RIMS objects to “diminished” broker transparency rule

The Risk and Insurance Management Society, Inc. (RIMS) announced disappointment with the New York Insurance Department’s final producer compensation regulation, with regard to both policy and process.

The final rule falls short of complete and mandatory disclosure for which RIMS has long advocated.

Commented RIMS: “If New York returns to a policy that permits contingent fees on a wide scale basis, smaller consumer entities, in particular, would be subject to a lack of complete transparency of producer compensation as a piece of the insurance purchase transaction. That could give rise to the same conflict-of-interest concerns that the proposed rule was meant to address.”

The original intent of the rule was to bring greater clarity and certainty to the insurance transaction. But, according to RIMS subsequent revisions have diluted the rule.

“[It] could give rise to the same conflict-of-interest concerns that the proposed rule was meant to address

RIMS statement

“The final regulation represents a 180 degree shift from previous versions, in terms of its commitment to consumer protection for renewals,” said the Society, which represents insurance buyers. “It also contains diminished disclosure requirements for producers.”

Due to the changes, RIMS called on the insurance regulator to reopen its public comment period for an additional 30 days.

“Consumer organisations have not had the opportunity to digest these additional changes and comment upon them,” says Scott Clark, director of RIMS External Affairs Committee and risk and benefits officer for Miami-Dade County Public Schools. “The previous revision had reinstated the disclosure requirements for most renewals so the reversal would appear to warrant another comment period.”