CIAB Sues To End Agent Countersignature

CIAB contends the laws violate constitutional protections that prohibit states from discriminating against residents and businesses of other states.

Ken Crerar, president of the Washington-based Council, told a press briefing that the decision to file the lawsuits reflects frustration of agent licensing reform efforts dating back more than 60 years.

While states are starting to make progress, Mr. Crerar said, countersignature laws represent the most egregious protection measures still on the books in some states.

He called countersignature requirements "pure profit" for agents who reside in the relevant states, because they receive a fee without having to do any work.

In Florida and Nevada, Mr. Crerar said, the cost to the system of countersignature laws amounts to millions of dollars a year, costs which he said are totally unnecessary.

Nicole Allen, director of government relations for the Council, said that in Florida, non-resident agents must pay up to 50 percent of commission to resident agents simply to get their signatures on policies.

In Nevada, she said, the fee is 5 percent of premium or 25 percent of commission.

Mr. Crerar added that in both states, the insurance departments rigorously enforce the countersignature laws and have audited insurance agencies to assure the fees are paid.

Generally, he said, advocates of countersignature laws justify them in the name of consumer protection. But Mr. Crerar scoffed at that justification.

In an interstate system, he said, agent licensing itself is the consumer protection.

Joel Wood, senior vice president of government affairs for the Council, said that while legislative efforts are underway to establish a system of reciprocity for agent and broker licensing, and hundreds if not thousands of changes in state laws are being made, it is frustrating that two states continue to have countersignature laws outstanding.

Ms. Allen noted that in addition to Florida and Nevada, Alabama, South Dakota and West Virginia also have countersignature laws.

Mr. Crerar said the council filed the lawsuits against the Florida and Nevada laws because they are the two most egregious.

The lawsuit asks the respective federal courts to issue permanent injunctions enjoining the state insurance commissioners in Florida and Nevada from enforcing the countersignature laws.