The New York State Insurance Department has posted a collection of answers to common questions about the state’s Regulation 194 producer compensation disclosure rules.
The regulation requires producers to provide a mandatory initial disclosure to all insurance purchasers.
Producers do not have to volunteer information about compensation amounts, but they must dislose compensation amounts when customers ask for the informaton.
New York department officials say in the new batch of Regulation 194 guidance that the regulation does apply to sales of life insurance, annuities, accident and health insurance, and state-mandated disability contracts as well as to sales of property-casualty insurance.
The regulation does not apply to reinsurance.
If a producer is selling group and blanket insurance policies, the producer must start by providing the mandatory initial disclosures to the group policyholder, such as an employer or association, officials say.
“However, the insurance producer also must provide the disclosures to a certificate holder or member if the insurance producer has direct sales or solicitation contact with the certificate holder or member, and the certificate holder or member pays the entire premium,” officials say.
A producer must provide the initial disclosure to a purchaser even if the producer is not compensated for the sale, and the producer must provide the disclosure even if a policy is being sold by mail, Internet or telephone.