PIANY Reports 'Success' In Talks On N.Y. Fee Disclosure Rule

Their talks have dealt with Regulation 194, which goes into effect Jan. 1, 2011 requiring disclosure of producer compensation information to purchasers of insurance policies.

PIANY said they presented the regulators with a comprehensive list of questions; concerns and suggestions regarding the implementation of the regulation based on input from members of the organization.

The agent representatives said they asked for clarification on each of the points.

Under the new department regulations, producers will be required to describe to consumers their role in the transaction and how they get paid. If the client requests it, the agent or broker will have to provide a more detailed statement about compensation.

The regulation was published after extensive hearings. Regulators began developing it after a 2005 New York Attorney General's Office investigation revealed that some commercial insurance brokers took hidden payments to steer clients to insurers involved in a bid-rigging scheme.

The Independent Insurance Agents and Brokers of New York and The Council of Insurance Brokers of Greater New York have said they will challenge the new rule in court because it is overly burdensome.

PIANY said since those groups "have been precluded from active discussions with NYSID on this issue in light of pending lawsuits, PIANY is committed to make sure that the rules being developed by NYSID are as simple and easy to comply with as possible, should the lawsuit fail to stop the regulation."

Mr. Ryan said after Monday's more than an hour and a half of discussions "All agreed that the meeting was highly productive."

He said the participants had reached agreement "on department-approved disclosure language as suggested by PIANY, as well as similar agreements on each of the areas of concern that we brought to the table."

The other points, said, Mr. Ryan, "included when the regulation would require out-of-state producers to provide disclosure, how producers can identify when items they receive are based upon the sale of a policy and what is considered a renewal versus a new policy."

PIANY said it had resolved those issues following "earlier successful efforts to eliminate disclosure of a producer's compensation on every policy, eliminate disclosure requirements for renewals unless asked, include all licensed producers, including direct writers, and eliminate detailed disclosure of exact amounts of contingent compensation."

The organization said at its request, the department "will formally announce and publish the agreed-upon disclosure language, after it completes the required internal approval process. NYSID officials now will begin to draft the Circular Letter, offering compliance guidance for producers, which incorporates the recommendations and clarifications identified by PIANY."

It added that once the draft is complete, "PIANY will be invited to review the draft guidelines and return to the NYSID for further discussion and input.

A spokesman for the insurance department said the PIANY report of its Monday session with regulators was accurate

The group said it has pursued meetings with the department so agents and brokers are ready to comply with these requirements in the event that a lawsuit is not successful.

"PIANY refuses to sit on the sidelines and wait for a court to decide this issue. There are still a lot of open items on this regulation that need to be determined before it goes into effect. And, we're working to make sure these requirements are as simple and non-invasive as possible. Someone needs to be at the table representing producers." Mr. Ryan said.

More detail on PIANY's efforts and the regulatory issues the association is addressing are online at www.pia.org/COMM/abcd/.