NEW YORK—The Risk & Insurance Management Society Inc. issued a new executive report Wednesday to help risk managers better understand broker compensation and potential conflicts of interest.

RIMS also revised its broker compensation position statement to address new broker-marketed products being introduced to insurers.

In the report, RIMS said it hopes to heighten members' awareness of the potential pitfalls surrounding the insurance purchasing process, so they are “empowered to press for greater transparency” in their negotiations with brokers as well as regulatory reform in their own states.

The report came as the New York State Insurance Department prepared to issue new broker compensation disclosure regulations. As the rules stand now, agents and brokers would have to disclose their compensation only if asked by the insurance buyer—a position RIMS has criticized for not going far enough to protect consumers.

In the report, RIMS recommends that risk managers require full disclosure of the nature of all compensation earned by their broker in placing their coverage as well as any service relationship or financial interest the broker may have with the recommended insurers.

The report details the different types of insurance broker compensation in the market and gives examples of provisions risk managers can include in their request for proposals that address compensation issues.

In tandem with the report, RIMS revised its position statement on broker compensation to address new products and services brokers are offering insurers.

“While RIMS takes no issue with new products, there must be a separate agreement between the two parties, which does not link these services to specific clients,” Deborah Luthi, director of RIMS' external affairs committee, said in a statement. “However, if a broker receives payment from both the carrier and the buyer for placement of insurance products, all transparency requirements should adhere to that transaction.”

The position statement came on the heels of Aon Corp.'s Monday announcement that it had launched Inpoint, a new consulting unit to help insurers make better decisions on market selection, premium growth, service enhancements and product development.

RIMS' members can download “A Practical Guide to Insurance Broker Compensation and Potential Conflicts of Interest for the Risk Manager” at www.rims.org.

Nonmembers will be able to order a copy for a fee of $150.00.