Don't Ask, Don't Tell, Don't Cut It!

The debate over disclosure of broker compensation has taken an ugly turn in New York, and the next battleground will be not just a court house, but the court of public opinion.

Responding to a lawsuit challenging a New York disclosure regulation due to take effect Jan. 1, 2011, the state’s insurance department expressed its “disappointment” it had come to this, and wondered aloud what brokers might be “trying to hide” from their clients. (See http://www.property-casualty.com/News/2010/5/Pages/Producer-Groups-Sue-To-Stop-Compensation-Disclosure-Rule.aspx about the suit, and http://www.property-casualty.com/News/2010/5/Pages/Regulator-Disappointed-In-NY-Broker-Compensation-Lawsuit.aspx?k=NY+broker+compensation about the department’s reaction.)

The Independent Insurance Agents and Brokers of New York–one of two groups to file the lawsuit, along with the Council of Insurance Brokers of Greater New York–was quick to respond to the department’s challenge about the motive of producers in this action. While insisting they stand behind disclosure, they are challenging the department’s right to impose a mandatory, bureaucratic procedure to accomplish this.