Trades Push For Agent Exemption

Comments by the Property Casualty Insurers Association of America, the American Insurance Association, the Independent Agents and Brokers of America, and the National Association of Professional Insurance Agents on the revised NAIC proposal all make clear that the proposed amendments to the Model Act should be confined to transactions conducted by brokers only.

A lawyer for the Council of Insurance Agents and Brokers, the group most affected by the proposed changes, said they agreed with the comments.

Scott Sinder, outside general counsel of the CIAB, said the joint comments and joint suggestions submitted by AIA, the CIAB, the Big I and the PIA "are designed to impose the disclosure obligation on all of those who are engaging in insurance brokerage activities to the extent that they are engaging brokerage activities, and to address the operational issues related to providing the disclosure."

For example, in its supplemental comments to the NAIC, PCI said it "agrees with the number of regulators who spoke at the hearings in New Orleans indicating that it is inappropriate to have any amendment to the Producer Licensing Model apply to agents."

Specifically, the PCI said, "As those regulators mentioned, there has, to date, been no evidence that the issues at hand lie on the agent side."

The PCI statement added, "Those regulators hit the nail on the head by acknowledging that when it comes to the agent scenario, the problem lies elsewhere."

Language putting new requirements on agents should be removed, PCI said.

The Big I, discussing the nature and scope of fees and commissions addressed in the proposal, said it supports "mandatory disclosure by brokers of meaningful information concerning the sources and nature of their compensation, including contingent compensation agreements."

Wesley Bissett, Big I senior vice president of state relations and government affairs, explained that, "Our national board proactively took action urging brokers to disclose to clients the existence of incentive compensation agreements, and we are glad to see that there is growing agreement in the industry as to the wisdom of this course."

Mr. Bissett said in supplemental comments to the NAIC that the stated goals and objectives of the model law "are admirable, but additional revisions are necessary in order to ensure that the concepts within it translate into true value for consumers."

Mr. Bissett said that the Big I told the NAIC that, "Where problems exist, they must be fixed, but we should not try to fix what isn't broken. The NAIC is doing a good job of studying these important issues, and I believe most regulators understand the difference between requirements that are meaningful and offer true value to consumers, and burdensome rules that don't benefit consumers and only impose unnecessary costs on Main Street businesses."