The regulation and subsequent implementation guidance indicate that no particular format is required for the disclosure, and we are beginning to see disclosures that carriers are including in their NY applications, or model forms for producers to modify or adopt for their use. A sample disclosure provided by Mutual of Omaha can be viewed by clicking here, and Shipp Financial will offer sample disclosures when you request applications from us, especially where a carrier has not included one.

One of our carriers, (Mutual of Omaha) has provided a concise Q&A summary of the requirements, which follows below. We are also providing links to the Circular Letter No. 18 (2010) dated November 5, 2010 from the Insurance Department and a recent opinion letter from the Office of General Counsel (OGC) for further information. We also expect further information to come from the carriers over the next several months, and will provide updates as pertinent.

http://www.ins.state.ny.us/circltr/2010/cl2010_18.pdf  (the implementation circular)

http://www.ins.state.ny.us/ogco2010/rg100906.htm (the opinion letter)


This notice is intended to be informative and educational in nature, and not to provide legal guidance. Questions may be directed to your legal counsel or the NYS Insurance Department.


Mary Beth Hofmeister, Director of Sales & Marketing
Shipp Financial Services, Inc.
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New York Regulation 194:

As stated above, New York regulation 194 takes effect on January 1, 2011. At that time, producers will be required to make certain disclosures regarding their compensation. The following Q&A will address how you can comply with these new requirements.

Q – When must I begin disclosing the right to request compensation paid for insurance policies?

A – The regulation containing this requirement takes effect on January 1, 2011. The disclosure must be made at or prior to the time of application unless the application is merely being used to solicit multiple quotes.

Q – How do I make this disclosure?

A – There are a number of requirements for the initial disclosure. We have created the attached New York Disclosure form that you may use to satisfy this requirement.

Q – Do I have to use this form?

A – No. The obligation to provide this information is yours. You may make this disclosure as you see fit. We are providing this form merely to assist you with this obligation.

Q – What is compensation for these purposes?

A – Compensation is anything of value received but does not include tangible goods with the insurer name, logo or other advertisement and having an aggregate value of less than $100 per year per insurer.

Q – If requested, how must the compensation be disclosed?

A – The compensation may be described in a number of ways. These included the following:

• Total dollar amount expected to be received based in whole or in part on the sale.

• Total amount expected to be received as a percentage of one year of premium.

• With life insurance, annuities, long-term care insurance and disability policies, you may disclose known compensation as a percentage of the expected duration of the policy or contract. The example provided by the NYSID is as follows: “I expect to receive from the insurer 8% of the total premium you pay on this policy if you keep the policy in place for 13 years which is the expected average duration of this type of policy. Most of that compensation will be paid in the first year.”