IIABNY Chairman To Oppose Commission Disclosure

Neal L Sullivan, chairman of the Independent Insurance Agents & Brokers of New York Inc., said he will give testimony tomorrow in opposition to proposals for contingent commission disclosure requirements.

The joint fact-finding hearing is being conducted by the New York State Insurance Department and New York State Office of the Attorney General in Albany, N.Y.

Contingent commissions–sometimes referred to as profit sharing–are received by insurance agents and brokers. The department and attorney general are seeking information about making disclosure requirements mandatory and whether such compensation creates a conflict of interest for agents and brokers.

Mr. Sullivan will voice the long-standing IIABNY position that profit sharing is a legitimate method of compensation.

He and the association said in a statement they believe that mandatory disclosure singles out the independent insurance distribution method and would add burden to the agent or broker while increasing cost to the insured.

Also voicing their concern will be past-president of the Professional Insurance Agents of New York John Bailey. He will reiterate the association's long-standing position that contingent commissions are legal, effective compensation for the state's producers.

He will also note that contingent commissions, paid by carriers to independent agents, are not the same as “placement service accounts” that the major brokers were accused of manipulating to their advantage. He will say that honest retail insurance producers should not be penalized for the illegal acts “of those who now seek to change the market in their favor.”

The meeting will be held at 10 a.m. at the Chancellor's Hall at the State Education Building in Albany.

The hearing is the second of three which will conclude Thursday in New York City at 10 a.m. at the New York University Eisner and Lubin Auditorium.

Hearing information is available at the Insurance Department's Web site at www.ins.state.ny.us.