The NYS Department of Insurance took the final step toward promulgating new regulations that would require agents and brokers in the state to disclose all forms of compensation they receive from insurers upon request. The regulation is open for public comment until January 16th at which point the NYSID will have the authority to adopt it. As expected there is widespread opposition from the Independent Agents & Brokers Association calling the measure “unwarranted”. Frankly we applaud the NYSID for their leadership and vision to compel transparency in this important area. The issue of compensation was surfaced in 2005 through a NYAG scandalous investigation into broker placement and compensation practices. This regulation will support the intent of full disclosure that was championed earlier but not called into law. The regulation would compel agents and brokers to disclose several key areas surrounding placements including:
- A description of the nature, amount and source of any compensation to be received by the producer or any parent, subsidiary or affiliate based in whole or in part on the sale.
- A description of alternative quotes presented by the producer including the coverage, premium and compensation that the producer, parent, subsidiary or affiliate would have received based in whole or in part on any alternate quotes.
We wholeheartedly support the regulation as we feel it will only enhance the insurance placement process and allow insureds and their advisors to calibrate value for money. A key goal in any insurance placement is to allow the Insured to mitigate insurable risk and use insurance and brokerage resources to help lower their Total Cost of Risk (TCoR).
The regulation can be found on the NYSID web site:
http://www.dfs.ny.gov/insurance/r_finala/2010/rf194txt.pdf
