New Bulletin from Division of Insurance has advisory rules on producers charging fees in connection with the sale of insurance
If it was unclear whether Massachusetts agents could charge separate fees for additional services in connection with insurance sales, the DOI’s Bulletin 2013-09 answers that question: “Yes”. As with anything legal however, the devil is in the details.
The Division of Insurance issued its bulletin October 4 announcing that insurance producers can now charge separate fees to insurance purchasers in conjunction with the sale of insurance. Massachusetts joins other states like New Jersey and Oregon that permit their insurance producers to charge fees. Unlike these other states, however, the official requirements on what must go into the notification to one’s insureds about the fees charged is not as detailed as other states. However, that may come later. In the meantime, here is the official statement from the DOI:
“This Bulletin is being issued to provide guidance to resident and non-resident insurance producers, including special insurance brokers, engaged in the solicitation, negotiation and sale of insurance in the Commonwealth of Massachusetts relative to fees charged by producers in connection with the sale of insurance products.
Resident and non-resident insurance producers, including special insurance brokers, engaged in the solicitation, negotiation and sale of insurance in the Commonwealth may charge the purchaser of an insurance product a fee in addition to the policy premium established by the insurance company, provided that:
The purpose and amount of the fee shall be disclosed, in writing to the purchaser prior to the time of sale;
The fee shall not be included in the policy premium, as established by the insurance company issuing the policy; and
The fee shall be separately itemized on the policy declarations page, billing statement or other documentation provided to the purchaser setting forth the cost of the policy.”