IIABNY To Take Action Against Disclosure Compensation Rule

The Independent Insurance Agents & Brokers of New York (IIABNY) announced that it will proceed with legal action to stop a New York State Insurance Department-published rule that mandates that producers tell their clients, if asked, who is paying them and how much. The rule goes into effect Jan. 1, 2011, but challenges are expected from multiple agent organizations, many of which agree with IIABNY that the rule is needless.

INN reported Wednesday that in a statement, New York State Insurance Superintendent James Wrynn said the new regulation is designed to provide transparency by requiring agents and brokers to describe to consumers their role in a business transaction and how they are compensated.

After receiving an advance copy of the final rule, the IIABNY board of directors deliberated for three hours at its quarterly business meeting on February 8. The board says the department made some positive changes, but the rule would place an undue burden upon its members for no justifiable reason. IIABNY is also challenging the Insurance Department’s authority to promulgate the regulation.

“IIABNY has a responsibility to represent and to protect the interests of its members, and our members have unanimously and vociferously told us that this rule is unnecessary, ineffective and overly burdensome to their businesses,” says IIABNY president and CEO Dick Poppa. “We cannot sit back idly and let the department impose an unnecessary rule that will only serve to add another time-consuming and costly requirement for our members, which in turn could also result in additional costs to consumers.”