DOL Response to Allegations that Some in Insurance Industry Have Developed a Pattern and Practice of Underreporting Commission and Fee Payments to Brokers and Agents
In response to allegations by Fortis Benefits Insurance Company that some in the insurance industry have developed a pattern and practice of underreporting commission and fee payments to brokers and agents based on incorrect interpretations of Schedule
A to Form 5500, the DOL issued an advisory opinion that ERISA imposed a legal duty on an insurance company to furnish the plan administrator with accurate information on fees and commissions paid to brokers, agents and other persons. According to the DOL, information must be disclosed regarding all commissions and fees directly or indirectly attributable to a contract or policy between a plan and an insurance company, and includes persistency and profitability bonuses, It is not permissible to conclude that payments must be disclosed only when they are a “sales commission” on an individual policy or contract.
