week over concerns about portions of the revised rule, according to a spokesman for the industry trade group, who declined to be more specific about those concerns.

The spokesman said the IIABNY hopes the governor's staff will make additional changes before the rule is published in the New York Register. After the date of publication, which has not yet been determined, concerned parties will have 45 days to comment on the proposed rule.

The Council of Insurance Agents and Brokers also had some reservations.

“The one question we had was renewals. It states it only excludes renewals where producers don't have sales or solicitor contact with clients. We're not sure what that means,” said Nicole Allen, vp of industry affairs in Washington, adding that the CIAB will be requesting clarification during the comment period.

Terry Fleming, vp of New York-based RIMS and director of risk management for Montgomery County, Md., said the society will express its opinion during the comment period. “Obviously, we're disappointed at not getting mandatory disclosure without having to ask,” he said.

The rule was precipitated by the bid-rigging and contingent commission scandal that erupted in 2004, resulting in various officials' 2005 and 2006 settlements with several brokers and insurers.

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