A trade group for New York City insurance agents says it is launching a legal challenge against the state’s insurance department over new rules that would require agents to disclose their pay to customers.
Directors of the Council of Insurance Brokers of Greater New York voted this week to launch a so-called article 78 proceeding – essentially, an appeal to state court over a state agency’s rules.
“This regulation creates an unreasonable burden on the small and mid-size insurance producer by requiring written disclosure when quoting the insurance of the role of the producer, information that the producer will be paid for selling the product, how much the producer will be paid, and a discussion of the factors that determine the amount of the compensation,” said the group’s legislative chairman, Anthony Calafiore. “While we have no problems in disclosing that we are compensated for providing the insurance, it should be at the time of sale and not when quoting the account.”
The group said the new rules provide no additional protection for consumers, and add tremendous costs to the producer in complying with the regulation – particularly for smaller accounts since disclosure rules apply regardless of the size of the premium.
The group’s president, Anthony Aquilino, said that “many of our members are involved in family businesses, some in their second and third generation of ownership. These businesses would not exist if they were not providing competent services and competitive premiums to their clients. There has been no clamoring by consumers for compensation disclosure, and when asked if there were any complaints against any other agents or brokers, the Insurance Department could not cite one instance of a consumer complaint.”
The new rules, which are set to go into effect January 1, have created an uproar among agents and brokers in the Empire State since they were first announced.
The CIB is not the only group to say it will launch a legal challenge. The Independent Insurance Agents and Brokers of New York has also maintained it will file a lawsuit against the department of the rules, although that suit has not yet been filed.
However, another trade group, the Professional Insurance Agents of New York, said it will not join the lawsuit over concerns that it would lose it’s ability to negotiate with the department to hopefully make the compliance rules more palatable for agents.
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