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Monday, October 13, 2014

Producer Compensation Disclosures, are You in Compliance?

By ABIA Outside Counsel, Chrys D. Lemon, McIntyre & Lemon, PLLC

The NAIC’s Producer Licensing Model Act, which has been adopted in several states, requires that if a customer is to compensate a producer or a producer’s affiliate for an insurance transaction, that fact and the amount of compensation must be disclosed to the customer, and the customer must acknowledge receipt of the disclosures.  If the amount of compensation is not available, a reasonable estimate and a method of calculation must be provided.  The disclosures must be provided before the customer buys the insurance.

If a producer is not to be compensated by the customer, the disclosures are not required, but the producer must disclose that the insurer will compensate the producer in connection with the placement of insurance. 

None of these disclosures is required to be given to individuals who are participants or beneficiaries of employee benefit plans, or those covered under a group or blanket insurance policy or annuity contract. 
To learn more about disclosure regulations and the special rules that apply in New York, read the full compliance article. 

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