RIMS called upon the insurance industry to eliminate certain broker compensation arrangements at a public hearing in New York City on July 25. RIMS President Janice Ochenkowski, ARM, testified to New York Superintendent of Insurance Eric Dinallo and New York Attorney General Andrew Cuomo.
“RIMS has for some time maintained that the relationship between brokers and insurance consumers should be governed by the principle of complete transparency,” said Ms. Ochenkowski during her testimony. “We believe that a contingent fee system creates an inherent conflict of interest. The best way to level the playing field is to eliminate such compensation arrangements.”
In her testimony, Ms. Ochenkowski stressed that RIMS position is a broad prohibition on contingent fees for insurance producers. However, should the New York Department of Insurance and Attorney General choose not to endorse this approach, the Society believes that all compensation arrangements should be fully disclosed in writing. “The relationship between the broker and the commercial consumer must be based on a foundation of trust, truth and honesty. Complete disclosure of all compensation arrangements is not the perfect solution, but it will go a long way to promoting transparency, reestablishing the trust between the broker and the customer, and providing customers with sufficient information to evaluate any potential conflicts of interest in the placement of insurance policies,” stated Ms. Ochenkowski.
Read Ms. Ochenkowski’s complete testimony here.