SAVANNAH, GA.–The National Conference of Insurance Legislators has put off a vote on a resolution accusing state attorney generals of evading the legislative process by negotiating settlements banning brokers' contingent commissions.

The resolution considered at NCOIL's spring meeting here was aimed primarily at the agreements negotiated between three state attorneys general with Marsh, Willis and Aon and other brokerages following the 2004 scandal over compensation.

At that time, New York Attorney General Eliot Spitzer charged during the course of an investigation that hidden contingent commissions collected from insurers were part of a scheme to rig bids and steer clients.

Georgia Rep. Rich Golick, R-Smyrna, sponsored the resolution, charging that “a small group of attorneys generals and insurance regulators have recently undermined and evaded the legislative process by using legal settlements with insurers and large insurer brokers to unilaterally implement public policy measures.”

Texas Democratic Rep. Craig Eiland, D-Galveston, who chairs the State Federal Relations Committee, said he wanted to put off the issue because Mr. Golick was not at the meeting.

His move came despite the urgings of Wes Bissett, senior vice president of the Independent Insurance Agents of America, who asked the panel to reconsider any postponement because the matter was urgent.

“Some of the settlements reached by some AGs and regulators with big insurance companies and the largest brokers include provisions that are essentially lawmaking,” Mr. Bissett said.

A prohibition on insurance companies paying contingent commissions “is the kind of measure that ought to be approved and adopted by a legislative body,” said Mr. Bissett.

In addition to Mr. Spitzer, Connecticut Attorney General Richard Blumenthal and Illinois Attorney General Lisa Madigan have entered into global settlements with brokers who agreed to stop accepting the fees for various lines of business.

“The main settlements have been negotiated by three attorneys general yet they have been applied nationwide and there has been no opportunity for comment,” he said.

Rep. Eiland said he preferred to put off the issue until representatives of the attorneys general through the National Association of Attorneys General can comment.

In addition, he noted that NAAG and NCOIL have been partners in some regulatory reform efforts and wanted to make sure careful thought was given before any move that might antagonize them.

Special Reports /

NCOIL Postpones Censoring AG Broker Settlements

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