Council of Insurance Brokers of Greater New York and Independent Insurance Agents & Brokers of New York File Legal Action to Stop Unfair Producer Compensation Transparency Regulation

Says regulation imposes ‘massive and unwarranted costs’ on producers

The Independent Insurance Agents & Brokers of New York and the Council of Insurance Brokers of Greater New York today jointly filed a legal action to prevent the New York Insurance Department from implementing a burdensome and confusing regulation that will require insurance producers to disclose to their clients certain information about how insurance companies compensate them. The groups filed the action in New York State Supreme Court in Albany.

Insurance Regulation 194, which takes effect on January 1, 2011, requires producers to disclose certain information about their compensation to all clients, regardless of whether the clients have asked for it. Should any client request more information, the regulation requires the producer to provide detailed information about their compensation for the policy sold and the compensation they would have received had the client chosen a different policy.

IIABNY, which in 2004 called on insurance agents and brokers to voluntarily disclose to their clients the existence and nature of all their compensation, has opposed mandated disclosures as burdensome for producers and of little benefit to consumers.

The board of CIBGNY had similar concerns. Both groups testified at hearings on the subject conducted by the Insurance Department and the New York attorney general during the summer of 2008, saying that such a regulation is unnecessary and would not be in the best interests of either consumers or producers.

IIABNY and CIBGNY were part of an industry effort throughout 2009 aimed at convincing the department to drop Regulation 194 or minimize its burdens on producers. While standing up to protect producers’ businesses, the industry group hoped to keep the dispute out of the courts. However, after the department adopted the final version of the rule last winter, IIABNY and CIBGNY announced their plans to take legal action, the only producer groups to do so.

The action, known as an Article 78 proceeding, asks the court to annul parts or all of the regulation. In its court filing, IIABNY and CIBGNY asserted that:

·         The Insurance Department does not have authority under New York law to mandate compensation disclosure;

·         The regulation “represents an impermissible attempt to rewrite the Insurance Law on a subject as to which the Legislature has already specifically legislated”;

·         Parts of the regulation “impose massive and unwarranted costs of compliance on brokers so as to constitute an arbitrary exercise of regulatory power”; and

·         The regulation violates producers’ rights to due process and equal protection under the U.S. and New York State Constitutions.

Anticipating that the court proceeding might not conclude before the regulation’s scheduled effective date, IIABNY on May 13 sent the department a proposal for specific language that a producer could use for making the required initial disclosure. However, IIABNY and CIBGNY continued to move forward with plans to pursue legal action.

Since its inception in 1967, the CIBGNY has been the leading professional independent insurance brokers association in the New York City Metropolitan area. CIBGNY members come from all NYC Boroughs, Long Island, Westchester and Rockland Counties. The CIBGNY continues today to provide a powerful advocacy for the interests of its members and their clients and a forum for the exchange of professional education, information and camaraderie.

Contact: Anthony Aquilino, President CIBGNY
(718) 252-5456
aa@regencyagency.com

There is strength in numbers!

Your support and affiliation is vital

to our advocacy efforts on behalf of

you and your clients.

Producer Compensation Transparency or Producer Disclosure have been the most urgent issues that we are challenged with today. We've had numerous meetings with the Insurance Department and with our legislators in Albany. The regulation is on the table to become effective as of January 2011.

 We need your support more than ever.

 The Council of Insurance Brokers of Greater New York (CIBGNY) is beginning a legal proceeding to stop a New York Insurance Department regulation from taking effect. CIBGNY have directed their lawyers to move ahead with an Article 78 proceeding to challenge the promulgation and adoption of Regulation 194 – Producer Compensation Transparency. An Article 78 Proceeding is an appeal of a decision made in the New York Courts. The groups’ legal action will seek to prevent the New York State Insurance Department from implementing Regulation 194 mandating that the state’s licensed agents and brokers disclose their total compensation to existing and potential clients in certain situations.

 As an insurance broker in Brooklyn and President of the CIBGNY, I, like many brokers, sat on the sidelines and waited for someone else to do "it". I felt something lacking. Someone or some company was controlling my business.

 I found out by joining and supporting the CIBGNY my voice would be heard. CIBGNY is a group that listens and responds to insurance business owners, staff and affiliates. A group made up of brokers, general agents, insurance company reps and executives. All working together to keep abreast with the ever changing insurance industry we work and live in.

 So what am I appealing to you for?

 We need you to become a member. We need your support now.

 If you leave "it" up to someone else, some day you may not have "it".

 Join today!  Please don't put it off. Complete the membership application and submit with your dues.

 Visit our web site for updates on our continuing efforts regarding disclosure and other legislative issues.

 We are there for you. Come be there for yourself.

 Sincerely,

 Anthony Aquilino
President
Council of Insurance Brokers of Greater NY (CIBGNY)

Steve Acunto
Publisher - Insurance Advocate
P.O. Box 9001
Mt. Vernon, NY  10552

Dear Steve,

 I believe that working together is the one way our agent/broker community can overcome mandatory disclosure. When I was President of the Council of Insurance Brokers of Greater New York, Inc., I spent countless hours fighting and testifying against the NYSID regulation now slated to go into effect on Jan. 1, 2011. I, and every honest hard-working broker I know, object to disclosure because it is unnecessary and onerous, and a slap in the face to those of us who engage in ethical behavior and who always put our client’s interest first.

My experience in dealing with the NYSID gives me no confidence that the Department is committed to producers in its promise to make compliance simple. In fact, I believe the NYSID itself doubts its authority to promulgate this regulation. So, I am glad a lawsuit has been promised and I expect it to win. I hope it will be filed soon and without hesitation. I stated these opinions recently at a PIANY Advisory Council meeting in New York City.

But I also said I understand PIA’s concern about approaching this fight from two angles and I appreciate the wisdom of this decision. I recognize that every producer group will benefit from continued negotiation with the NYSID, just as every group will benefit from the suit and I am proud of the work our industry has achieved working together over the past year to fight the regulation. I believe if our industry is galvanized we will all benefit.

I would like to remind the smart producers that membership in your association is invaluable and also a responsibility; and I implore the staff and members of each association to focus our collective efforts on our mutual goal—fighting disclosure, regardless of the method of attack. Fighting amongst ourselves will only serve those who support it. 

Sincerely,

 Anthony Calafiore
Past President CIBGNY

IIABNY & CIBGNY Join Forces to Fight Producer Compensation Disclosure Regulation

(DeWitt, New York, April 19, 2010) — The Council of Insurance Brokers of Greater New York (CIBGNY) and Independent Insurance Agents & Brokers of New York (IIABNY) are teaming up for a legal proceeding to stop a New York Insurance Department regulation from taking effect. Officials from both trade organizations announced today they have directed their lawyers to move ahead together with an Article 78 proceeding to challenge the promulgation and adoption of Regulation 194 – Producer Compensation Transparency. The groups’ legal action will seek to prevent the New York State Insurance Department from implementing Regulation 194 mandating that the state’s licensed agents and brokers disclose their total compensation to existing and potential clients in certain situations.

CIBGNY president Anthony Aquilino stated: “The Insurance Department’s insistence on forcing an overbearing and burdensome regulation on our members is more than troubling. Once our board decided recently to initiate an Article 78 proceeding, it was a logical next step to work with IIABNY and protect the interests of both our members.”

At its quarterly business meeting on Feb. 8, IIABNY’s board of directors voted to initiate an Article 78 proceeding after working for months with the Insurance Department to craft an acceptable compensation disclosure regulation. However, the association’s directors concluded the Department’s final draft would impose excessive and unnecessary demands on producers and ultimately lead to additional costs for consumers.

“IIABNY never sought to pick a fight with the Department over this issue,” said IIABNY Chair of the Board Lane Rubin. “Rather, we spent countless hours working with state regulators to come up with a solution that would be acceptable to all parties. Unfortunately, that hasn’t happened yet, and we were forced to turn to the courts. Fortunately for agents and brokers in New York, we now have a willing and able partner in CIBGNY, who is standing with us against an unwarranted regulatory regime.”

The groups are challenging the Insurance Department’s legal authority to implement Regulation 194, which is scheduled to go into effect on Jan. 1, 2011. IIABNY and CIBGNY expect to file legal papers in state Supreme Court in May.

The Independent Insurance Agents & Brokers of New York, Inc. has represented the common business interests of independent insurance professionals since 1882. More than 1,800 agencies and their 18,000 employees currently rely on the DeWitt, New York-based not-for-profit trade association for legislative advocacy, continuing education and other means of industry support. For more information, go to www.iiabny.org

Since its inception in 1967, the CIBGNY has been the leading professional independent insurance brokers association in the New York City Metropolitan area. CIBGNY members come from all NYC Boroughs, Long Island, Westchester and Rockland Counties.  The CIBGNY continues today to provide a powerful advocacy for the interests of its members and their clients and a forum for the exchange of professional education, information and camaraderie. For more information, go to www.cibgny.com

Insurance Department Requests Comments on Existing Regulations that Impose Unnecessary Burden

In accordance with Governor's Executive Order No. 25 - Regulatory Review and Reform - http://www.state.ny.us/governor/executive_orders/exeorders/eo_25.html , the NYS Insurance Department is inviting the regulated community to "identify existing regulations that impose unnecessary, burdensome or excessive costs, paperwork, reporting or other requirements."

Public comments are due by May 24, 2010

 Here's the link to the NYSID web site
 http://www.ins.state.ny.us/r_misc/RExecOrd25.htm

COMMENT #1:  :

 REPEAL REGULATION 194 (11 NYCRR PART 30) - PRODUCER COMPENSATION TRANSPARENCY

(It's interesting to note that CIB cited E.O. 25, among other salient arguments, in its Letter-in-Opposition to Reg. 194 to Superintendent James Wrynn.)

 Please feel free to comment on ANY OTHER regulatory topics of concern as well.

This is your official chance to go on the record as an individual licensee with the NYS Insurance Department to complain about regulatory overreach.  Don't waste it!