The Risk & Insurance Management Society on Thursday voiced its disappointment in the New York State Insurance Departmentâ€™s final producer compensation regulation, calling it a â€œ180-degree shift from previous versions in terms of its commitment to consumer protection for renewals.â€
The final regulation also contains diminished disclosure requirements for producers, according to New York-based RIMS, which called on the NYSID to reopen its public comment period for another 30 days.
The final regulation, published in the New York State Register on Wednesday, represents the fifth iteration of the rule and differs greatly from the original version released in January 2009.
Under the original version, producers operating in New York would have been required to disclose in writing to clients the â€œnature and amountâ€ of any compensation they received.
By December 2009, the rule had been revised to require producers operating in the state to disclose their compensation only upon client request. Producers would have been required, however, to automatically disclose to clients whether they represent the insurance purchaser or insurer for purposes of the sale and, if applicable, that they would receive compensation from the selling insurer.
After the required 45-day public comment period, the NYSID revised the final regulation, which contained several changes that agent and broker associations had sought, including less stringent disclosure requirements regarding their role in a transaction and on renewals. While in the previous version, renewals were exempt from the disclosure requirements when the producer had no sales or solicitation contact with the purchaser in the connection with the renewal, the final version exempts all renewals unless the purchaser requests more information about the producerâ€™s compensation less than 30 days prior to renewal or less than 30 days after a renewal.