NEW YORK (February 11, 2010) — The Risk and Insurance Management Society, Inc. (RIMS) today announced its disappointment with the New York Insurance Department’s final producer compensation regulation, with regard to both policy and process. The final regulation represents a 180 degree shift from previous versions, in terms of its commitment to consumer protection for renewals. It also contains diminished disclosure requirements for producers. Due to the substantive changes between the most recently published revision and the final rule, RIMS calls on the Department to reopen its public comment period for an additional 30 days.
“Consumer organizations 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.”
The intent of the rule, as it was initially presented, was to bring greater clarity and certainty to the insurance purchase transaction in order to protect consumers. While this objective was a positive first step by the Department; each subsequent revision has diluted the original intent and has resulted in the final rule that falls short of complete and mandatory disclosure, for which RIMS has been a long-time advocate.“
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.
“While RIMS will continue its mission of educating consumers, the published rule potentially puts many at a disadvantage when dealing with producers,” says Clark. “RIMS believes the Department should permit another comment period so that affected parties might once again have an opportunity to be heard.”