NU Online News Service, April 30, 1:41 p.m. EDT

Anxiety is growing within the agent and broker community about rules in New York going into effect in January 2011, requiring them to disclose to their clients information about compensation received from insurers.

In a statement, a trade group representing New York property and casualty insurance agents is warning out-of-state agents that the rules would apply to them if they go into effect in January as currently required.

The recently-published regulation, N.Y. Insurance Regulation 194, calls for producers to disclose to their clients information about any compensation received from insurance companies.

In a statement, Lane S. Rubin, chairman of the board of the Independent Insurance Agents & Brokers of New York, noted that only one other producer group has joined them in taking legal action to stop the New York Insurance Department from implementing the regulation.

Coincidentally, officials of the Association for Advanced Life Underwriting, which represents top life brokers, issued the same warning to members attending its annual meeting in Washington, D.C. earlier in the week.

And, like the IIABNY, an AALU lobbyist said the trade group is contemplating taking legal action against the New York department.

Mr. Rubin stated, "Insurance producers all over the country have New York licenses."

He added, "They may have heard about the new requirements and incorrectly believed that it's a New York matter only. They don't realize that they also will have to comply with these rules if they write business in New York."

He explained that the regulation applies to anyone required under New York law to hold a license to sell, solicit or negotiate insurance. This means it affects both New York residents and residents of other states holding New York non-resident licenses.

"I'm afraid that non-resident producers who have only a few New York clients–particularly those in nearby states like Connecticut, New Jersey, and Pennsylvania–will not be prepared if this regulation takes effect next January," Mr. Rubin said.

The AALU officials made the same observations at their meeting.

The variable product commission disclosure proposals developed by the New York State Insurance Department pose an "immediate danger" to the life industry, Marc Cadin, AALU senior vice president, said at the group's meeting.

"This issue is so important that it's dominating the AALU board's agenda," he said. "We're now debating whether to sue the New York Department of Insurance."

The commission disclosure proposal "is a solution in search of a problem," Mr. Cadin added. "We'll do what it takes to minimize the damage this regulation might cause to our business."

Kenneth Kies, founder and managing director of the Federal Policy Group, Washington, D.C., and also a lobbyist for the AALU said, "Our sense is that officials in the department are becoming more realistic."

He noted, "This is a work in progress–but an important one, given the implications for exporting commission disclosure requirements to other states."

Special Reports /

Out of State Agents Warned About N.Y. Disclosure Rules

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