PIANY

…Kevin M. Ryan, CIC, president of the Professional Insurance Agents of New York State Inc., and Matthew F. Guilbault, Esq., PIA’s director of government and industry affairs, have reported that they met with New York State Insurance Department Deputy Superintendent Matthew Gaul and Assistant Deputy Superintendent and Counsel Paul Zuckerman on Monday, May 10, to continue their discussions on Reg. 194. Reflecting input from PIANY members throughout the state, Ryan and Guilbault met a fourth time to present the NYSID with a comprehensive list of questions; concerns and suggestions regarding the implementation of the regulation; and asked for clarification on each of the points. Since other groups have been precluded from active discussions with NYSID on this issue in light of pending lawsuits, PIANY is committed to make sure that the rules being developed by NYSID are as simple and easy to comply with as possible, should the lawsuit fail to stop the regulation.

“All agreed that the meeting was highly productive,” said Ryan. “During the hour and a half plus meeting, we reached agreement on department-approved disclosure language as suggested by PIANY, as well as similar agreements on each of the areas of concern that we brought to the table.” These included when the regulation would require out-of-state producers to provide disclosure, how producers can identify when items they receive are based upon the sale of a policy and what is considered a renewal versus a new policy.

The resolution of these issues followed PIANY’s earlier successful efforts to eliminate disclosure of a producer’s compensation on every policy, eliminate disclosure requirements for renewals unless asked, include all licensed producers, including direct writers, and eliminate detailed disclosure of exact amounts of contingent compensation.

At PIANY’s request, the NYSID will formally announce and publish the agreed-upon disclosure language, after it completes the required internal approval process. NYSID officials now will begin to draft the Circular Letter, offering compliance guidance for producers, which incorporates the recommendations and clarifications identified by PIANY. Once complete, PIANY will be invited to review the draft guidelines and return to the NYSID for further discussion and input.

In an effort to have producers fully ready to comply with these requirements in the event that a lawsuit is not successful, PIANY has met with NYSID officials four times throughout the course of the last month, to make sure the interests of all New York producers are represented fully as the department finalizes its compliance and enforcement rules for the regulation.

“PIANY refuses to sit on the sidelines and wait for a court to decide this issue. There are still a lot of open items on this regulation that need to be determined before it goes into effect. And, we’re working to make sure these requirements are as simple and non-invasive as possible. Someone needs to be at the table representing producers.” Ryan concluded. PIANY has a website for producers on the topic www.pia.org.

IIABNY

…Meanwhile, the Independent Insurance Agents & Brokers of New York have submitted their proposal to the Insurance Department as part of comprehensive approach to tackle Reg. 194.

IIABNY has given the New York Insurance Department proposed wording for a document to help insurance producers comply with the new regulation on producer compensation transparency. The association said that it submitted the proposal to the department on May 13. During conversations with IIABNY staff, department officials encouraged the group to submit its ideas.

The IIABNY proposal would give insurance producers clear direction on how to comply with the regulation, should it take effect, according to IIABNY It suggests standard wording to inform the client: • That the producer may have access to more than one insurance company for the coverage;

• That the producer has legal and ethical obligations to both the client and the insurance company;

• That the producer will receive compensation from the insurance company based on a contract between the two, that the amount may vary between companies, and that the volume and profitability of the producer’s business may affect the amount of compensation; and

• That the client may obtain additional information about the producer’s compensation upon request.

After months of discussions aimed at convincing the department to drop Regulation 194 or minimize its burdens on producers, IIABNY responded to the demands of independent agents and brokers. The group announced in February that it would lead the effort to stop the regulation in the courts, and it continues to prepare for litigation. The Council of Insurance Brokers of Greater New York said last month that it would join IIABNY in the legal action, making it the only other producer trade organization to do so. Regulation 194 requires producers to follow a two-step process, beginning with a disclosure to all clients at the time of application. Following that, they must make detailed disclosures to clients who request them. The proposal IIABNY sent to the department applies only to the initial disclosure. The group intends to submit a proposal for the second disclosure at a future date. “We are pursuing a dual track strategy on Regulation 194,” said IIABNY’s new Chair of the Board David M. Gelia. “While we continue to pursue our legal options for stopping this unnecessary and burdensome regulation, we have also developed language to help producers more easily comply should the regulation stand. We look forward to hearing the Insurance Department’s comments on our proposal.”

The plot thickens