It comes as no surprise that groups of insurance agents and brokers in New York State filed suit this week in an attempt to block the implementation of a commission disclosure regulations recently adopted by the State Insurance Department. The agents contend that the Department lacks the legal authority to impose the regulations and also that they deny the insurance producers due process of law under the U.S. and New York State constitutions.
The Deputy Superintendent of the New York Department for life insurance noted that one of the agent groups filing the suit is on record as favoring “transparency” and expressing a willingness to disclose compensation information when requested by consumers. He pointed out that “this regulation does nothing more than enshrine that policy position…At some point…you really have to ask the question, what it is that they’re trying to hide about these compensation structures and what it is they are so fearful of having consumers know about the way they get paid by insurance companies?”
Good questions, indeed. Just why should life insurance be virtually the only financial product for which sales costs are not disclosed? Who does that really benefit? Journalists covering personal finance topics should follow this story with interest.