This regulation applies to Insurance Producers in New York State and requires producers to make disclosures to consumers in regards to compensation which may be received as a result of the issuance of an insurance contract.
The regulation was instigated due to former New York Attorney General Eliot Spitzer’s 2004 investigations of Aon, Willis and Marsh. In these cases, there was compensation paid by both the client and the insurer. Additionally, these transactions involved primarily very large commerical accounts.
However, the New York Insurance Department wanted the clarification of producer compensation to apply to transactions involving $100 or more in annual compensation.
The disclosure is a two step process. The first step is required in all cases. The more detailed disclosure is required when a consumer requests more detailed information.
Additionally, the producer is required to retain the disclosure for a period of 3 years.
Since this regulation is targeted to insurance producers and not to insurance companies themselves, producers should consult their legal advisers or associations for more details on how to ensure compliance with this regulation.