What must a producer do when receiving commission related to servicing existing policyholders?

When a producer receives commission related to servicing existing policyholders, it is crucial to disclose all charges to the client. This practice aligns with ethical standards and regulatory requirements in the insurance industry, which emphasize transparency in financial matters. By disclosing all charges, the producer ensures that the policyholder is fully informed about any costs associated with their policy, fostering trust and clear communication.

This transparency is important because it allows clients to understand what they are paying for and helps them evaluate the value of the services they are receiving. It also mitigates the risk of misunderstandings or disputes regarding fees in the future, which can lead to complaints and regulatory scrutiny.

Documenting service fees or including terms in the policy can be part of the overall process but does not specifically address the direct obligation to inform clients about charges. Obtaining a waiver from the policyholder, while potentially relevant in some contexts, does not fulfill the broader requirement for transparency and disclosure that is foundational to the producer-client relationship.