NU Online News Service, May 10, 3:00 p.m. EDT--The chairman of the New York State Senate Insurance Committee has told a group of insurance brokers he believes the misdeeds of large commercial brokers are not a reason for additional regulation of Main Street agents.
Sen. James Seward, R-Milford, made his comments last week at a meeting of the Professional Insurance Wholesalers Association Inc.
Little, "if anything," should be done in terms of legislation for the state's insurance brokers and agents to address bid-rigging and contingent fee abuses by large commercial brokerages that have been uncovered by New York Attorney General Eliot Spitzer, Mr. Seward said.
The senator said he understands the difference between a large brokerage operation and a typical independent agent, and added he is confident that much of the state Senate also recognizes the difference.
He said that the action of national brokers does not translate into the need for broad-based regulatory change.
"Whatever is done legislatively, if anything, shouldn't be disruptive to an otherwise well-functioning market," he reportedly said.
Seth Lamont, counsel for the senator, said Mr. Seward's comments have remained consistent since January when he first addressed the issue.
Mr. Lamont said there are no bills pending in the state Senate to address contingent compensation. However, bills have been introduced in the state Assembly sponsored by Assemblyman Ryan Karbon, D-Rockland, and are in committee.
Mr. Seward's comments mirror remarks by New York State Acting Insurance Superintendent Howard Mills, who said in April that agents should be permitted to continuing to accept contingent commissions.
Mr. Mills noted that agents are more reliant on the commissions than the mega-brokers, and the practice at the agency level has not resulted in abuses seen among the mega-brokers. Mr. Mills added that greater disclosure was the answer, not abandonment of contingent commissions.
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