ProgramBusiness
 
  


  1. News Articles
  2. Related News Articles
  3. Comments
News Article Details

IIABNY and CIBGNY File Legal Action to Stop State Producer Compensation Transparency Regulation

Source: IIABNY


Posted on 28 May 2010

Facebook LinkedIn Twitter Google

The Independent Insurance Agents & Brokers of New York and the Council of Insurance Brokers of Greater New York this week jointly filed a legal action to prevent the New York Insurance Department from implementing what they feel is a burdensome and confusing regulation that will require insurance producers to disclose to their clients certain information about how insurance companies compensate them. The groups filed the action in New York State Supreme Court in Albany.

Insurance Regulation 194, which takes effect on January 1, 2011, requires producers to disclose certain information about their compensation to all clients, regardless of whether the clients have asked for it. Should any client request more information, the regulation requires the producer to provide detailed information about their compensation for the policy sold and the compensation they would have received had the client chosen a different policy.

IIABNY, which in 2004 called on insurance agents and brokers to voluntarily disclose to their clients the existence and nature of all their compensation, has opposed mandated disclosures as burdensome for producers and of little benefit to consumers. The board of CIBGNY had similar concerns. Both groups testified at hearings on the subject conducted by the Insurance Department and the New York attorney general during the summer of 2008, saying that such a regulation is unnecessary and would not be in the best interests of either consumers or producers.

IIABNY and CIBGNY were part of an industry effort throughout 2009 aimed at convincing the department to drop Regulation 194 or minimize its burdens on producers. While standing up to protect producers’ businesses, the industry group hoped to keep the dispute out of the courts. However, after the department adopted the final version of the rule last winter, IIABNY and CIBGNY announced their plans to take legal action, the only producer groups to do so.

The action, known as an Article 78 proceeding, asks the court to annul parts or all of the regulation. In its court filing, IIABNY and CIBGNY asserted that:

* The Insurance Department does not have authority under New York law to mandate compensation disclosure;

* The regulation “represents an impermissible attempt to rewrite the Insurance Law on a subject as to which the Legislature has already specifically legislated”;

* Parts of the regulation “impose massive and unwarranted costs of compliance on brokers so as to constitute an arbitrary exercise of regulatory power”; and

* The regulation violates producers’ rights to due process and equal protection under the U.S. and New York State Constitutions.

Anticipating that the court proceeding might not conclude before the regulation’s scheduled effective date, IIABNY on May 13 sent the department a proposal for specific language that a producer could use for making the required initial disclosure. However, IIABNY and CIBGNY continued to move forward with plans to pursue legal action.


Comments

Post a Comment
If you are a Storefront / Tradingfloor user, click here to login.
Note: As a guest user, please fill out the form below to post a comment.
Post your comments here.
Name :
Email Address :
Captcha :
Comments :
Character left : 2000