Skip to Main Content
Services Talent Knowledge
Site Search


Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

December 21, 2010

Insurance Department Regulation Regarding Producer Compensation Transparency

On February 10, 2010, the Superintendent of Insurance adopted new regulations, 11 N.Y.C.R.R., Part 30, effective January 2, 2011. The stated purpose is to increase transparency in the practices of insurers and producers regarding incentive compensation paid to insurance producers.

The term "compensation" is broadly defined in the regulation to include anything of value (i.e., money, trips, prizes, gifts, etc.). The term "insurance producer" includes any agent, broker, intermediary, excess lines broker or any other person licensed to sell, solicit or negotiate insurance.

The regulations mandate four basic disclosure requirements for the producer:

  • disclosure of the producer's role in the sale;
  • whether the producer will receive compensation as a result of the sale;
  • that compensation may vary, depending on a number of factors; and
  • that purchaser may receive additional information about the amount of compensation upon request.

Disclosure of the specific amount of compensation is not mandatory unless it is specifically requested by the purchaser. Disclosure must occur at or prior to the time of the application, and must be oral or in the form of a "prominent writing." However, if the disclosure is oral, the producer must also disclose the information in a prominent writing by the time the policy is issued.

If the purchaser requests more information about the compensation, the producer must disclose the following:

  • a description of the nature, amount and source of any compensation;
  • a description of any alternative quotes presented by the producer
  • a description of any material ownership interest the producer and affiliates have in the insurer and its affiliates;
  • a description of any material ownership the insurer and its affiliates have in the producer and affiliates; and
  • a statement of whether the producer is prohibited by law from altering the amount of compensation received from the insurer.

The new regulations do not apply to reinsurance, insurance with a captive insurance company where the producer has no direct sales or solicitation contact with the purchaser (wholesale brokers, managing general agents), or sale by an unlicensed broker and renewals, unless the purchaser requests more information.

In a recent challenge to the validity of the new regulations, the New York Supreme Court ruled that the Superintendent of Insurance was empowered to adopt the regulations and there was no showing that the regulations were "unreasonable or irrational." Sullivan Financial Group, Inc., et al. v Superintendent of Insurance, Sup. Ct. Albany Co., Nov. 17, 2010.

If you require further information regarding the information presented in this Legal Alert and its impact on your organization, please contact any of the members of the Practice Area.


Click here to sign up for alerts, blog posts, and firm news.

Featured Media


Fourth Department Finds Language in 1980 Statute Is Gender Neutral for Purposes of Child Victims Act


Priority of Federal Tax Lien on Personal Property: Secured Lender vs. IRS


COVID-19 Business Interruption Update: New York High Court Affirms in Favor of Insurer


USFWS Introduces General Permit for Bald and Golden Eagle Incidental Take


ORES Executive Director Issues First Denial of Section 94-C Permit Application Following Applicant's Partial Loss of Site Control


New Details About OPWDD Spending in the New York State FY 2025 Executive Budget

We're Growing in DC!

We’re excited to announce Barclay Damon’s combination with Washington DC–based Shapiro, Lifschitz & Schram. SLS’s 10 lawyers, three paralegals, and four administrative staff will join Barclay Damon while maintaining their current office in DC’s central business district. Our clients will benefit from SLS’s corporate, real estate, finance, and construction litigation experience and national energy-industry profile, and their clients from our full range of services.

Read More

This site uses cookies to give you the best experience possible on our site and in some cases direct advertisements to you based upon your use of our site.

By clicking [I agree], you are agreeing to our use of cookies. For information on what cookies we use and how to manage our use of cookies, please visit our Privacy Statement.

I AgreeOpt-Out