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Don't Ask, Don't Tell, Don't Cut It!

The debate over disclosure of broker compensation has taken an ugly turn in New York, and the next battleground will be not just a court house, ...

By Staff Writer | Updated on June 01, 2010
MoneyHandsThe debate over disclosure of broker compensation has taken an ugly turn in New York, and the next battleground will be not just a court house, but the court of public opinion.

Responding to a lawsuit challenging a New York disclosure regulation due to take effect Jan. 1, 2011, the state’s insurance department expressed its “disappointment” it had come to this, and wondered aloud what brokers might be “trying to hide” from their clients. (See http://www.property-casualty.com/News/2010/5/Pages/Producer-Groups-Sue-To-Stop-Compensation-Disclosure-Rule.aspx about the suit, and http://www.property-casualty.com/News/2010/5/Pages/Regulator-Disappointed-In-NY-Broker-Compensation-Lawsuit.aspx?k=NY+broker+compensation about the department’s reaction.)

The Independent Insurance Agents and Brokers of New York–one of two groups to file the lawsuit, along with the Council of Insurance Brokers of Greater New York–was quick to respond to the department’s challenge about the motive of producers in this action. While insisting they stand behind disclosure, they are challenging the department’s right to impose a mandatory, bureaucratic procedure to accomplish this.

“I think the Insurance Department knows that we don’t have anything to hide, and we’ve been very clear for years now that agents and brokers should be prepared to voluntarily disclose the nature of their compensation. And if anybody asks, producers should be very willing to provide that information,” Tim Dodge, director of public relations for the IIABNY), told our own Caroline McDonald.

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