The New York State Insurance Department posted the latest version of its proposed broker compensation disclosure rules.

The implementation of the disclosure rules, which is being watched closely by several others states, establishes when agents and brokers must make certain disclosures about their role in an insurance transaction to their clients.

The proposed rules can be viewed at the NYSID website.

The regulation would require an insurance producer to disclose several components of the deal, including whom the producer represents in the transaction; that the producer will receive compensation from the insurer, based on the sale of the policy; that the compensation paid by insurers may vary; and that, upon request, the purchaser may obtain from the producer information about the compensation that the producer expects to receive from the sale of the policy.

The regulation also requires that, upon the customer’s request, the producer must disclose (in writing) the amount of compensation (which includes anything of value, including money, credits, loans, interest on premium, forgiveness of principal or interest, vacations, prizes or gifts), for the policy selected and any alternative quotes presented.

The draft regulation is scheduled to be published in the Dec. 2 edition of the New York State Register, which triggers the State Administrative Procedure Act process and a 45-day public comment period.

When approved, regulated parties will be given a phase-in period of six months.

The rules have undergone substantial revision since their first release in January, following hearings in June 2008 into whether a need existed for them in the state.

Although the draft is superior to prior iterations, it still presents concerns for professional, independent insurance agents, especially in the area of compliance, according to a statement from the Professional Insurance Agents of New York, a trade group.

The PIANY maintains that the rules are not necessary because no need has been identified. The group also alleges that the current definition of “compensation” is overly broad and overly inclusive and disclosure of it should be restricted to commissions alone and that the cost of compliance to producers is disproportionate to any benefit the draft will provide purchasers.

The organization also wants the mandatory disclosure rules to apply uniformly to all distribution channels and must not single out independent producers, according to the statement.

People may comment on the proposed rules by e-mail at mgaul[at]ins[dot]state[dot]ny[dot]us.