New York independent agent groups reacted with concern thatcompensation disclosure rules proposed by the state's insurancedepartment could become an unworkable burden on producers, but thethree major insurance brokerage firms applauded the proposal.

Representatives from the Independent Insurance Agents &Brokers of New York and the Professional Insurance Agents of NewYork said while they do not have a problem with disclosure, they donot want to see a requirement for disclosure become an undueobligation.

"Agents and brokers should voluntarily disclose compensationupon client request, but [the association is] opposed to anyadditional burdensome requirements on agents and brokers," theDewitt, N.Y.-based IIABNY said in a statement.

"We have no problem with disclosure," said Matthew Guilbault,director of government and industry affairs for the PIA of NewYork, based in Glenmont, N.Y. "We are concerned if [theregulations] are overly burdensome."

Both groups said they are in discussions with the insurancedepartment about the regulations and are hopeful their concerns canbe resolved.

The four-page draft does not prohibit compensation orcontingency arrangements between producers and their insurancecompany, IIABNY noted.

Mr. Guilbault said one concern the association has is that thedraft regulations do not inform clients that commissions producersreceive from carriers cannot be rebated in any way to the client toreduce their premium. There is also no differentiation between anagent and broker in the rules, he said, which is also aconcern.

The New York State Insurance Department sent out copies of thedraft regulation yesterday seeking input as they are developed fromconsumer and industry groups and other interested parties, adepartment spokesman said.

The four-page regulation sets out who has to disclose andincludes a sample notice of what that disclosure to clients shouldsay. The language refers to producers, not agents or brokers. Theregulation would exempt direct agents, reinsurers, wholesalers andcaptives from needing to disclose.

In an editorial roundtable interview at National Underwriteryesterday, New York Insurance Superintendent Eric Dinallo saidanyone handling financial services products needs to providecomfort to clients that there is total transparency, and that anyregulations would be designed to that end.

"There needs to be pure transparency, and I do not see anyquestion about it," he said.

Among the brokers supporting the regulation is Joe Plumeri,chairman and chief executive officer of Willis Group Holdings. Hesaid he commended the superintendent for "taking this importantstep to protect the interests of insurance buyers."

He called the regulation a "validation of our firmly heldposition" and added he hoped it would lead to an industry-widestandard.

"We fully support Superintendent Dinallo's efforts to create alevel playing field," said Brian Duperreault, president and CEO ofMarsh & McLennan Companies. "We look forward to continuing towork closely with the New York authorities to establish anequitable regulatory landscape that serves the interests of allclients."

David Prosperi, vice president of global public relations forAon Corp. said, "Aon believes all brokers and agents should at aminimum be willing to tell their clients who will pay them, howmuch they will make, and the quotes producers provide. This is thebasic information every client deserves."

He added that the firm believes the current draft regulations donot go far enough and should require an "enhanced discussion" aboutcontingent commissions.

The four biggest insurance brokerage firms--Marsh &McLennan, Aon, Willis, and Arthur J. Gallagher Corp.--gave uptaking contingency fees and agreed to disclose their compensationarrangements in 2004 after then New York Attorney General EliotSpitzer uncovered evidence that profitable volume base contingentcommissions served kickbacks for cooperating with insurers in a bidrigging scheme.