GLENMONT, N.Y.–As the formal 45-day comment period required of the New York State Insurance Department came to a close, The Professional Insurance Agents of New York State Inc. provided written comments to the NYSID this week, representing input compiled from PIA members and more than a year of cooperation with policymakers on the department’s draft regulation on producer compensation disclosure.
PIA reiterated its fundamental objection that any regulation to mandate disclosure would be unnecessary and an undue burden to honest insurance agents and brokers. “In fact, as we’ve pointed out repeatedly, the Department has not offered to share any documented harm relative to the actions of Main Street agents and brokers that would justify the adoption of a disclosure mandate,” said PIANY President Kevin M. Ryan, CIC, in his letter on behalf of the association.

PIANY also argued that the NYSID would be overstepping its statutory authority by imposing such a mandate and that the cost of compliance would far outweigh any benefit the regulation would provide to consumers. In fact, PIANY asserted the regulation could serve as a disincentive for independent insurance producers to conduct market-wide searches on behalf of their clients to present the widest possible choice for their insurance coverage.

Beyond its fundamental objections, PIANY also cited specific concerns with the draft, demonstrating the near impossible burden it would impose on its members. These included: an overly broad definition of compensation, making compliance difficult, if not impossible; the need to be flexible regarding an appropriate time for disclosure; the need for the regulation to recognize that a producer may commonly act as both an agent and a broker in an insurance transaction;  the need to clarify disclosure requirements for out-of-state policies with incidental New York coverages; the cost and burden of compiling and retaining records; and  the need to fully exempt renewals.  

Based on the faults cited in its letter, PIANY recommended that the proposal be substantially modified or rejected. If any regulation were to be enacted, however, PIANY said that the NYSID should substantially extend its proposed six-month phase-in period. “As these examples show, there are myriad compliance questions that are of tremendous concern and consequence to PIANY members. And, more questions surface all the time,” the letter said. PIANY continues to work with the industry-wide coalition it originally organized to turn back this misguided proposal.

PIANY’s full comments to the NYSID can be found here: www.pia.org/GIA/NY/producercompcomment1.10.pdf.
 
PIANY is a trade association representing professional, independent insurance agencies, brokerages and their employees throughout the state.

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