Insurance brokers in New York State will be forced to reveal their commission to clients under a new directive issued by the state regulator last week.

Under the new regulation, all brokers will be required to disclose whether the insurer pays commission on the sale. Brokers must also supply a detailed compensation statement to consumers on request.

New York State Insurance Department Superintendent James Wrynn says the regulation will improve transparency and build consumer confidence in the purchase of insurance.

“Consumers should understand any incentives that may potentially affect the recommendations from their agents or brokers,” he said.

The regulator justified its decision by stating that insurer compensation of brokers can be paid in many different forms, which may not be apparent to insurance consumers.

The state regulator admits it faced “stiff opposition” from the insurance industry in drafting the new regulation, which takes effect from January 1 of next year.