Posted on 21 Apr 2010
The Council of Insurance Brokers of Greater New York (CIB) has announced it will bring an Article 78 proceeding to challenge the legal validity of New York’s compensation rule (Insurance Department Regulation 194) for agents and brokers.
Regulation 194 (Producer Compensation Transparency) was created by the New York Insurance Department in reaction to illegal activities by several large Insurance Brokers who were accused by the Attorney General of taking payoffs from insurance companies. These large brokers were able to use their large volume to obtain compensation arrangements that would not have been available, but for their size.
"Many of our members are involved in family businesses, some in their 2nd & 3rd generation of ownership," said CIB President Anthony Aquilino. "These businesses would not exist if they were not providing competent services and competitive premiums to their clients," Aquilino continued. "Furthermore, 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."
"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," stated CIB 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," he added.
The requirements for disclosure apply regardless of the size of the premium. The Producer will have to provide the same information for a $ 200 apartment policy as he/she will for a commercial policy costing thousands of dollars. This regulation does not provide any additional protection for the consumer, yet adds tremendous costs to the producer in complying with the regulation.
Since its inception in 1967, the CIBGNY has been the leading professional independent insurance brokers association in the New York City Metropolitan area. CIBGNY members come from all NYC Boroughs, Long Island, Westchester and Rockland Counties. The CIBGNY continues today to provide a powerful advocacy for the interests of its members and their clients and a forum for the exchange of professional education, information and camaraderie.