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Member, Beacon International Group, Ltd.
NEW YORK—The New York State Insurance Department released its final producer compensation disclosure regulation Tuesday.
As expected, the final rule includes several changes that broker organizations had sought, including less stringent disclosure requirements for intermediaries regarding their role in a transaction.
New York’s Producer Compensation Transparency regulation, which will be published in the New York State Register on Wednesday, requires agents and brokers to disclose to insurance buyers: their role in an insurance transaction; whether they will receive compensation from an insurer based on the sale; that compensation insurers pay to agents or brokers may vary depending on the volume of business done with that insurer or its profitability; and that the purchaser may obtain more information about the compensation an agent or broker expects to receive from a sale by requesting that information from the agent or broker.
The changes go into effect Jan. 1, 2011.
The long-anticipated disclosure rule, on which regulators have been working since they held joint hearings in 2008 with the New York attorney general’s office, was published in the New York State Register in early December. Interested parties had until Jan. 16 to comment on the published rule.
The final regulation is significantly different from earlier versions of the rule. For example, the original draft included mandatory disclosure of broker and agent compensation. In addition, prior versions would have required producers to disclose to buyers whether they were representing the insurer or the buyer in a particular transaction and to provide compensation disclosures on all policy renewals.