Upon meeting Eric Dinallo for the first time, one prominent industry association leader confided to me that he found the new Superintendent to be “something of an acquired taste”. During his roughly two year tenure as Supt. of Insurance, a tenure which coincided with chaos on Pine Street, in Albany’s Executive Mansion, and on Wall Street, he gradually became the taste happily acquired and prized by the industry as its appetite for greater transparency and identifiable guard rails was increased as a result of newspaper headlines, lawsuits and the realities of a recession. The public’s, the media’s and some politicians’ concerted calls for corporate accountability did not find a deaf ear in the Superintendent’s office. Initial suspicions about him, stemming from his close ties to Eliot Spitzer, as part of the posse that flanked the Sheriff of Wall Street, proved ultimately to be a fear only for those who feared a reasonable standard of probity. The general disgust with Spitzer’s behavior never touched Dinallo, as a consequence of his good performance as a public servant and his reputation as a philosophically tempered individual whose principles were solidly rooted, but whose practical sense of regulation enabled the NYSID to continue to set the standards for the country. Eric Dinallo did better than a good job, in our view, although we did not always agree with his approaches. He did “ice” some of the industry’s often excessive warmth and coziness with the State that can lead easily to compromised objectivity, entrenched lassitude and regulatory sloppiness.

It must not have been easy for the Superintendent. Those of us who have come to the world of business from the classics and the study of philosophy always harbor a certain petite frustration, I think, since the purity and pristine clarity in those studies rarely find fulfilling correlatives in the world of business, where practicality, some principles and established law take over for more searching, profound questions of right and wrong, sound and unsound, bright and ignorant. Applied ethics and market logic are not half as beautiful as the pure subjects themselves and intelligent deliberations about them. In a business world that is hardly tolerant of heady, patient argument or passionate zealotry, the ability to temper action with sound intellection is a mark of some serious distinction, one that Eric Dinallo has earned. His regulatory posture and his caring attention provided good guidance and guidelines in the face of the most challenging times for insurers since 1984. We salute him for his accomplishments, particularly as he underlined to Congress and to the media that AIG’s healthy insurance operations were not part of its gargantuan illness as a result, to some degree, of State regulatory architecture and accountability standards. We wish him well as he moves to NYU and, after that, perhaps back to public service.
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While referring, I hope not tediously, to philosophy and logic, we recall that the most basic part of elementary logic classes, at least back when I was in college, involved a review of fallacies in reasoning, involving among other things, false emphases found under the heading “using truth as a vehicle for falsehood”. This deceiving, misleading line of argument comes to play in the matter of producer compensation disclosure.

An agent, required to disclose too much at the point of purchase, risks calling undue emphasis to his commission monies and, therefore, suspicion, probing and, potentially, improper or incorrect inference on behalf of the buyer. There are entertaining parallels. Imagine a doctor required to tell his patient “I will begin your prostate exam now. I pay the lab on 35th Street $37.50 for the test; in fact, I make only $112 on your case. Ready?”
Ahhh, disclosure. Giving undue or misplaced emphasis easily makes truth a vehicle for falsehood. Insurance Advocate has been a most vociferous voice against rebating and has run articles over our past 120 years identifying improper practice, illegality and fraud committed by different parties in the industry. When it comes to producer compensation disclosure at the point of contract, we feel that the potential for a customer inferring that an “opportunity” exists and therefore requesting some form of rebate by virtue of the undue emphasis placed on the disclosure is elevated dramatically and unnecessarily by an overkill level of disclosure. In this, we agree with LICONYand NYSAIFAand others that a producer should disclose the fact of his or her compensation vehicle, i.e. commission, but not the amount or attendant compensation features. Let’s hope the final bill comes out and comes out that way, as the coup du jour locks the legislature even further than its rather “keyless” lead