NAIC Hits Brokers, Insurers With Letter, Law
By Jim Connolly
NU Online News Service, Nov. 14, 6:45 p.m. EDT?Insurance commissioners reacting to the broker-insurer bid-rigging scandal have drawn up a letter and a model law to make carriers and brokerages shape up.[@@]
Two inquiry letters, one for brokers and one for companies, are being readied for mailing by state insurance departments, Diane Koken, Pennsylvania insurance commissioner and president of the National Association of Insurance Commissioners, Kansas City, Mo., told National Underwriter.
The letters and the model act were developed during a meeting Thursday in Chicago. All NAIC officers were present and all members of a 13-member task force were represented. Other state representatives were also in attendance, Ms. Koken said.
The letters deal with "inappropriate solicitation practices that may have occurred" among both producers and companies as well as any ongoing internal investigations that have been started or investigations that have been completed.
A new model that is an amendment to the current Producer Licensing Model Act will be publicly released this week, according to Ms. Koken.
The model is "relatively short" but could be expanded depending upon feedback from the full body of state insurance commissioners as well as interested parties, she adds. A public hearing will be held during the winter NAIC meeting Dec. 4-7.
It is important to get the model completed by year-end so that all states can get the model introduced in their legislatures quickly, she said. Ms. Koken added that the goal is to get the model enacted with as much uniformity as possible.
The meeting was attended only by U.S. insurance regulators, although Ms. Koken says that all input will be welcomed during the public hearing.
She said a number of state insurance commissioners are in regular contact with their state attorneys general on the issue. And, New York Superintendent Greg Serio and the New York insurance department are working with New York Attorney General Eliot Spitzer.
Spitzer launched the investigation that has engulfed brokers and insurers and could extend to reinsurers. In civil suits against Marsh Inc. and Universal Life brokerages he has alleged that hidden fee arrangements and payoffs from insurers led brokers to steer customers business to insurers who were part of the scheme, which fixed and inflated prices.
The two prongs of the NAIC effort, the letters and the model act, will be joined by a third prong, an online, fraud prevention Web site, Ms. Koken said. That site will be up by Jan. 1, 2005. The new Web site was not discussed during the meeting, Ms Koken said.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.