Regulator says brokers must tell clients how they are paid
The New York Insurance Department has published proposed Producer Compensation Transparency Regulation governing how brokers report their payments from insurers, Dow Jones reports.
The rules were developed after public hearings and "extensive outreach to interested parties," beginning in July 2008.
Under the rules insurance brokers must
- Let their customers know whether they represent the purchaser or the insurer
- State whether they receive compensation from the insurer based on the contract they sell
- State that compensation insurers pay may vary based on a number of factors, such as the total volume of business the broker brings to the insurer.
- Explain that customers can request more information about the compensation.
If the proposals are approved by the Governor's Office of Regulatory Reform, they will be open to public comment for 45 days.
The regulation aims to set a standard of "transparency" for any type of compensation a broker receives, whether contingent or not, Matthew Gaul, special counsel in the insurance department, said.
