NAIC Broker Disclosure Amendment Changes Unlikely

Mr. Iuppa made his comments at the CityBar Center for Continuing Legal Education's annual insurance regulation seminar in New York City.

On Dec. 29, the NAIC approved a broker fee model disclosure amendment which required those producers compensated by both the insured and the carrier to disclose the nature of that compensation.

At the time, the regulators said they would consider further provisions that expand the requirement to virtually all producers and possibly spell out some sort of fiduciary duty the brokers should assume in their position.

The property-casualty trade groups, along with the Independent Insurance Agents and Brokers of America, have opposed any further expansion of the amendment's scope.

Mr. Iuppa said a final decision will most likely be made at the NAIC summer meeting in June.

The NAIC passed the amendment to the Producer Model Licensing Act in the aftermath of a civil action against Marsh & McLennan by the New York Attorney General's Office that accused the firm of rigging bids and taking incentive payments to steer business to insurers who were part of the conspiracy.

No state has passed the NAIC amendment, and similar measures have been introduced in only a handful of states in the current legislative year. "There does not seem to be any mad rush to pass this in the states," Mr. Iuppa said.

Since the amendment's passage, the top three insurance brokers have settled with their state regulators and agreed to stop the practice of collecting contingency fees.