Commissions on Life Insurance

[Effen]

I have a client that recently had an "awakening" with regards to their insurance broker. The guy had lots of whole life insurance policies inside and outside the db plan. There was also some large stock re-purchasing contracts outside the plan.

Is there anyway the policy holder can find out exactly how much the agent has received in commissions? The "commissions paid" was generally left blank on the previous Schedule As.

Does the policy holder have a right to know this information? If so, will the insurance company provide it if they are contacted directly?

[Belgarath]

The policyholder being the Trustee/Plan Administrator, I presume.

Yes, since the insurance company is required to provide the necessary information to complete a schedule A, then I can't imagine that they would refuse. A threat of complaint to the DOL/IRS might have a salutary effect if they are uncooperative, but I can't imagine why they wouldn't cooperate with the Plan Administrator/Trustee. If it is an individual participant, then I'd expect they could only provide to the Administrator/Trustee.

Don't know if a state banking & insurance department would be helpful or not.

Also, I believe most insurance companies utilize some sort of form disclosing the precise commissions - which must be approved by the plan fiduciary.

[Ron Snyder]

Belgarath hasn't much of an imagination. Insurance companies run the gamut: some fully disclose commissions; some partially disclose commissions and others refuse to disclose. Filing Schedule A is the responsibility of the employer, not of the insurer.

I believe that those companies which do not already include Schedule A amounts in their reporting will refuse to provide such information unless forced to do so (by a lawsuit). A few may capitulate under threat of lawsuit. Exhaustion of administrative remedies prior to suing always makes sense; the client may file a complaint with the state insurance department if he really wants to know.

[Belgarath]

Veba - I neither dispute my lack of imagination, nor do I dispute that Schedule A filing is the responsibility of the Plan Administrator.

However, if you read my response a bit more carefully, you'll see that I said, "...since the insurance company is required to provide the necessary information to complete a schedule A..."

See DOL 2520.103-5.

In my experience, I haven't had much trouble getting this data, but my experience with this is limited, so I yield to your expertise in dealing with insurance carriers to obtain the required data.

[SteveH]

I haven't ever seen an insurance company refuse to disclose the comissions. More often than not I think the client never reads the Schedule A. Even if they do review the figure I think the numbers are so big that the client figures it must not be a commission and maybe is a number that they just don't understand. After all most of the 5500 report is filled with things the client doesn't understand.