State RegulationsNY specificDifficulty 2/5
A New York client asks her broker to explain how the insurer will compensate the broker on the account. Under Reg 194 (11 NYCRR Part 30), the broker must
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Reg 194 (11 NYCRR Part 30), when a client asks, the broker must provide information about the compensation the broker receives or expects to receive in connection with the client's business — including the amount, source, and nature of the payments. Answering the client's request is the companion duty to the standing disclosure that compensation exists.
Why the other options are wrong
- B) Commission information is not shielded from the client as a trade secret; Reg 194 entitles the client to ask and obligates the broker to answer.
- C) Brokers themselves must be prepared to explain their compensation under Reg 194; the duty cannot be pushed off to insurers.
- D) No prior approval from the Superintendent is required — the broker simply furnishes the requested compensation information.
Memory hook
When the client asks about pay, the broker answers — Reg 194.