WELCOME to 2005-and to the continuing fallout from New York Attorney General Eliot Spitzer's investigation of the insurance industry. For agents and brokers, a big question in the year ahead will be to what degree the reaction to the Spitzer investigation affects their relationships with clients and their ability to obtain contingent compensation from their carriers.
A major step toward answering that question took place shortly before the end of December, when the National Association of Insurance Commissioners approved an amendment to the Producer Licensing Model Act that would require agents and brokers to disclose more fully their compensation to clients. This was the fourth draft of the amendment, which the NAIC first proposed in November, and it reflected input NAIC solicited from carriers, producer organizations and other parties.
“We made a promise to consumers and (the) industry to get to the bottom of this matter as quickly as possible, resolving to develop and put in place a tangible action plan for state insurance regulators,” said Diane Koken, NAIC president and Pennsylvania's insurance commissioner. “With passage of this model legislation, we are delivering on that promise.”
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