Federal Court Overturns Nevada Countersignature Law
Nevada plans to appeal a federal judge's ruling overturning the state's countersignature law that barred out-of-state insurance brokers from doing business in the state without the involvement of an admitted agent.
In his ruling from the bench, Nevada District Court Judge James Mahan said the Nevada countersignature law "was not related to competence," and the law "presumes that someone who is a nonresident is not competent."
Judge Mahan also said that there was "no rational basis" for the additional requirement in Nevada law that its resident agents receive 5 percent of the commission from the business that is placed as a result of their countersignature.
The judge has not yet rendered a written decision.
The suit was brought by the Washington-based Council of Insurance Agents and Brokers, and Rebecca Restrepo, who runs the Sacramento, Calif., office of ABD Insurance and Financial Services.
The CIAB said its counsel has been asked to submit a proposed order in the case to the court for remedy, which would include language precluding the state's department of insurance from enforcing the countersignature law.
The CIAB's counsel Scott Sinder, of Collier Shannon Scott PLLC, in Washington said that once the decision is filed, the state will have 30 days to file a notice of appeal to the 9th U.S. Circuit Court of Appeals.
A staff official at the state's Division of Insurance, Peggy Dehl, said the state does indeed plan to appeal.
The Nevada Independent Insurance Agents, which filed a friend-of-the-court brief, argued in favor of the countersignature provision, saying it is a protection for consumers. Its lawyers argued that Nevada changes its laws frequently and that out-of-state brokers, and especially brokers based overseas, could not possibly be cognizant of all the changes. A representative from NIIA was not available for comment on the ruling.
The CIAB earlier this year won a lawsuit on this same issue in Florida. After filing suit in West Virginia, the state changed its law eliminating the countersignature provision. The law goes into effect there on Jan., 1, 2005.
The CIAB has suits pending in South Dakota and the territories of Puerto Rico and the Virgin Islands on the countersignature issue, according to Mr. Sinder.
Reproduced from National Underwriter Edition, August 12, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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