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On November 5, New York’s insurance producers finally got a look at an important Circular Letter that's been in the works all this year. Circular Letter 18 (2010) tells the producer community how the Department interprets its new regulation on disclosure of producer compensation. Now, producers have only until Jan. 1, 2011 (the effective date) to absorb this information and get set in their offices in order to comply. The entire producer community staunchly opposes a mandatory disclosure requirement-dating way back to when Eliot Spitzer was still Attorney General. While many of us don't object to disclosing information to our clients who ask - personally, I think it’s a good business practice— still, we don't think the Department should force us to. But all the years of protest, plus a court challenge, haven't fazed the Department in its determination to see this Regulation take effect.

So let’s assume for the moment that we’re going to start disclosing at the start of the New Year. What are we actually going to be doing? I'll confess I just recently started to focus on what the details mean, when they're put into practice. As a member of PIANY’s Agent & Broker Compensation Disclosure Task Force, maybe I shouldn't admit that. PIANY, the ABCD Task Force and the whole producer community have long focused, number one, on opposing this whole regulation; and number two, on getting changes made so that, if it does take effect, it will be simpler to comply with. But (now the Circular Letter is final) have we looked at the end result?

On principle, we oppose a mandate so much that it goes against our grain to ask, what would it make us do. But, I finally sat down and looked over all the changes that PIANY and others have been able to deliver. I was relieved to realize that the biggest part of the requirement is telling our new customers that we'll get paid for getting them insurance, and that we'll give them more details if they ask.

PIANY already has gotten the Department to sign off on language producers can use to comply with this "initial disclosure" requirement. Any producer can get the wording by going to the PIA Web site. PIANY also is beta-testing workflows with users of various agency management systems, so agencies can automate disclosure and recordkeeping if they so choose. By the way, how many producers realize that the initial disclosure doesn't include any compensation figures whatsoever? Only if a customer actually asks about it, is compensation required to be stated. (PIANY expects to have a template ready soon that producers can use to respond, if customers ask for more information.) How many customers that will turn out to be, remains to be seen. In the 50 years I’ve been a licensed producer, no one has ever asked. Will we suddenly be preparing a lot of these disclosures stating our compensation—or will people even care? What I do know, is that this “disclosure on request” part of the regulation will be a lot easier to do, than it would be if PIANY had not worked all year to get reasonable interpretations on how to do this. (For example, the Circular Letter includes sample language producers can use to help explain “unknown compensation”— amounts that you may or may not get.) We all know the period from Thanksgiving to New Year’s Day flies by in a round of parties and (for us producers) renewals. Don’t forget to stay engaged in learning about Reg. 194—a lot of resources have been created by PIANY and others—and figuring out what YOU will do, come next year.