Speaking in Manhattan at a symposium sponsored by the Insurance Brokers' Assn. of the State of New York, NYSID special counsel Matthew J. Gaul said the department thinks the newest version of the proposed agent and broker pay disclosure regulation is “close to finished.”
The Producer Compensation Transparency Regulation would require insurance agents and brokers in New York to notify buyers of their right to request information on the compensation the producers receive from insurers in connection with insurance placements. Mr. Gaul said the department has heard complaints from insurance purchasers, brokers and other industry representatives.
“No one is particular happy with the rule,” he said. “I take that to mean we probably ended up about where we should be....We tried to reach a compromise.”
Risk management groups say producers should disclose compensation information automatically without insurance purchasers having to ask for it. Mr. Gaul said agents and brokers would have to build significant new infrastructure and make significant operational changes to comply with a rule mandating disclosure in all cases. He said the newest draft of the regulation attempts to weigh “the burden on brokers against the interests of transparency.”
The New York State Governor’s Office of Regulatory Reform is reviewing the regulation. After the office issues a memorandum on its review and the governor’s office approves it, the regulation will be published in the state register. After a 45-day comment period, the department will either make minor changes and publish the final rule or, if the department decides major changes are necessary, it will submit a new draft of the regulation to GORR and begin the process again, Mr. Gaul said.
Mr. Gaul said the office could act soon.
“Our indications are that GORR is going to move relatively quickly on this matter,” he said.
Mr. Gaul also said the new regulation would be a challenge for the department to police.
“It will be very difficult for the department to make one-by-one efforts to enforce this,” he said. “I think a lot of it is going to have to rely on consumer complaint. I think there will be a fair amount of looking at the bigger players and their clients’ efforts, and perhaps some spot-checking of smaller agency brokers.”
But he said brokers and agents that make reasonable efforts to comply with the regulation will not need to worry about enforcement.
“The goal here is to put information in the hands of insurance purchasers,” he said.