Posted on 05 Feb 2009
The New York State Insurance Department (NYSID) is drafting regulation requiring the disclosure of producer compensation.
The draft contemplates a written disclosure notice being provided prior to the issuance or renewal of any insurance contract that describes the nature and amount of compensation to be received by the producer in connection with the sale. The regulation would require a notice stating that the insurance producer is often paid by the insurance company based upon the policies the producer sells, and therefore, may have incentives to recommend a particular policy based upon the amount of compensation paid in connection with that policy.
Producers also must disclose in writing any ownership stakes between the producers and insurers involved in the transaction.
In addition, they must make available, upon request, "any quotes or alternative [policies, contracts, bonds] the insurance producer considered and the relative amounts of compensation the insurance producer would have received in connection with those quotes or alternatives," according to the document.
The proposed regulation is as a result of a series of hearings on producer compensation held last year in New York.