This decision comes on the heels of disclosure requirements that do not afford consumers appropriate protections. The investigations, admissions, and fines that led to the 2005 agreements banning such commissions prove that these practices can be, and were, manipulated at the expense of the insurance consumer. Without strong consumer protections in place, RIMS has strong reservations about a policy that permits contingent commissions again, and this development illustrates why RIMS so vigorously fought for a stronger rule.
“When Arthur J. Gallagher and Company was released from its agreement in Illinois in 2009, RIMS expected that New York would shortly follow suit,” says Scott Clark, director of RIMS External Affairs Committee and risk and benefits officer for Miami-Dade County Public Schools.
“RIMS had hoped that in the absence of a contingent commission ban, brokers would be required to provide full compensation disclosure, allowing the consumer to decide whether the broker is acting in their best interest,” added Clark. “Unfortunately, the final regulation does not live up to that standard, and instead the burden to request full disclosure has been placed squarely on the consumer.”
RIMS urges Aon, Marsh, and Willis to commit to full compensation disclosure above and beyond the recent NYID regulation. Such action would go a long way toward building trust and strengthening the relationship between broker and purchaser. RIMS also reiterates its call that the New York Insurance Department revisit its producer compensation regulation, and open it up to another comment period following the most recent changes.
RIMS encourages other states to go further with their regulation and make a strong effort to enact full mandatory disclosure requirements that will protect the insurance consumer. RIMS will continue to work closely with all parties on the issues of producer compensation and disclosure.