New York Agents Plead Case for “Common Sense” Disclosure Rules

By | July 22, 2009

Independent agent groups in New York State pleaded with regulators during a meeting yesterday to take a more “common sense” approach to proposed rules requiring agents to tell clients how they get paid.

The meetings, which took place in Manhattan, were a chance for agents and brokers to air their views on a new draft of proposed regulations that greatly increase the amount information producers must disclose to clients about how they are compensated.

The meeting included representatives from the Independent Insurance Agents and Brokers of New York (IIABNY), Professional Insurance Agents of New York (PIANY), New York Insurance Association, Council of Insurance Agents & Brokers, Independent Insurance Agents & Brokers of America and the Council of Insurance Brokers of Greater New York.

It is the second meeting agents trade groups have held with state regulators since last year, when the insurance department and attorney general’s office conducted a series of meetings to gather public input about how to reform disclosure rules to make the compensation system for agents more transparent. The proposed rules were first released in January. The revised rules were released July 8.

The department said it will take comments on the draft until July 29.

“We are pleased that the department has again sought our input on the proposed rules,” said IIABNY Chairman Lane S. Rubin, who was present at the meeting. “We had a substantive discussion about the problems we see with the new draft, and we look forward to providing our written response to them within the time frame they have set.”

The groups discussed, among other things, concerns over the required description of a producer’s role in the insurance sales process, the level of detail in the disclosure of alternative quotes and the rule’s application to different types of insurance salespeople.

Agents’ groups are also concerned over record-keeping as well as possible penalties for agents who inadvertently fail to comply with the rules, which many say lack clarity.

A press release from PIANY about the meeting quoted NYSID Deputy Superintendent and General Counsel Robert Easton as saying “We want to be cognizant of operational concerns… We’re not out to unwittingly trip up producers.”

The NYSID is expected to forward the final rules to the governor’s office some time in the next several months.

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