The New York State Insurance Department is distributing a “discussion draft” of a proposed regulation under which insurance producers would be required to describe for their clients the nature and amount of the compensation they receive, along with any business relationships they may have with the insurer. Insurance buyers also would have the right to receive information about any other quotes or alternative insurance products the insurance producer considered and the compensation associated with those quotes or alternatives.

The proposal must be approved by the Governor’s Office of Regulatory Reform, and then a formal comment period will be opened. The Department hopes to be able to implement the regulation by the end of the year.

This proposed regulation is the result of a series of public hearings that were hurriedly scheduled last August, less than one month after the 1st Appellate Division of the New York Supreme Court ruled in a case involving Liberty Mutual that contingent commission agreements were not illegal. The court also ruled that there was “no duty to disclose the existence of the contingent commission agreement.” PIA of New York testified at the hearings.

This issue, first raised in 2004 as the result of civil suits and settlement agreements promulgated by then-New York Attorney General Eliot Spitzer, had begun to die down aided by this and several other adverse court rulings. Now, it’s back.

The PIA National Government Affairs Committee Working Group is coordinating with PIA of New York, assisting in their efforts to address the draft NY DOI regulation in the best manner for PIA members in New York.

PIANY Statement (PIANY 2/4/09)
 
PIA Hails Appeals Court Decision Declaring Contingent Commissions Are Not Illegal (PIA National press release 7/1/08)

February 10, 2009