For now, at least, New York insurance brokers are not legally required to disclose to clients the commissions they earn on policies they place, according to a new legal opinion released by the state’s insurance department.
But that could change as soon as this year the department said in a regulatory filing.
The insurance department reiterated that it plans to introduce new rules later this year that would require insurance brokers and some agents to disclose to their clients both the amounts and sources of their income.
Notice of that rule change first came last June, when it was published in the New York State Register.
No exact time frame has been announced for when the department plans to make that change.
It’s not the only commissions-related issue the department has ruled on.
In a separate filing, the department said there is no legal limit to the length of time an insurer can withhold earned commissions from a broker.
That ruling came after an unidentified broker questioned the practice of an unnamed insurer that had a policy of withholding commissions for 31 days.
Only the contract between an insurer and producer governs the length of time commissions can be withheld, the department said, adding that it “generally does not interfere with a private contract between an insurer and a broker, provided that the agreement does not otherwise violate the insurance law.”
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