New York-based RIMS said it supported the department's original disclosure rule released in February, but it views the proposed revisions released Wednesday as “a significant retreat from the regulation’s premise of protecting the rights of insurance consumers.”
RIMS said it is concerned about the burden on clients having to request compensation information from their broker or agent and that renewals would be exempt from disclosure requirements.
Under the original rule, agents and brokers would have been required to disclose in writing to clients the amount and nature of any compensation they received prior to issuing or renewing an insurance contract.
However, the new rule would require only that agents and brokers disclose to clients whether they represent the buyer or the insurer for purposes of a sale, and whether they will receive compensation from an insurer. This disclosure would be required only prior to binding an insurance contract and could be made either orally or in writing.
Only upon request would insurance buyers be given descriptions of the nature, amount and source of compensation their producers receive; details of alternative quotes received; and descriptions of material ownership interest between a producer and an insurer.
“RIMS has been actively involved in discussions among stakeholders and the New York State Insurance Department for many months,” said RIMS’ board member Deborah Luthi, in a statement. “We viewed the original proposed regulation as a step in the right direction toward strengthening the trust relationship between the consumer and producers. While the regulatory process is advancing, RIMS is disappointed that the new document does not contain consumer protections that were part of the original proposal.”