Are brokers allowed to receive contingent commissions from surplus lines carriers?

Brokers are permitted to receive contingent commissions from surplus lines carriers, but they must adhere to specific regulations and disclosure requirements. This means that while the practice of receiving these commissions is not inherently forbidden, brokers are obligated to inform their clients about such arrangements. Disclosure is crucial in maintaining transparency and ethical standards in the insurance industry, ensuring that clients are fully aware of any potential conflicts of interest that may arise from the broker's compensation structure.

In New Jersey, as well as in many other jurisdictions, these requirements are in place to protect consumers and promote fair business practices, ensuring that clients have all necessary information to make informed decisions. By complying with these regulations and providing proper disclosures, brokers can maintain their integrity and the trust of their clients.