New York Agents Group Suing State over Pay-Disclosure Rules

February 10, 2010

  • February 11, 2010 at 7:12 am
    wudchuck says:
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    it’s like purchasing an item from the store, you are supposed to be told how much tax is! when you purchase gas, your told how much is going towards taxes – not that anyone reads that one or listens.

    what this does is truly puts the consumer in control of whom they want insurance. it makes it a more competitive market.

  • February 11, 2010 at 7:24 am
    Marty Smith says:
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    This disclosure law is not about how much tax is being charged. Tax is a public levy on top of the cost of an item/service. I don’t know if this is good or bad law. However, if insurance agents are forced to reveal their commission, how about car salesman? Clerk in a store that are on commission? Or any commissioned sale? Where does it end? Do most buyers really care? Or is this punitive at one industry?

  • February 11, 2010 at 7:33 am
    wudchuck says:
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    well, show taxes?! well, it be like all those so-called hidden charges we are starting to find out. how many of purchase a tire and find out all these extraneous charges we pay for? how many of them should be at the cost of the business and not the consumer? a consumer would like to be able to know what he’s purchasing. if one company is charging a commission and another is not – how many times have i heard that he got my premium lower (only because he lowered his commission). that agent is knows that he can lower the his commission because he’s going to hopefully retain the policy holder for awhile more. my concern, is how many times is a consumer going to realize when rates go up, and he/she shops he might find someone else for lower…but when they go back to the agent who works on commission will reduce a little more of his commission to retain that policy holder. consumers will fight to get lower rates; they don’t want to play tit for tat over premium. they should wake up and see that they continue to find lower rates but then don’t change only because that agent is lower his commission. eventually that consumer will finally say enough chasing the cash every 6 months or 1 yr because rates went up and you decide to lower my premium only after i come to you showing i have a lower rate w/another company being offered.

  • February 11, 2010 at 8:18 am
    Darwin says:
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    Insurance agents want to be treated the same as used car salesmen? Wow, so much for “trusted choice”. What is the public to think?
    No, you don’t want to tell your clients what you do? Why are you spending money on ads for?
    If this is the way you’re going to behave, it would be much easier to find an insurance agent who is interest in me, not himself.

  • February 11, 2010 at 10:04 am
    Kingston Bowen says:
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    We do not expect nor require all industries to disclose the breakdown of cost. There is commission in insurance just as nearly all sales transactions. It is naive to expect all transactions to disclose all parts of a cost. If we require insurance agents, then we should require every sales activity to do the same.

  • February 11, 2010 at 11:15 am
    Ima Victim says:
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    Well, I have to agree with the DOI completely on this, and I’m convinced this needs, for the sake of equity, to be extended to EVERY business in America. I’m dying to know what my barber makes and whether he gets some kind of incentive or kickback from the Vitalis hair tonic people, that money grubbing, deceitful *******. It’s not like I have any choice and could take my business to one of the other 80 barbers in the area based on the bottom line cost of a haircut. Help me, I’m a victim!!!

    Likewise, you know all those product displays shoved out into the aisles at grocery stores we have to navigate our carts around? I know someone’s getting paid for promoting that stuff. I bet the cashier at Kroger is taking me for a ride, not to mention all of those ladies cooking and hawking Jimmy Dean sausage links from those portable hot plates and griddles near the meat counter. I just know they’re getting something for that and it’s critical that I know how much so I can make the very, very important decision whether or not to shop at Kroger or the Piggly Wiggly. Please, the government MUST save me from this economic debauchery!!!

    And how about those real estate agents? Don’t you know that they’re getting some sort of incentive from particular builders to push their houses? I need to know who and how much. It’s absolutely essential that I know the exact amount of commissions and bonuses these people are getting. It’s not like the actual price of the house is what should govern and I certainly couldn’t take my business to another agent who can get me a lower price. Oh, the pain, the pain!

    I’m so proud of your insurance department and the driving force who prompted all this, the shepherd of all things moral and ethical, Mr. Elliot Spitzer. Praise Jesus and Ralph Nader! Government has once again saved us all from victimization. They just need to kick it up a notch and include ALL businesses across this great land.

    P.S. What public office does your current insurance commissioner have his eye on? I hear there’s a Senate seat that is in need of a savior.

  • February 11, 2010 at 12:01 pm
    God says:
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    Ima Victim, as you can see I blessed you with commonsense.

  • February 11, 2010 at 12:52 pm
    Lennie says:
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    You mean to say, you will not buy from an agent because he is making too much commission?

    I agree with one of the repondents, where will this lead to and where will it end? If you want to know how much an insurance agent is making for commission, what about a car sales agent? an avon agent? etc. etc. etc.

  • February 11, 2010 at 1:23 am
    not rich says:
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    A simple view –

    First of all an agent cannot lower his commission, it’s illegal and it’s called rebating. Look it up. Secondly, an insurance premium does not go up or down based on commission amounts. Each insurance company predetermines what they will pay for the sale of their product. An Independent agent enters into an agreement with a particular insurance company and is compensated by selling the company’s product in the form of a commission, a predetermined percentage of the sale.

    The average amount a Personal Lines Insurance Agency grosses on all sales is approximately 13-percent. That’s before taxes and expenses reduce that amount to about 1-cent on every dollar. I for one have no problem telling the world that’s all an agent is expected to live on. But go on wudchuck, beat me up for trying to make a living.

  • February 11, 2010 at 1:26 am
    sarah says:
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    I think we should find out who gives him money for rate making policy? Political donations? or maybe that trip to Bermuda from AIG? Hmmmmm. I hear crickets…. churp churp….

  • February 11, 2010 at 1:29 am
    sarah says:
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    Sorry not a rich dude, but you can reduce your commissions, it is not rebating. It is perfectly legal to do so. You just cannot give back your commissions to the insured after recieving them to the client. Ask your department of Insurance, It is done all the time.

  • February 11, 2010 at 1:29 am
    Red says:
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    I have been disclosing what I make in revenue (we can charge fees and/or collect commissions in my state) for 25 years. We work on small, medium and large accounts. If clients value what you do, they don’t mind paying. In all my year of doing this I have had only one instance where the client questioned the fee. Usually we get increases in our fees, not decreases. It is all about the value you bring.

  • February 11, 2010 at 1:36 am
    not rich says:
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    Here is what you wrote –

    “You just cannot give back your commissions to the insured after recieving them to the client.”

    Does that make sence to you?

    What are you trying to say?

  • February 11, 2010 at 1:40 am
    Larry says:
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    Wiil thge disclosure law include Gieco bonuses to their people for writing new business. Will it include the incomes of the underwriters, middle management, executives, and major stockholders; such as Warren Buffett and Berkshire Hathaway.
    How about captive agents ? Will they have to reveal the cost of company paid health insurance, sick leave, vacations, holiday pay, etc. This is a ploy by direct writers to make life more difficult for Independent Agents. That’s “so what” Thank God for IIABNY.

  • February 11, 2010 at 2:00 am
    J. T. Altobellis says:
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    My hangup is that with the majority of my clients I would be embarrassed as to how little we make on the majority of our transactions. We are already perceived by most of the public as low lifes. Now with this disclosure requirement, we proving we’ve earned the title “low paid low lifes”.

  • February 11, 2010 at 2:13 am
    Marty Smith says:
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    Interesting comments. How about unintended consequences? At what point do people/companies say, “To heck with you NY, its not worth it to put up with your over regulation.” And they leave. Before you say it isn’t happening, check the outflow of people from NY and some other over regulated and ove taxed states. AT some point regulation and taxes become so burdensome that smart folks move on. And the state is left with less revenue and ever increasing obligations. Good luck NY. And CA and MI.
    PS to Ima Victim You are if you believe you are and if you belive you are you are doomed at your own hand. Goodluck!!

  • February 11, 2010 at 2:17 am
    jdude says:
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    Some amazing comments in here. Warren Buffet’s earnings, including benefits and bonuses are fully disclosed as are the top 5 officers of all publicly-held companies. And, I cringe everytime agents compare themselves with car salesman or the Avon lady. They should be comparing themselves to other financial services professionals, but that would require them to admit that other financial services sales people (stocks, mutual funds, etc.) do disclose their compensation and costs. And, IIABNY should be willing to admit that it helped to create confusion in the marketplace with its Trusted Choice motto, “We serve you first” when, in fact, they have signed contracts saying they owe their loyalties to the companies they represent (or, at very least, are dual agents). This is a win the battle, lose the war fight for IIABNY; they might get the rule tossed but will make the whole industry look bad in doing so.

  • February 11, 2010 at 2:40 am
    Insurance Geek says:
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    …much ado about nothing.

    There is no reason to believe that Spitzer’s finding represent a systemic industry problem. This was simply a witch hunt by someone with political aspirations.

    The average independent agency has 9 staff members. About half of them have an organization-wide income of $500K or less and about two-thirds have a revenue of $1.25M or less.

    There isn’t a shred of evidence that the typical independent agency is scamming or deceiving anyone and, given the size of these small businesses, they are the least likely to be able to absorb the increased and unnecessary costs of this pointless disclosure requirement. It’s peacock politics with someone putting on a show for the public.

    Consumers and businesses are free to get as many quotes on their insurance as they want. Bottomline, all things being equal, if one quote is less than another, why does the producer’s compensation have anything whatsoever to do with the decision to insure? It’s immaterial.

    What business is it of mine to interfere in the contract between insurer and agent? My decision is best made based on product, service and price. How that price is determined is immaterial to me. I simply compare the product, service and price of each competing bid and make a decision.

  • February 11, 2010 at 2:43 am
    Insurance Geek says:
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    The FACT is that you can “rebate” in some states and not others. In some states you can lower your commission; in others (most) you can’t.

  • February 11, 2010 at 2:46 am
    Insurance Geek says:
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    You’re right, JT. Most consumers have no idea how low an agent’s commission is. If they have any idea at all, they think it’s similar to life insurance commissions. The entire thing is a waste of time. The public would be better served if regulators spent their time ferreting out real fraud instead of political grandstanding.

  • February 11, 2010 at 2:48 am
    Rick says:
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    Bureaucrats must justify their cushy jobs. Therefore more hair brained ideas that never ever go away, even though their proven worthless. Similiar to bureaucracies. No matter how much of a dismal failure they are, they never ever go away. They just increase in size and continuously add more unionized cushy government jobs.

  • February 11, 2010 at 2:49 am
    Insurance Geek says:
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    You’re right that NY will run people away. They tried to require that NY be added to all workers comp policiesi in the country even if an employee was only passing through the state on an airline connection. You have bean counting regulators across the state who have no interest in expending any real, productive effort in protecting consumers. It’s posturing for political gain.

  • February 11, 2010 at 2:51 am
    Insurance Geek says:
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    “IIABNY should be willing to admit that it helped to create confusion in the marketplace with its Trusted Choice motto, “We serve you first” when, in fact, they have signed contracts saying they owe their loyalties to the companies they represent (or, at very least, are dual agents).”

    “We serve you first” is a service pledge, not a contractual obligation. Legal representation is governed by contract or statute in all states. Using a service pledge isn’t misleading or deceptive. It distinguishes an independent agent who owns his or her own book of business from a captive agent who does not.

  • February 11, 2010 at 2:57 am
    Otto says:
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    Send a message next election. Vote all the bums out and new appointments will be made.

  • February 11, 2010 at 2:57 am
    Insurance Geek says:
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    “They should be comparing themselves to other financial services professionals, but that would require them to admit that other financial services sales people (stocks, mutual funds, etc.) do disclose their compensation and costs.”

    Bad example. I’ve used three financial brokerage firms in the past 15 years for stock and mutual fund purchases. They disclose their compensation because THAT is what I’m buying from them. My only out of pocket cost is their brokerage fee. I HAVE to know that in order to pay them.

    When I buy insurance, my out of pocket expense is the PREMIUM for my insurance. I don’t care how that premium is broken down into sales commission, overhead, profit, etc. All I care about is the total cost and how it compares to other options available from that or other agencies.

    There is ZERO need for me to know the agent’s/agency’s compensation any more than there is a need for me to know my stock broker’s individual salary or commission.

  • February 11, 2010 at 3:09 am
    Boston agent for NY Agents says:
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    Typical Government trying to regulate everything and i am glad to see you are not taking it lying down. All this regulation comes because a few bad apples were taking kickbacks which have nothing to do with what we earn.

  • February 12, 2010 at 12:04 pm
    Hooray for Capitalism!!! says:
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    Is Eric Dinallo still in charge there? Last I knew, he was hoping for a spot on the Obama team if that tells you anything.

    The real concern is not this one small regulatory requirement for one state’s agents…the bigger picture is that liberals, democrats and the President want to be informed and in control of more and more people’s paycheck.

    Another favor Conservatives do for liberals…explain this to them…that we should fight things like this.

    It’s more of the “I can’t take care of myself” and I need the government to protect me that liberals would resist if they understood the potential ramifications.

    American consumers are NOT STUPID. They know how to shop for insurance, and can make their own decisions.

    Has anyone noticed the latest Consumer Financial Protections…specifically the one where companies can no longer offer interest free, payment free, promotional pricing..ie 18 months interest/payment free? The federal government now requires you to make that $10 payment, all in the name of protecting you????? Making a minimum payment is a pain in the butt, we we just won’t take advantage of interest free financing…..which hurts businesses. Thanks Obama!



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