NU Online News Service, May 17, 3:02 p.m. EDT
The Independent Insurance Agents & Brokers of New York has suggested additional language to the state Department of Insurance regarding disclosure regulation, as it gears up for a court challenge.
The DeWitt, N.Y.-based association said the new language would help producers comply with the new regulation on producer compensation transparency. The proposal, submitted on Thursday, was made at the encouragement of the department, IIABNY said in a statement.
"We are pursuing a dual track strategy on Regulation 194," said IIABNY Chairman David M. Gelia. "While we continue to pursue our legal options for stopping this unnecessary and burdensome regulation, we have also developed language to help producers more easily comply should the regulation stand. We look forward to hearing the insurance department's comments on our proposal."
The New York Insurance Department's Regulation 194, scheduled to take effect Jan. 1, 2011, would require producers to describe to consumers their role in the insurance transaction and how they are compensated. Upon the client's request, an agent or broker would have to provide a more detailed statement about the compensation (more detail about the subject: http://tinyurl.com/2u2mtqp).
IIABNY said its proposal "gives insurance producers clear direction on how to comply with the regulation, should it take effect."
The association suggested that client information language, which only applies to the initial disclosure, would say:
o That the producer may have access to more than one insurer for the coverage.
o That the producer has legal and ethical obligations to both the client and the insurer.
o That the producer will receive compensation from the insurer based on a contract between the two, that the amount may vary between companies, and the volume and profitability of the producer's business may affect the amount of compensation.
o That the client may obtain additional information about the producer's compensation upon request.
The association said it intends to submit a proposal for the second disclosure at a future date.
An association spokesman said that IIABNY, joined by the Council of Insurance Brokers of Greater New York, is still going ahead with its litigation.
A representative from the department was not immediately available for comment.
In an e-mail, Andy Mais, an insurance department spokesman said, "It's a transparent, open process. We encourage comments from all stakeholders. But we won't be able to sit down and have an extensive back-and-forth dialogue with groups that have chosen to litigate about the regulation."
This story was updated at 3:40 p.m. EDT
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