Broker & Agent Disclosure

Following investigations of illegal practices by a small group of mega brokers, IIABNY has developed a policy position on disclosure of agent/broker compensation. IIABNY supports disclosure to clients of the existence and nature of compensation an agent or broker receives. This disclosure should be done in the broader context of communicating with the client or prospective client which outlines the entire relationship and services of the agency/brokerage. The value of the brokers’ business is his or her customer base and brokers work hard to properly service their clients in order to retain their business. Consumers who are unhappy can bring their business to another producer.

The Association’s policy supports disclosure to clients of the existence and nature of all compensation an agent or broker receives. While the form of the disclosure needs to be flexible and appropriate to the circumstance, the end result should be an environment that provides an open exchange of information. This forward-thinking policy statement goes beyond others we have seen to date, in that it strongly urges all IIABNY members—brokers and agents alike—to foster an environment of full transparency with their customers. We hope that this policy will become a model for our industry throughout the country and will help to restore a feeling of trust among consumers who purchase insurance.

Action Needed:

IIABNY supports voluntary agent/broker disclosure. We also support incentive or profit sharing compensation arrangements between insurance companies and their agents and brokers. We oppose any legislation that would restrict these contractual arrangements. These agreements are commonly called profit sharing agreements and are based on the agency’s or broker’s overall performance on its book of business with a particular company. While these agreements may be based on some combination of factors, such as profitability, volume, growth and retention, the profitability of the book of business is usually the dominant factor. These agreements provide an incentive for agents/brokers to work with their clients to manage their risk exposures and prevent losses. This risk management activity directly benefits clients over time with more favorable insurance prices and coverage terms.

Licensing Issues

To further the goal of multi-state uniformity, we support the elimination of separate “agents” and “brokers” licenses in New York and establishment of a “producer” license, as suggested in model legislation recommended by the National Association of Insurance Commissioners (NAIC). By eliminating the licensure distinction between “agents” and “brokers” the ability for licensed New York insurance professionals to conduct business in other states will be streamlined and it will eliminate inconsistent regulatory requirements.

We also support the concept of a single license for property & casualty and life insurance agents and brokers in New York State. By consolidating license renewal dates to one common renewal date, licensees will benefit from more streamlined record-keeping and the ability to efficiently manage their continuing education requirements for each license. With the tremendous progress the Insurance Department has made in the area of on-line license renewal, the single license concept should not result in any additional administrative burden on the Department.

Action Needed:

We support the replacement of separate “agents” and “brokers” licenses with a single “producers” license.

We also support a single New York State license with a common renewal date for property & casualty and life agents.

Legislative Position Paper 2006 Session

Broker & Agent Disclosure

Auto Insurance Reform

Health Insurance Reform

Market Availability & Affordability

Workers Compensation Reform

Law Labor 240 / 241 Reform