In response to the controversy generated by New York Attorney General Eliot Spitzer's investigations into alleged bid rigging and market manipulation by insurance brokers, the National Association of Insurance Commissioners has drafted a compensation disclosure amendment to its Producer Licensing Model Act. Despite its adoption of the amendment, the NAIC has sent one section back to a task force to be reviewed and possibly reworked. Section B, which would require disclosure by all producers, including independent agents and salaried employees of direct response companies, was criticized by many trade groups and representatives for being too inclusive and casting an overly wide net.

The commissioners' decision to delay consideration of a section of the proposed amendment was a step in the right direction, according to the Property Casualty Insurers Association of America. PCI also has concerns regarding the application of the other sections, however. “For example, the wording of Section A (2) may open the door for some commissioners to interpret these requirements as broadly applying to all producers, including captive agents and direct response insurers,” said Robert Zeman, PCI senior vice president, industry and regulatory affairs.

The model act is intended to provide guidance to state legislatures as their 2005 sessions begin.