IIABNY Chair to Testify at Broker Comp Hearing

Neal Sullivan, chair of the Independent Insurance Agents & Brokers of New York Inc., will testify July 23 before a joint public hearing conducted by the New York State Insurance Department and New York State Office of the Attorney General. Sullivan will provide written and oral testimony.

The Albany hearing will address the issue of contingent commissions—sometimes referred to as profit sharing—received by insurance agents and brokers.

According to a recent NYSID news release, the hearings were scheduled to determine if agents and brokers “should be required to make full disclosure” of profit sharing agreements to their clients and “whether such compensation creates an irreconcilable conflict of interest” for agents and brokers. However, the Liberty Mutual Insurance Company was victorious in a recent New York State Supreme Court, Appellate Division, First Department decision that determined “contingent commission agreements between brokers and insurers are not illegal.” The decision further explained that Liberty Mutual “had no duty to disclose the existence of the contingent commission agreement.”

Sullivan will reflect a long-standing IIABNY position that profit sharing is a legitimate method of compensation, as seen through the Liberty Mutual decision. In addition, IIABNY believes that mandatory disclosure singles out the independent insurance distribution method and would add burden to the agent or broker while increasing cost to the insured.

The Chancellor’s Hall at the State Education Building, 89 Washington Ave. in Albany is the site of the event, which begins at 10 a.m.