Another Countersignature Law Bites The Dust--Almost

WASHINGTON–A federal judge in the Virgin Islands ruled Friday that the territory's countersignature law is unconstitutional, but agents and brokers were advised to continue following the law until appeals are exhausted.

The decision continued a string of victories on the issue for the Council of Insurance Agents & Brokers, which has been waging a decade-long battle to end the disparity in treatment between in-state and out-of-state brokers.

The judge in Charlotte Amalie, St. Thomas, made the decision in a bench ruling.

The rulings prohibit states or territories from forcing nonresident insurance brokers and agents to pay fees to a resident agent in order to do business in that jurisdiction.

But the ruling is not final because the territory has the right to appeal the judge's ruling. As a result, the Washington, D.C-based association said it is cautioning brokers and agents to continue following the countersignature law requirements until the ruling is final.

The Virgin Islands case was the final CIAB lawsuit on the issue to be adjudicated.

Previously, countersignature laws in Florida, South Dakota, Nevada and Puerto Rico were struck down by federal judges in those jurisdictions, and the West Virginia legislature repealed its law rather than defend it in court.

The rulings on countersignature laws in Nevada and Puerto Rico are still in the appeals process and are not yet final, a CIAB official said.

“This victory means the CIAB has prevailed against the odds and successfully challenged the constitutionality of every one of these protectionist laws on behalf of our members who suffered from this costly barrier to free commerce,” said Ken A. Crerar, the association's president.

The CIAB won its first countersignature lawsuit in Florida in September 2003, followed by similar victories in Nevada, South Dakota and Puerto Rico.