Anxiety is growing within the agent and broker community about rules that will go into effect in New York in January that will require them to disclose to their clients information about the compensation they receive from insurance companies.
In a statement, the trade group representing New York property and casualty insurance agents warned out-of-state agents that the rules would apply to them if they go into effect.
The recently published N.Y. Insurance Regulation 194 requires producers to disclose to their clients information about the compensation they receive from insurers.
Lane S. Rubin, chairman of the board of the Independent Insurance Agents & Brokers of New York, said in a statement that only one other producer has joined them in taking legal action to stop the New York Insurance Department from putting the regulation into action.
Officials of the Association for Advanced Life Underwriting, which represents top life brokers, also issued the same warning to members attending its annual meeting in Washington, D.C. earlier in the week.
And, like the IIABNY, an AALU lobbyist said that the group is contemplating taking legal action against the New York department.
“Insurance producers all over the country have New York licenses,” Rubin said. “They may have heard about the new requirements and incorrectly believed that it’s a New York matter only. They don’t realize that they also will have to comply with these rules if they write business in New York.”
He said the regulation applies to anyone required under New York law to hold a license to sell, solicit or negotiate insurance. This means that it affects both New York residents and residents of other states who hold New York non-resident licenses.
“I’m afraid that non-resident producers who have only a few New York clients- particularly those in nearby states like Connecticut, New Jersey and Pennsylvania-will not be prepared if this regulation takes effect next January,” Rubin said.
The AALU officials made the same observations at their meeting.