A New York state agents association has asked the state'sinsurance department to make any mandatory producer compensationdisclosure regulation more general in nature to avoid forcingagents to disclose information they may not have.

In a meeting with the department, representatives from theIndependent Insurance Agents and Brokers of New York (IIABNY), ledby Chairman Neal L. Sullivan, raised some concerns about thedepartment's Jan. 29 draft regulation on producer compensationtransparency.

Jill Muratori, legislative representative for IIABNY, said theassociation believes the draft regulation is too specific, andexplained that certain requirements would be "difficult orimpossible for a producer to do."

For example, she said the draft regulation contains a provisionthat would require producers to estimate how much compensation theyare going to receive when that figure might be unknown insituations such as profit sharing.

"We gave them an idea that perhaps instead of drilling down intothe detail that [the department] has in [its] proposal, perhaps amore general type of disclosure that invites a purchaser to askmore questions about compensation would be more appropriate than ablanket detailed compensation disclosure," Ms. Muratori said.

According to IIABNY, the department asked the association toprovide an alternative proposal that it believed would be moreworkable for producers.

Matthew Guilbault, director of government and industry affairsfor the Professional Insurance Agents of New York (PIANY), said hisassociation recently sponsored an industrywide summit on the draftproposal. He said life, health and property-casualty agents andcompanies all met to discuss strategies. The participants agreedthe department's draft is "undoable and unworkable" as is, hesaid.

Mr. Guilbault said one problem he sees is a provision that if anagent considers a number of policies, and presents one to a clientbased on what the agent feels is best, the agent has to go back andprepare compensation arrangements for every other policy that wasconsidered in the event the client asks for the information. This,he said, could create a lot more work for smaller "mom and pop"agencies.

"It really serves as a disincentive...to offer the consumer thewidest breadth of choices," Mr. Guilbault said.

Observers say that any alternative proposal seriously consideredby the department would likely have to contain mandatorydisclosure, as opposed to voluntary.

Mr. Sullivan said in the IIABNY statement, "It appears that thedepartment is not in support of simply a voluntary disclosure, andIIABNY is engaged with them to rework the language."

Recent comments by New York State Insurance DepartmentSuperintendent Eric Dinallo during an editorial roundtableinterview at National Underwriter supported Mr. Sullivan'sstatement. Mr. Dinallo said anyone handling financial servicesproducts needs to provide comfort to clients that there is totaltransparency, and that any regulations would be designed to thatend.

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

A department source also said mandatory disclosure is highlylikely to be part of the final regulation.

Mr. Guilbault said the department will be holding four workinggroup hearings on the proposed regulation starting on March 6, andPIANY will participate in them.

A department source said the NYSID has met with "numerousstakeholders" and hopes to have a regulation completed by the endof the year.