N.Y. Superintendent Defends Agent Compensation Rules

When the basis for the disclosure initiative was challenged, PIA said Mr. Wrynn responded, "There's a history. The concerns were the consumer's right to know and a level playing field."

The regulations requiring the disclosure to clients of compensation by insurers and their activity in securing quotes are a legacy of the 2005 steering scandal when it was revealed that large brokers were sending their commercial insurance clients to insurers who paid them undisclosed fees.

Mr. Wrynn in discussing the new regulations described the process by which each of three successive drafts responded to producer comments.

"The consumer has a right to know," Mr. Wrynn said. "The customer already feels this way. The disclosure is just memorializing that fact. We've tried to make it as fair as possible. Now, are you paying for the sins of others? Yes, to an extent you are. But, if nothing is done and some other group of producers does something, then we've failed, in a way," PIA quoted him as saying.

The superintendent urged insurance agents to provide him with recommendations "that will let you service your clients better. I'd like to be less a regulator and more a facilitator for agents as well as companies."

"Superintendent Wrynn shares many goals with our association: helping insurance consumers in New York state and enhancing the markets available to independent insurance agents," said Ellen D. Kiehl, PIANY's senior research analyst. "The discussion of his agenda and concerns for the New York state insurance industry provided conference attendees with valuable insight on what to expect in the coming year."

Mr. Wrynn, who was confirmed as superintendent in September, also addressed his department's involvement in the national financial crisis over the past year.

PIA said Mr. Wrynn told the meeting that while financial problems have increased "the threat of federal regulation," he is optimistic that state-based regulation of the insurance industry will remain in place.

A shift to Washington "could have a tremendous impact" on the state's finances, he said, with "several hundred million dollars" of revenue potentially at stake. His department is monitoring the federal health care reform developments on a daily basis, he added.

The superintendent outlined three major areas where he intends to focus his energy, in addition to all that is happening at the federal level. These include emphasizing the local insurance market he regulates; bringing to a successful completion a number of endeavors the department currently has underway; and enhancing New York's stature as a world financial center conducive to doing business in the state.

"I'd like to make it easier to do business–create a business environment that promotes insurance. I want companies to want to work here," he said.

The Independent Insurance Agents & Brokers of New York also heard from Mr. Wrynn last week.

IIABNY said the discussion with members "centered on the superintendent's priorities, which he said include enhancing New York's status as a world financial center; making New York an easier place to do insurance business; and reviving the New York Insurance Exchange. Other topics of conversation were the department's proposed regulation on producer compensation disclosure and the medical malpractice insurance market."