Earlier this month, an appeals court in New York agreed with the lower court’s ruling and said the insurance regulators have the authority to require brokers to disclose the source of their compensation.
The rule, Regulation 194, was implemented in 2010 by the Department of Insurance, which is now part of the Department of Financial Services. It requires brokers to disclose their role in the sale of insurance and explain whether they get compensated from an insurer or third party, and factors that affect their compensation. Brokers are required under the rule to offers detailed information on their compensation to clients when asked.
But in Matter of Sullivan Financial Group Inc. vs. Wrynn, opponents argued that the regulators had overstepped its authority when they implemented the rule. They also argued that the rule does a poor job of improving transparency. But the appeals court ruled that the regulators do have the authority to issue such a rule and that it’s not the court’s role to second-guessthe rule’s effectiveness.
Topics Agencies Legislation New York
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