Posted on 09 Jul 2009
The New York State Insurance Department's most recent draft on regulation of producer compensation transparency substantially modifies the original version issued in January 2009. The most recent version eliminates language that stated insurance producers have incentives to recommend a particular insurance policy based upon the amount of compensation paid in connection with that policy.
The new draft also establishes a two-tiered disclosure mandate, whereby policyholders first would be told who the producer represents; that the producer will receive compensation for selling the policy; that this compensation may vary from carrier to carrier; and that more information is available if requested. A request would trigger a more detailed disclosure. The NYSID also included language reflecting that producers are precluded from negotiating commission levels by law.