While it plans legal action to stop a proposed producer compensation disclosure rule, the Independent Insurance Agents & Brokers of New York is still offering its suggestions to state regulators to aid its members.

David M. Gelia

The IIABNY said it has given the New York State Insurance Department (NYSID) proposed wording for a document to help producers comply with the new rule, set to take effect Jan. 1, 2011, with the goal of greater compensation transparency. The new regulation requires insurance producers to disclose how insurers are compensating them initially and in greater detail if asked by a client.

The agents’ group submitted the recommendations May 13, according to a statement, following discussions with state regulators.

The IIABNY announcement comes as The Professional Insurance Agents of New York (PIANY) also submitted its recommendations for disclosure language following a May 10 meeting with NYSID staff.

Among its recommendations, the IIABNY suggested that the rule, known as Regulation 194, include wording to inform the client a producer may have access to more than one insurer for coverage; that a producer has legal and ethical obligations to both the client and the insurer; and that compensation may vary between insurers based on contracts with producers, with the volume and profitability of the producer’s business likely to impact the amount of compensation.

In February, the IIABNY and the Council of Insurance Brokers of Greater New York announced that they would take legal action to stop the regulation in court. The IIABNY said both groups continue to prepare for litigation.

“We are pursuing a dual track strategy on Regulation 194,” said IIABNY Board Chairman David M. Gelia in a statement. “While we continue to pursue our legal options for stopping this unnecessary and burdensome regulation, we have also developed language to help producers more easily comply should the regulation stand. We look forward to hearing the insurance department’s comments on our proposal.”