Life Brokers Weigh In On NAIC Producer Act
By Matt Brady
NU Online News Service, Dec. 23, 2:34 p.m. EST?Support for the National Association of Insurance Commissioner's proposed Producer Licensing Model Act by four life insurance industry trade associations will depend on the removal of a section of the draft rule, the groups said in a letter.[@@]
The American Council of Life Insurers, the Association for Advanced Life Underwriting, the National Association of Insurance and Financial Advisors and the National Association of Independent Life Brokerage Agencies, representing both agents and insurers, told the NAIC that while many of their concerns regarding an earlier draft have been addressed, the remaining provision, Subsection B, remains an obstacle.
The provision would require a producer to disclose to a client, prior to the sale, that the producer's compensation may vary depending on the product or company involved, and that the producer may receive additional compensation from the company or a third party based upon other factors.
"We have carefully reviewed the latest draft amendment to the PLMA (Producer Act) and concluded there is only one remaining issue standing in the way of our support of it, and that is the continued inclusion of Subsection B," the groups said in the letter.
Enacting the rule including Subsection B, the groups continued, would give rise to serious questions such as their effect on state anti-rebate or anti-discrimination laws, and would go beyond the scope of the issue the NAIC is trying to address.
"Neither our organizations nor, we suspect, our regulators, have had the opportunity to carefully consider the full impact of Subsection B," the groups stated. "Consequently, we cannot realistically envision supporting the proposal if it includes that subsection because of its potential to fundamentally alter the operation of our businesses without the thoughtful analysis, discussion and process necessary to avoid serious adverse consequences to us and to our customers."
The letter did not guarantee that the groups would not support a proposed rule including Subsection B, but it made a strong implication the backing of the trade associations would depend on the removal of the section from the model act.
"Subject to final determinations by our respective governing bodies, if Subsection B is removed from the amendment to the PLMA, the strong sense of the organizations signing this letter is to support the amendment as it comes up in state legislatures next year; but if it remains, our opposition to the model and enactment of it in the states seems very probable."
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